PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL

2.

Principal Terms and Conditions

(a)

Names of parties involved in the proposed transaction

(i)

Principal Adviser(s)/Lead Arranger(s)

Deutsche Bank (Malaysia) Berhad

(ii)

Arranger(s)
None

(iii)

Valuers
City Valuers & Consultants Sdn Bhd

(iv)

Solicitors
For the Lead Arranger:
Zaid Ibrahim and Co.
For the Originators:
Lee Choon Wan & Co.

(v)

Financial adviser
None

(vi)

Technical Adviser
None

(vii)

Guarantor
None

(viii)

Trustee
HSBC (Malaysia) Trustee Berhad

(ix)

Facility Agent
Deutsche Bank (Malaysia) Berhad

(x)

Primary Subscriber(s) and Amount Subscribed

None

(xi)

Underwriter(s) and amount underwritten

None

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(xii)

Syariah Adviser
Dr Mohd Daud Bakar

(xiii)

Central Depository
Bank Negara Malaysia

(xiv)

Paying Agent
Bank Negara Malaysia

(xv)

Reporting accountants
For the Originators: Ernst & Young
For the Issuer: Moore Stephens Associates & Co.

(xvi)

Others
(A)

Corporate Administrator -Corporatehouse Services Sdn Bhd. The Corporate

Administrator will provide corporate administrative services to the Issuer.

(B)

Transaction Administrator HSBC (Malaysia) Trustee Berhad

The Transaction Administrator will provide certain administrative services to
the Issuer in relation to the management of the accounts and Issuers
payment obligations to various parties.

(C)

Tax Advisers - Ernst & Young Tax Consultants Sdn. Bhd.

(D)

Share Trustees Dato Kamaruddin Bin Mohd Jamal and Chandrasegaran

a/l Ramasamy. The Share Trustees will hold 100% of the ordinary shares in
trust for the benefit of certain charities pursuant to the terms of a declaration
of trust.

(E)

Advising Merchant Bank (in relation to the disposal of the plantation assets) Alliance Merchant Bank Berhad.

(F)

Lessor - ABS Plantation Assets Berhad

(G)

Lessees - Benta Plantations (Perak) Sdn Bhd, Syarikat Kaum Melayu Hilir
Perak Sdn Bhd and Tahir, Rozlan & Tasariff Sdn Bhd

(H)

Lease Guarantor - Multi Vest Resources Berhad

(I)

Subscriber - Deutsche Bank (Malaysia) Berhad

The role of the subscriber will be to subscribe for the 100% of the Offering
Notes to be issued.
The Notes will be issued via private placement without prospectus on a
Best Effort Basis. Once the yield to maturity and final issue size is
finalized, Deutsche Bank (Malaysia) Berhad will inform the SC prior to the
issuance of the Notes.

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(b)

Islamic principle used

Bai Bithaman Ajil (BBA)
In accordance with such principle:
(i)

the SPV and the Primary Subscriber will enter into an asset purchase agreement
(the Class A Asset Purchase Agreement) pursuant to which the SPV will sell to the
Primary Subscriber the Class A Asset (as described below) for a cash amount (the
Class A Asset Purchase Price). Immediately after the execution of the Class A
Asset Purchase Agreement, the Primary Subscriber and the SPV will enter into an
asset sale agreement (the Class A Asset Sale Agreement) pursuant to which the
Primary Subscriber will sell the Class A Asset back to the SPV at a price which is
equivalent to the Class A Asset Purchase Price and a profit element (the Class A
Asset Sale Price). The SPV will issue the Class A Notes to the Primary Subscriber
which represent the SPVs obligation to pay the Class A Asset Sale Price. The
Class A Asset Sale Price is payable over a period of 10 years, subject to early
redemption as described in this term sheet. The Class A Notes will comprise of
Primary Class A Notes and Secondary Class A Notes. The Secondary Class A
Notes will represent profit.
Class A Asset would comprise of the rights of the SPV under the Sale and
Purchase Agreements in relation to properties held under the following titles:
1.

H.S. (D) L.P 11038, Lot 11501, Mukim Durian Sebatang, Daerah Hilir
Perak, Negeri Perak;

2.

H.S.(D) L.P 11039, Lot 5936, Mukim Changkat Jong, Daerah Hilir Perak,
Negeri Perak; and

3.

H.S. (D) L.P 100/75, Lot 7362, Mukim Changkat Jong, Daerah Hilir Perak,
Negeri Perak.

The value of the Class A Asset is expected to be RM 50,136,000 based on the

market valuation of the relevant land. The Class A Asset Purchase Price is
expected to be approximately RM46,000,000 i.e. 91.8% of the value of the Class A
Asset and therefore complies with the Securities Commissions requirements on the
pricing of assets in connection with Islamic financing. The Class A Asset Sale Price
is expected to be approximately RM71,000,000, being the aggregate of the Class A
Asset Purchase Price and the profit element.
(ii)

the SPV and the Primary Subscriber will enter into an asset purchase agreement
(the Class B Asset Purchase Agreement) pursuant to which the SPV will sell to the
Primary Subscriber the Class B Asset Purchase Price (as described below).
Immediately after the execution of the Class B Asset Purchase Agreement, the
Primary Subscriber and the SPV will enter into an asset sale agreement (the Class
B Asset Sale Agreement) pursuant to which the Primary Subscriber will sell the
Class B Asset back to the SPV at a price which is equivalent to the Class B Asset
Purchase Price and a profit element (the Class B Asset Sale Price). The SPV will
issue the Class B Notes to the Primary Subscriber which represent the SPVs
obligation to pay the Class B Asset Sale Price. The Class B Asset Sale Price is
payable over a period of 10 years, subject to early redemption as described in this
term sheet. The Class B Notes will comprise of Primary Class B Notes and
Secondary Class B Notes. The Secondary Class B Notes will represent profit.
Class B Asset would comprise of the rights of the SPV under the Sale and
Purchase Agreements in relation to properties held under the following titles:

