Draft dated 11/02/01



Submitting Merchant Bank : Alliance Merchant Bank Berhad

Company name : Kwantas Corporation Berhad

Stock name : KWANTAS

Stock code : 6572

Contact person : Leong Choon Meng / Puar Chin Jong

Designation : Director / Senior Manager

E-mail : slwong@.my

KWANTAS CORPORATION BERHAD (“KWANTAS” OR “COMPANY”)

• Proposed acquisition of 250,000 ordinary shares of RM1.00 each in Kwantas Land Development Sdn Bhd (“KLD”) representing the entire issued and fully paid-up share capital of KLD for a total purchase consideration of RM86,936,588 to be fully satisfied by the issuance of 16,718,574 new ordinary shares of RM1.00 each in Kwantas (“Kwantas Shares”) at an issue price of RM5.20 per Kwantas Share (“Proposed KLD Acquisition”); and

• Proposed acquisition of 2 ordinary shares of RM1.00 each in Kwantas Oleo Sdn Bhd (“KOSB”) representing the entire issued and fully paid-up share capital of KOSB for a total purchase consideration of RM3,713,368 to be fully satisfied by the issuance of 714,108 new Kwantas Shares at an issue price of RM5.20 per Kwantas Share (“Proposed KOSB Acquisition”).

(collectively referred to as the “Proposed Acquisitions”)

1. INTRODUCTION

On behalf of the Board of Directors of Kwantas, Alliance Merchant Bank Berhad wishes to announce that on [date]29 November 2004, the Company had entered into the following conditional share sale agreements (“SSAs”) to acquire the entire equity interest in the companies named hereunder which are involved in the operation of oil palm plantations:

(i) Conditional SSA with Kwan Ngen Chung and Kwan