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1. H.S (D) L.P 11040 Lot 7280, Mukim Changkat Jong, Daerah Hilir Perak, Negeri
Perak;
2. H.S. (D) L.P 11041 Lot 7281, Mukim Changkat Jong Daerah Hilir Perak, Negeri
Perak;
3. H.S. (D) L.P 11042, Lot 7258, Mukim Changkat Jong, Daerah Hilir Perak,
Negeri Perak.
The value of the Class B Asset is expected to be RM 40,985,000 based on the
market valuation of the relevant land. The Class B Asset Purchase Price is
expected to be approximately RM40,000,000 i.e. 97.6% of the value of the Class B
Asset and therefore complies with the Securities Commissions requirements on the
pricing of assets in connection with Islamic financing. The Class B Asset Sale Price
is expected to be approximately RM71,000,000, being the aggregate of the Class B
Asset Purchase Price and the profit element.
(iii)

the Issuer and the Originators will enter into asset purchase agreement pursuant to
which the Issuer will sell the Class C Asset (as described below) for cash, which will
be set-off with the balance purchase price owing by the Issuer to the Originators
under each of the Sale and Purchase Agreements which are to be satisfied by the
issuance of the Subordinated Notes. Immediately thereafter, the Originators and the
Issuer will enter into asset sale agreement pursuant to which the Originators will sell
the Class C Asset to the Issuer at a price which is equivalent to the purchase price
and a profit element. The SPV will issue the Subordinated Notes to the Primary
Subscriber which represent the SPVs obligation to pay the Class C Asset Sale
Price. The Class C Asset Sale Price is payable over a period of 10 years, subject to
early redemption as described in this term sheet. The Subordinated Notes will
comprise of Primary Subordinated Notes and Secondary Subordinated Notes. The
Secondary Subordinated Notes will represent profit.
Class C Asset would comprise of the rights of the SPV under the Sale and
Purchase Agreements in relation to properties held under the following titles:
1. H.S. (D) L.P 11037, Lot 10052, Mukim Durian Sebatang, Daerah Hilir Perak,
Negeri Perak.; and
2. H.S. (D) L.P 11038, Lot 11501, Mukim Durian Sebatang, Daerah Hilir Perak,
Negeri Perak.
The value of the Class C Asset is expected to be RM84,710,000 based on the
market valuation of the relevant land. The Class C Asset Purchase Price is
expected to be approximately RM 66,000,000 i.e. 77.9% of the value of the Class C
Asset and therefore complies with the Securities Commissions requirements on the
pricing of assets in connection with Islamic financing. The Class C Asset Sale Price
is expected to be approximately RM 294,000,000 being the aggregate of the Class
C Asset Purchase Price and the profit element.

(c)

Facility Description
The Notes will be asset backed notes, secured by the Secured Property (as defined below).
The expected sources of repayment for the Notes are the Lease Rental Payments and the
sales proceeds to be received from the Lease Guarantor from the exercise of the Purchase
Option (as defined below) (or from sale of the Assets (as defined below) in the event that
the Purchase Option is not exercised).

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(d)

Issue Size (RM)

Aggregate issue size of up to RM175 million comprising of Senior Notes of Class A Notes of
up to RM50 million and Class B Notes of up to RM45 million and Subordinated Notes of up
to RM80 million.

(e)

Issue Price (RM)

The Senior Notes will be issued at a discount to par. The Subordinated Notes will be issued
at par.

(f)

Tenor of the facility/issue

The Notes will have the following Maturity Dates:
(i)
(ii)
(iii)

Class A Notes: Expected/Legal Maturity Date 9 years/ 10 years;

Class B Notes: Expected/Legal Maturity Date 9 years/ 10 years; and
Subordinated Notes: Expected/Legal Maturity Date 9 years/ 10 years

It is expected that the Lease Guarantor will exercise its Purchase Option at the end of year
nine and that the proceeds will applied for the early redemption of the Notes in full at that
time. The expected maturity of the Notes is therefore one year prior to the final maturity.
(g)

Coupon / profit or equivalent rate (%)

The profit rates will be determined prior to the issue.
The indicative profit rates are as follows:
(i)
(ii)
(iii)

Class A Notes
Class B Notes
Subordinated Notes

:
:
:

6.00%
6.75%
35.00%

In year 10, the profit rates on all classes of Senior Notes will increase by 1.00%. This
increase have been taken into account in the total selling price referred to in item (u) below.
(h)

Coupon / Profit Payment frequency and basis

Semi-annual in arrears for the Senior Notes. In the case of the Subordinated Notes,
payment of profits is on the maturity date of the Subordinated Notes.
Basis: actual day/365 day

(i)

Yield to Maturity (%)

The yield to maturity will be determined prior to the issue.

(j)

Security / Collateral
The security to be created by the Issuer:
(i)

First charge over the Assets (as defined below).

(ii)

First assignment over the sale and purchase agreements and the lease agreement
in respect of the Assets and rights under the Lease Guarantee and Purchase
Option Agreement (as defined below).

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(k)

(iii)

First charge and assignment over (a) the Collection Account (as defined below), (b)
the Reserve Account (as defined below) and (c) the Capital Expenditure Account
(as defined below).

(iv)

Fixed and floating charge over all other assets of the Issuer.

Details on utilisation of proceeds

(i)

For the Issuer:

The issue proceeds of the Notes will be utilized by the Issuer as follows:

(ii)

(A)

up to RM3,500,000 will be deposited into the Reserve Account;

(B)

approximately RM1,400,000 for the transaction fees, costs and expenses;

and

(C)

the remaining balance of the issue proceeds will be used to part finance the
purchase of the Assets from the Originators

For the Originators:

The proceeds from the purchase of the Assets will be utilised by the Originators to:

(l)

(A)

approximately RM62.8 million for the purpose of financing the acquisition by

BPSB of shares in Pinehill Ventures Ltd, a company incorporated in Labuan
(including refinancing a bridging loan of up to RM20,000,000 proposed to
be provided by the Lead Arranger, if any part of it has been drawndown);

(B)

approximately RM8,500,000 for the purpose of repaying BPSBs existing

facility with Alliance Merchant Bank Berhad;

(C)

approximately RM12,200,000 for working capital requirements; and

(D)

approximately RM1,500,000 for the expenses for the acquisition by BPSB

of shares in Pinehill Ventures Ltd.

Sinking Fund
None

(m)

Rating
(i)
(ii)

Class A Notes
Class B Notes

: AAA (Indicative)
: AA (Indicative)

Subordinated Notes will not be rated.

Credit Rating Agency
(n)

: Malaysian Rating Corporation Berhad (MARC)

Form and Denomination

The Notes shall be issued in accordance with (1) the Code of Conduct and Market
Practices for the Malaysian Corporate Bond Market issued by the Institut Peniaga Bon
Malaysia and approved by BNM (IPBM Code) and (2) the Rules on the Scripless
Securities under the Real Time Electronic Transfer of Funds and Securities (Rentas)
system issued by BNM (Rentas Rules) and (3) the Rules on Fully Automated System for
Issuing/Tendering (FAST) issued by BNM (FAST Rules), or their replacement thereof
(collectively the Codes of Conduct) applicable from time to time. The Rentas Rules shall

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prevail to the extent of any inconsistency between the Rentas Rules and the IPBM Code.
The Notes shall be initially represented by a global certificate in bearer form to be deposited
with BNM, and is exchangeable for definitive notes only in certain limited circumstances as
specified in the trust deed for the Notes. The Notes will be issued in denominations and
multiples of RM1000 each.
(o)

Mode of Issue
Private placement without prospectus

(p)

Selling Restriction
The Notes (other than the Subordinated Notes) may not be offered or sold, directly or
indirectly, nor may any documents or other material in connection therewith be distributed,
in Malaysia, other than to such persons to whom the offer or invitation to purchase the
Notes (as defined below) would be an excluded offer as prescribed in section 38(1) or
excluded issue as prescribed in section 39(1) of the Securities Commission Act 1993, and
would also fall within Schedule 5 of the Securities Commission Act 1993.
The Subordinated Notes are non-transferable and non-tradable.

(q)

Listing Status
The Notes will not be listed on any exchange.

(r)

Minimum Level of Subscription (RM or %)

The Senior Notes will be 100% subscribed by Deutsche Bank (Malaysia) Berhad and the
Subordinated Notes will be fully issued to the Originators as part consideration for the
Assets.

(s)

Other regulatory approvals required in relation to the issue, offer or invitation and
whether or not obtained
Deutsche Bank (Malaysia) Berhad has obtained the approval of the SC for the proposed
waiver from complying with the requirements of paragraphs 4.01(3) and (5) of the
Guidelines on the Offering of Asset-Backed Securities in relation to the Notes via letter
dated 14 June 2005.
Other than the approval of the SC, there are no other regulatory approvals required in
relation to the issue, offer or invitation.
However, the following regulatory approvals are required for the transfer of the Assets to the
Issuer:
-

the SC (under Section 32(2)(g) of the SCA);

the Foreign Investment Committee;

the Estate Land Board; and

the Menteri Besar of Perak

Further the approval of the Menteri Besar of Perak is required for the lease and charge of
the Assets.
All of the above approvals are conditions precedent to the issue, have been applied for and
are still pending.
(t)

Identified Assets
Rights under the Sale and Purchase Agreements (as further described under paragraph (b)
above).

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(u)

Purchase and selling price/rental (where applicable)

Total purchase price: Approximately RM152,000,000
Total selling price: Approximately RM436,000,000

(v)

Condition Precedent
To include but not be limited to, the following:
(i)

Transaction documents
The transaction documents having been signed and endorsed as exempted from
stamp duties.

(ii)

The Issuer
The following documents being delivered to the Lead Arranger:

(iii)

(A)

Certified true copies of the Certificate of Incorporation, and the

Memorandum and Articles of Association, Forms 24 and 49 of the Issuer.

(B)

A certified true copy of a board resolution of the Issuer authorising, among

others, the execution of the transaction documents.

(C)

A certified true copy of the approval from the shareholders of Multi Vest
Resources Berhad, approving the sale of the Assets to the Issuer, if
required.

(D)

A list of the Issuers authorised signatories and their respective specimen

signatures.

(E)

A report of the relevant company search conducted at the Companies

Commission of Malaysia in respect of the Issuer.

(F)

A report of the relevant winding up search or the relevant statutory

declaration of the Issuer.

(G)

A copy of the valuation report setting out, amongst others, the current
market values as at a date no earlier than an agreed date prior to the Issue
Date of the Notes.

General
(A)

The respective approvals from the SC, FIC and other authorities for the
transfer, the lease and the charge of the Assets (where required) being
given.

(B)

Such notices of assignment to or consents from relevant counterparties

required under the transaction documents having been given or obtained.

(C)

The transfer, the lease and the charge of the Assets, together with all
documents required to be deposited with the relevant land authority to effect
registration, have been presented to the relevant land office/ land registry
for registration, under the National Land Code.

(D)

The Notes receiving the rating acceptable to the Lead Arranger.

(E)

The delivery of a legal opinion addressed to the Lead Arranger and the
Trustee advising with respect to, among others, the legality, validity and
enforceability of the transaction documents, the sale of the Assets
constitutes a true sale from the legal perspective, and a confirmation from
the solicitors of the Lead Arranger addressed to the Lead Arranger that all
the conditions precedent have been fulfilled.

(F)

Such comfort letters from the accountants and tax and other advisers as
may be required by the Lead Arranger.

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(w)

Representations and Warranties

The representations and warranties of the Issuer in relation to the issue of the Notes will
include, but not limited to, the following:
(i)

the Issuer is a company with limited liability duly incorporated and validly existing
under the laws of Malaysia and has power to carry on its businesses and to own its
property and assets and has complied with all legal requirements required for its
business;

(ii)

the constitution documents of the Issuer incorporate provisions which authorise, and
all necessary corporate and other action has been taken to authorise, and all
consents, approvals of any governmental agency have been duly obtained and are
in full force and effect which are required to authorise the Issuer to execute and
deliver and perform the transactions contemplated in the transaction documents to
which the Issuer is a party in accordance with their respective terms;

(iii)

the transaction documents to which the Issuer is a party are, or will when executed
be, in full force and effect and constitutes, or will when executed constitute, valid
and legally binding obligations of the Issuer, enforceable in accordance with their
respective terms, and

(iv)

warranties with respect to the Issuers business.

The representations and warranties of each Originator under the Sale and Purchase
Agreement will include, but not be limited to, the following:

(x)

(i)

the Originator is the sole legal and beneficial owner of the Assets and of all rights
under any and all agreements to be identified relating to the Assets (the Related
Contracts);

(ii)

no encumbrance or security interest exists in relation to its rights, title and interest in
the Assets and the Related Contracts;

(iii)

it holds all documents necessary to enforce the provisions of each Related

Contract;

(iv)

it has disclosed to the Issuer all relevant Related Contracts;

(v)

it is lawfully entitled to sell the Assets and Related Contracts upon the terms and
conditions of the relevant Sale and Purchase Agreement and, unless otherwise
disclosed, no consent to the sale and assignment of the Assets and Related
Contracts is required to be given by any person;

(vi)

legal and beneficial ownership of the Assets and Related Contracts will vest in the
Issuer free and clear of all encumbrances, subject to the terms and conditions of the
relevant Sale and Purchase Agreement;

(vii)

unless otherwise disclosed, it maintains appropriate insurance policies in respect of

the Assets and such policies are in full force and effect and all premiums due have
been paid;

(viii)

the Originator is a company incorporated in Malaysia; and

(v)

the Originator is a going concern.

Events of Default
To include but not be limited to, the following:
(i)

the Issuer fails to pay any amount due under the Notes (other than the
Subordinated Notes) on the due date for payment of any such amount;

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(ii)

the Issuer fails to perform or observe any other provision of a Transaction

Document (as described below) (other than the obligation referred to in paragraph
(i) above), where the Trustee is of the opinion that such failure has or will have a
material adverse effect and if the failure is remediable, the failure is not remedied
within 30 days after written notice from the Trustee requiring the Issuer to rectify
them;

(iii)

an insolvency event occurs in respect of the Issuer;

(iv)

if at any time following the last date that Multi Vest can exercise the option to
purchase the Assets, the Trustee determines that the sale of the Assets will not
realise sufficient moneys to repay the Notes (other than the Subordinated Notes) in
full on the Expected Maturity Date;

(v)

a resolution to wind up the Issuer has been passed;

(vi)

where a scheme of arrangement under section 176 of the Companies Act 1965 has
been instituted against the Issuer;

(vii)

where a receiver has been appointed over the whole or a substantial part of the
assets of the Issuer;

(viii)

where any other indebtedness of the Issuer becomes due and payable prior to its
stated maturity or where the security created for any other indebtedness becomes
enforceable;

(ix)

where there is revocation, withholding or modification of a licence, authorisation or

approval that impairs or prejudices the Issuers ability to comply with the terms and
conditions of the Notes or the provisions of the Trust Deed or any other document
relating to the issue, offer or invitation in respect of the Notes;

(x)

all or any part of any Transaction Document is or becomes void, illegal, invalid,
unenforceable or of limited force and effect;

(xi)

the Issuer ceases to be the owner of the Assets; and

(xii)

any of the Originators fails to pay the Rescission Amount (see below) upon the
relevant Sale and Purchase Agreement being rescinded.

Upon the declaration of an Event of Default, the outstanding amount under the Notes will
immediately be due and payable and the security for the Notes is enforceable.
(y)

Principal terms and conditions for warrants

Not applicable.

(z)

Other principal terms and conditions for the issue

Please find additional key information relation to the transaction enclosed below:
(i)

Assets
The assets to be securitised (the Assets) are properties held under issue
documents of title:
(A)

HS(D)LP 11039, Lot No. 5936, Mukim Changkat Jong, Perak;

(B)

HS(D)LP 11042, Lot No. 7258, Mukim Changkat Jong, Perak;

(C)

HS(D)LP 11040, Lot No. 7280, Mukim Changkat Jong, Perak;

(D)

HS(D)LP 11041, Lot No. 7281, Mukim Changkat Jong, Perak;

(E)

HS(D)LP 100/75, Lot No. 7362, Mukim Changkat Jong, Perak;

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(F)

HS(D)LP 11037, Lot No. 10052, Mukim Durian Sebatang, Perak; and

(G)

HS(D)LP 11038, Lot No. 11501, Mukim Durian Sebatang, Perak,

together with all buildings erected thereon and certain fixtures used by the Originators in
its business operations at the Assets (including machinery and other items to be notified
by the Originators to the Issuer prior to the completion of the sale and purchase of the
Assets).
(ii)

Sale and Purchase of the Assets

Under the Sale and Purchase Agreements, the Assets will be transferred from the
Originators to the Issuer at market value. The relevant Originator for properties
described in (B), (C), (D), (F) and (G) above is BPSB, the relevant Originator for
properties described in (A) above is SKMH and the relevant Originator for properties
described in (E) above is TRT.
The purchase price will be payable by the Issuer to the Originators partly in cash from
the issue proceeds of the Senior Notes and partly in the form of Subordinated Notes.

(iii)

Rescission of the Sale and Purchase Agreement

If there has been a breach of representation or warranty by the Originator which is
not capable of being remedied or being capable of being remedied, but the
Originator fails to remedy within 14 days, all of the Sale and Purchase Agreements
may be rescinded and then the Originators will pay the Rescission Amount (as
described below) to the Issuer and all expenses incurred or to be incurred by the
Issuer, if any. All proceeds received by the Issuer as a result of the Sale and
Purchase Agreements being rescinded will be applied in the order described under
the heading Rescission Waterfall (as described below).
The Rescission Amount will be equal to:

(iv)

(A)

the outstanding amount under the Primary Senior Notes; and

(B)

the outstanding amount under the Primary Subordinated Notes.

The Lease Agreement

The lease between the Issuer and the respective Originators will commence on the Issue
Date and be for a period of up to 30 years. The Lease will be net leases whereby the
Lessees are responsible for all costs and expenses relating to the Assets including such
costs and expenses in respect of the operation, maintenance and repair of the Assets
(including without limitation, real estate taxes and insurance). The Lessees shall be
obliged to pay all Lease Rental Payments (as defined below) during the term of the
Leases without set-off, deduction or counterclaim.

(v)

The Lease Rental Payment

The lease rental payments payable by the Lessees to the Issuer (the Lease Rental
Payment) shall be due on the 7th day prior to each Payment Date (see below) (each, a
Lease Payment Date). The indicative amounts of the combined total of the Lease
Rental Payments under the Leases are as follows:
Lease Payment Date

Indicative Amount

1st

RM4,733,750

nd

RM4,733,750

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(vi)

3rd

RM5,246,800

4th

RM5,246,800

5th

RM5,592,000

6th

RM5,592,000

7th

RM5,737,200

8th

RM5,737,200

9th

RM5,853,600

10th

RM5,853,600

11th

RM5,293,600

12th

RM5,293,600

13th

RM5,535,600

14th

RM5,535,600

15th

RM5,375,200

16th

RM5,375,200

17th

RM5,102,000

18th

RM5,102,000

19th

RM4,950,400

20th

RM4,950,400

Lessees covenants under the Lease Agreement

The Lessees must among others:
(A)

maintain and operate the Assets in compliance with all applicable laws and
regulations in a manner consistent with the standards of operation and
maintenance employed prior to the sale of the Assets to the Issuer, normal
wear and tear excepted;

(B)

cause to be carried and maintained with respect to the Assets such

insurance in such forms and with such insurers as is common within the
relevant industry;

(C)

utilise any proceeds from insurance carried and maintained with respect to
the Assets to improve or restore the value of the Assets; and

(D)

only incur indebtedness for borrowed moneys which ranks junior to the
Lessees obligations to the Issuer.

The Lessees shall not among others:

Page | 12

(vii)

(A)

expose the Assets to risk of damage;

(B)

transfer, part with or share the possession of the Assets;

(C)

allow the interest of the Lessor in the Assets or any part thereof to be
prejudiced;

(D)

expose the Lessor to liability;

(E)

make any replacement, alteration or addition which could mean that the
Assets is not readily identifiable as the Issuers or which may lead to a
reduction in the value of the Assets; or

(F)

create or allow to come into existence an encumbrance (other than

pursuant to the Transaction Documents) which affects the Assets or any
part thereof.

Lease Guarantee
The holding company of the Lessees, Multi Vest Resources Berhad (the Lease
Guarantor), will provide a guarantee to the Lessor in respect of the Lease Rental
Payments payable by the Lessees.

(viii)

Purchase Option
The Lease Guarantor (or a nominee of the Lease Guarantor, which may include any
of the Originators) will have an option to purchase the Assets (all and not some
only) (the Purchase Option). The Lease Guarantor may exercise the Purchase
Option by giving notice at any time between the third anniversary date of the Lease
and 90 days prior to the expiration of nine years from the commencement of the
Lease (Purchase Option Period), subject to the following conditions:
(A)

the notice by the Lease Guarantor to exercise the Purchase Option must be
given no later than 90 days before a Lease Payment Date (Notification
Date);

(B)

the purchase price of the Assets must be at fair market value to be

determined in accordance with an independent valuation at such time , but
shall not be less than the fair market value as at the closing date; and

(C)

payment of the purchase price and transfer of the Assets pursuant to such
Purchase Option shall occur no later than 14 days before the Lease
Payment Date immediately following the Notification Date.

If the Purchase Option is not exercised within the Purchase Option Period, the
Issuer will then sell the Assets before the end of year 10. Upon the sale of the
Assets, either the Issuer or the Lessees may elect to cancel the Leases.

(ix)

Lease Default
A default under any of the Lease Agreement (the Lease Default) will include but
not be limited, to the following:
(A)

any of the Lessees fails to pay amounts due under the relevant Lease
Agreement within a period to be agreed;

(B)

any of the Lessees fails to perform or observe any other provision of the
relevant Lease Agreement (other than the obligation referred to in
paragraph (a) above), where such failure has or will have a material

Page | 13

adverse effect and if the failure is remediable, the failure is not remedied
within a period to be agreed after written notice from the Issuer requiring the
Lessee to rectify them;
(C)

an insolvency event occurs in respect of any of the Lessee or the Lease

Guarantor; or

(D)

a Lease Default occurs in respect of any other Lease Agreement.

After the occurrence of a Lease Default, the Issuer may terminate the Lease.
Thereupon, the Issuer will, in consultation with and in accordance with the
directions of the Trustee, start proceedings to sell the Assets in any manner.

(x)

Notes Redemption
Unless previously redeemed or cancelled, all of the Notes will be redeemed by the
Issuer at 100% of their outstanding nominal value on their maturity date.
The Senior Primary Notes will be partially redeemed on the following Payment
Dates in accordance with the following amortisation schedule:

Class A Primary
Notes

Class B Primary
Notes

to be redeemed

to be redeemed

1st

RM1,000,000

nd

RM1,000,000

3rd

RM1,000,000

RM900,000

th

RM1,000,000

RM900,000

5th

RM1,000,000

RM900,000

th

RM2,000,000

RM900,000

7th

RM2,000,000

RM900,000

th

RM2,000,000

RM900,000

9th

Payment Date

RM2,000,000

RM900,000

th

10

RM2,000,000

RM900,000

11th

RM2,000,000

RM900,000

th

12

RM2,000,000

RM900,000

13th

RM2,000,000

RM900,000

th

14

RM2,000,000

RM900,000

15th

RM2,000,000

RM900,000

th

16

RM2,000,000

RM900,000

17th

RM2,000,000

RM900,000

th

18

RM2,000,000

RM900,000

19th

RM2,000,000

RM900,000

RM17,000,000

RM29,700,000

th

20

Page | 14

Payment Period means each period from (and including) the date of issue of the Notes
(the Issue Date) to (but excluding) the first Payment Date and thereafter each period
from (and including) each Payment Date to (but excluding) the next following Payment
Date.
(xi)

Dates and periods for payment

Payments under the Notes will be made every 6 months (each date of payment,
Payment Date). The provisions in the Trust Deed setting out the cashflow
allocation methodology will include the following in respect of a Payment Date:

(xii)

(A)

the period in which the Available Income (as defined below) shall accrue to
be distributed on that Payment Date (Collection Period);

(B)

the relevant Payment Period; and

(C)

the date on which determinations are required to be made regarding the

amounts to be paid on that Payment Date (Determination Date).

Collection Account and Available Income

The Issuer will establish and maintain a Syariah compliant collection account (the
Collection Account) into which all Available Income (as defined below) will be
made. The Collection Account will be charged by the Issuer in favour of the Trustee
as security for payment due under the Notes and will be operated solely by the
Transaction Administrator.
Available Income means all amounts received by the Issuer after the Issue Date,
including without limitation, the Assets Income (as defined below) and any
Rescission Amounts paid into the Collection Account but excluding any amounts
received by the Issuer in respect of the Capital Expenditure Lease (as defined
below).

(xiii)

Capital Expenditure Item

Under the terms of the Lease Agreements, the Lessee may construct a capital
expenditure item on the Assets (Capital Expenditure Item) which does not include
replacements, improvements or other construction required as a result of normal
wear and tear arising from the use and occupation of the Assets. The Issuer will
pay for the construction of the Capital Expenditure Item and will lease it to the
Lessee under a lease agreement (the Capital Expenditure Lease).
The term of the Capital Expenditure Lease will be equal to the remaining term of the
Lease. The amount of the Capital Expenditure Lease will be equal to the cost of the
Capital Expenditure Item and will be payable in single payment due upon
commencement of the Capital Expenditure Lease. The Lessee may also choose to
advance all or part of the payment under the Capital Expenditure Lease to the
Issuer during construction of the Capital Expenditure Item.
The Issuer will establish and maintain a Syariah compliant Capital Expenditure
Account (the Capital Expenditure Account) into which all payments under the
Capital Expenditure Lease will be made. The Capital Expenditure Account will be
charged by the Issuer in favour of the Trustee as security for payment due under
the Notes. The Lessee will apply to the Trustee for the release of funds in the
Capital Expenditure Account for the purpose of completing the Capital Expenditure
Item.

Page | 15

(xiv)

Assets Income
Assets Income means all amounts received by the Issuer after the Issue Date in
connection with the Assets including:

(xv)

(A)

Lease Rental Payments received in respect of the Assets;

(B)

proceeds received from the sale of the Assets;

(C)

any amount received from the Originators as damages or in the nature of

an indemnity in respect of breach of any representation, warranty or
covenant in connection with the Assets; and

(D)

all other amounts (including, without limitation, insurance proceeds,

premium refunds, tax refunds) received by or on behalf of the Issuer in
respect of the Assets during the immediately preceding Collection Period.

Reserve Account
The Issuer shall establish a separate bank account which is Syariah compliant
entitled the Reserve Account into which it shall deposit, using proceeds from the
issuance of the Notes, an amount up to RM3.5 million (the Required Reserve
Amount). The Reserve Account will be charged by the Issuer in favour of the
Trustee as security for payment due under the Notes and will be operated solely by
the Transaction Administrator.
Withdrawals from the Reserve Account may be made under the circumstances
specifically provided in the payment waterfalls below.

(xvi)

Pre-Event of Default/Lease Default Waterfall

On each Payment Date falling prior to an Event of Default and provided that no
Lease Default has occurred, the Available Income must be applied to pay the
following amounts in the following order:
(A)

Rateably and on a pari passu basis:

(i)

any Taxes (as described below) and government charges payable

for the Collection Period immediately preceding that Payment Date;

(ii)

any amount of the Trustees fee due and owing on that Payment
Date;

(iii)

any amount of the Transaction Administrators fee due and owing

on that Payment Date;

(iv)

any amount of the Corporate Administrators fee due and owing on

that Payment Date;

(v)

any amount of the Paying Agents fee due and payable on that
Payment Date;

(vi)

any amount of the Rating Agencys fee due and payable on that
Payment Date; and

(vii)

any other expenses of the Issuer incurred during the Collection

Period immediately preceding that Payment Date (other than any
payment obligation incurred pursuant to any of the Sale and
Purchase Agreements or the Lease Agreements),

Page | 16

approved by the Trustee (items in paragraph (i) to (vii) above are

collectively referred to as the Expense Amounts)
(B)

Secondary Class A Notes due on that Payment Date;

(C)

Secondary Class B Notes due on that Payment Date;

(D)

redemption of the Primary Class A Notes based on their amortisation

schedule in respect of that Payment Date and in respect of any earlier
Payment Date. If the Assets have been sold then all available funds will be
used to repay the Primary Class A Notes until their balance is reduced to
zero;

(E)

redemption of the Primary Class B Notes based on their amortisation

schedule in respect of that Payment Date and in respect of any earlier
Payment Date. If the Assets have been sold then all available funds will be
used to repay the Primary Class B Notes until their balance is reduced to
zero;

(F)

any amount required to replenish the Reserve Account to the Required

Reserve Amount;

(G)

any payment obligation incurred pursuant to any of the Sale and Purchase
Agreements or the Lease Agreement. Where there is more than one
payment obligation, payments to rank pari passu and rateably;

(H)

at the discretion of the Trustee, redemption of the Primary Class A Notes

until their balance is reduced to zero and then redemption of the Primary
Class B Notes until their balance is reduced to zero. All such payment shall
be in denominations of RM1,000,000.00;

(I)

to reduce the outstanding Primary Subordinated Notes to zero.

(J)

to reduce the outstanding Secondary Subordinated Notes to zero; and

Tax(es) includes any present or future tax, levy, impost, duty, charge, fee,
deduction or withholding in the nature of a tax and whatever called, by whomsoever,
on whomsoever and wherever imposed, levied, collected, withheld or assessed.
In the event of any shortfall, amounts in the Reserve Account may be used for the
payment of items (A) to (E) on any Payment Date, and once all amount owing under
the Senior Notes have been paid in full and the balance under the Primary Senior
Notes has been reduced to zero, then the amounts in the Reserve Account may
also be used for items (G), (I) and (J).
(xvii)

Rescission Waterfall
If Sale and Purchase Agreements are rescinded and after receipt of the Rescission
Amounts by the Issuer, the Available Income and moneys in the Reserve Account
will be applied to pay the following amounts in the following order:
(A)

Taxes and government charges owed by the Issuer, if any;

(B)

rateably and on a pari passu basis amounts owing or payable under the
Transaction Documents to indemnify the Trustee or any receiver acting
under the Transaction Documents against all loss and liability incurred by
the Trustee or, as the case may be, any receiver acting under the
Transaction Documents, other than such receivers remuneration;

(C)

rateably and on a pari passu basis any fees and liabilities, losses, costs,
claims, expenses, actions, damages, demands, charges and stamp duties
due to the Transaction Administrator, the Trustee, the Paying Agent, the
Corporate Administrator, the Rating Agency and any receivers
remuneration;

(D)

any other expenses of the Issuer which are owing;

Page | 17

(E)

any Secondary Class A Notes due and unpaid and the Yield Maintenance
Charge in respect of the Class A Notes;

(F)

to reduce the outstanding Primary Class A Notes to zero;

(G)

any Secondary Class B Notes due and unpaid and the Yield Maintenance
Charge in respect of the Class B Notes;

(H)

to reduce the outstanding Primary Class B Notes to zero;

(I)

any payment obligation incurred pursuant to the Sale and Purchase

Agreements or the Lease Agreement. Where there is more than one
payment obligation, payments to rank pari passu and rateably;

(J)

to reduce the outstanding Primary Subordinated Notes to zero; and

(K)

to reduce the outstanding Secondary Subordinated Notes to zero.

Yield Maintenance Charge means an amount being the greater of:

(xviii)

(A)

0.5% of the outstanding amount under the Primary Senior Notes or a

particular class of Primary Senior Notes, as the case may be; or

(B)

the excess, if any, of (i) the sum of the present values of all remaining
scheduled payments of the Senior Notes or a particular class of Senior
Notes, discounted at the rate which equals the then current prevailing yield
of Malaysian Government Securities then in issue with a term closest to, but
not exceeding, that remaining on the Senior Notes or a particular class of
Senior Notes on the next Payment Date following a rescission declaration or
the receipt of the purchase price for the Assets pursuant to the exercise of
the Purchase Option, as the case may be, over (ii) the outstanding amount
under the Primary Senior Notes or a particular class of Primary Senior
Notes, as the case may be.

Post Lease Default Waterfall

After the occurrence of a Lease Default, the Available Income and moneys in the
Reserve Account must be applied to pay the following amounts in the following
order:
(A)

Taxes and government charges owed by the Issuer, if any;

(B)

rateably and on a pari basis amounts owing or payable under the

Transaction Documents to indemnify the Trustee or any receiver acting
under the Transaction Documents against all loss and liability incurred by
the Trustee or, as the case may be, receiver acting under the Transaction
Documents, other than receivers remuneration;

(C)

rateably and on a pari passu basis any fees and liabilities, losses, costs,
claims, expenses, actions, damages, demands, charges and stamp duties
due to the Transaction Administrator, the Trustee, the Paying Agent, the
Corporate Administrator, the Rating Agency and any receiver;

(D)

any other expenses of the Issuer which are owing;

(E)

any Secondary Class A Notes due and unpaid;

(F)

any Secondary Class B Notes due and unpaid;

(G)

to reduce the outstanding Primary Class A Notes to zero;

(H)

to reduce the outstanding Primary Class B Notes to zero;

Page | 18

(xix)

(I)

any payment obligation incurred pursuant to the Sale and Purchase

Agreements or the Lease Agreement. Where there is more than one
payment obligation, payments to rank pari passu and rateably;

(J)

to reduce the outstanding Primary Subordinated Notes to zero; and

(K)

to reduce the outstanding Secondary Subordinated Notes to zero.

Post Event of Default Waterfall

After the occurrence of an Event of Default and enforcement of the Secured
Property, the Trustee must apply all proceeds of the Secured Property in the
following order of priority:

(xx)

(A)

to pay Taxes and government charges owed by the Issuer, if any;

(B)

to pay rateably and on a pari passu basis amounts owing or payable under
the Transaction Documents to indemnify the Trustee or any receiver acting
under the Transaction Documents against all loss and liability incurred by
the Trustee or, as the case may be, receiver acting under the Transaction
Documents, other than such receivers remuneration;

(C)

to pay rateably and on a pari passu basis any fees and liabilities, losses,
costs, claims, expenses, actions, damages, demands, charges and stamp
duties due to the Transaction Administrator, the Trustee, the Paying Agent,
the Corporate Administrator, the Rating Agency and any receivers
remuneration;

(D)

to pay any other expenses of the Issuer which are owing, subject to the
approval of the Trustee;

(E)

any Secondary Class A Notes due and unpaid;

(F)

to reduce the outstanding Primary Class A Notes to zero;

(G)

any Secondary Class B Notes due and unpaid;

(H)

to reduce the outstanding Primary Class B Notes to zero;

(I)

any payment obligation incurred pursuant to the Sale and Purchase

Agreements or the Lease Agreement. Where there is more than one
payment obligation, payments to rank pari passu and rateably;

(J)

to reduce the outstanding Primary Subordinated Notes to zero; and

(K)

to reduce the outstanding Secondary Subordinated Notes to zero.

Compensation
If the Issuer fails to pay any amount under the Notes, as agreed liquidated
damages, the Issuer shall pay a compensation (Tawidh) on the amount from the
date of default up to the date of actual payment at the rate and in the manner
prescribed by the Securities Commissions Syariah Advisory Council or such other
relevant authority.

(xxi)

Transaction Documents
The transaction documents (the Transaction Documents) will include, but not be
limited, to the following:
(A)

Sale and Purchase Agreements (and associated memoranda of transfer

(Form 14A) under the National Land Code 1965 (NLC));

Page | 19

(xxii)

(B)

Lease Agreement (and associated lease of land (Form 15A) under the
NLC);

(C)

Lease Guarantee and Purchase Option Agreement;

(D)

Trust Deed;

(E)

Security Deed and associated land charge documents;

(F)

Corporate Administration Agreement;

(G)

Class A Asset Purchase Agreement and Class A Asset Sale Agreement;

(H)

Class B Asset Purchase Agreement and Class B Asset Sale Agreement;

(I)

Class C Asset Purchase Agreement and Class C Asset Sale Agreement;

(J)

Subscription Agreement;

(K)

Depository and Paying Agency Agreement; and

(L)

Declaration of Trust.

Governing law
The governing law shall be the law of Malaysia.

(xxiii)

Early Redemption and Exercise of Purchase Option

Notwithstanding any provisions to the contrary, pursuant to the noteholders
resolutions dated 24 August 2009 (Noteholders Resolutions):
(A)

Exercise of Purchase Option

The Lease Guarantor may exercise the Purchase Option:
(1)

by giving the Issuer (with a copy to the Trustee) notice to exercise

the Purchase Option no later than 5 business days from the date of
the Noteholders Resolutions, and in any event no later than 28
August 2009; and

(2)

at the purchase price of RM 147,500,000.00 (Purchase Option

Price). The Purchase Option Price shall comprise of cash
consideration of at least RM80,512,470, and the remaining shall be
set-off against the Subordinated Notes and any other payments
under the Subordinated Notes.

Provided That the cash proceeds from the sale pursuant to the exercise of
the Purchase Option (Sale) together with the balance in the Reserve
Account (which shall at all times be no less than RM3,106,750) and excess
amount in the Collection Account will be applied for the purpose of the early
redemption referred to in (B) below in accordance with the provisions
therein.
(B)

Early Redemption
The Issuer will apply all or part of the cash proceeds from the Sale to
redeem (Early Redemption) all outstanding Class A Primary Notes, Class
A Secondary Notes, Class B Primary Notes and Class B Secondary Notes
(Outstanding Senior Notes) at a buyback amount which is set out in detail

Page | 20

in the Noteholders Resolutions (the Total Redemption Amount) with the

conditions that:
(1)

at least 5 business days notice of the Early Redemption is given by

the Issuer to the Facility Agent and the Trustee; and

(2)

the date of the Early Redemption (Early Redemption Date) shall

be no later than 1 December 2009.

For the purpose of the Early Redemption, all cash proceeds from the Sale
shall be deposited into the Collection Account immediately upon its receipt
by the Issuer, and on the Early Redemption Date, the balance in the
Reserve Account will be transferred to the Collection Account and the
aggregate balance in the Collection Account will be applied to pay for the
following in the following order of priority:

(C)

(1)

first, rateably and on a pari passu basis towards payment of the

Total Redemption Amount in respect of the Class A Notes;

(2)

second, rateably and on a pari passu basis towards payment of the

Total Redemption Amount in respect of the Class B Notes;

(3)

third, rateably and on a pari passu basis:

(a)

any Taxes and other government charges payable by the

Issuer for the period between the preceding Payment Date
and the date of the Early Redemption (Relevant Period);

(b)

all fees, costs, charges and expenses due and payable to

the Trustee, the Transaction Administrator, the Corporate
Administrator, the Depository and Paying Agent and the
Rating Agency on the date of the Early Redemption; and

(c)

any other expenses of the Issuer incurred during the

Relevant Period (other than that described in paragraph (4)
below) approved by the Trustee;

(4)

fourth, rateably and on a pari passu basis towards any payment of

any obligations incurred by the Issuer pursuant to any of the Lease
Agreement; and

(5)

fifth, rateably and on a pari passu basis towards any payment of the
Secondary Subordinated Notes until reduced to zero.

Deferment of Lease Payment and Redemptions

(1)

Should the Purchase Option referred to in (A) above is exercised:

(a)

the Issuer shall defer the payments by the Lessees of the

Lease Rental Payment which fall due on 1 September 2009
(Relevant Rent Amount); and

(b)

the Issuer shall defer the redemptions of RM2,000,000.00

nominal value for Class A Primary Notes and
RM900,000.00 nominal value for Class B Primary Notes
which are scheduled on 8 September 2009 (collectively, the
Relevant Scheduled Redemption); and

Page | 21

(2)

Should the Early Redemption as mentioned in (B) above do not

occur:
(a)

the Relevant Rent Amount together with an additional sum

of RM150,000.00 will become payable by the Lessees to
the Issuer and be deposited into the Collection Account no
later than 1 March 2010; and

(b)

the Relevant Scheduled Redemption will be made by the

Issuer on the next Payment Date of 8 March 2010 and the
total amount payable by the Issuer on 8 March 2010 is as
set out in the Noteholders Resolutions.

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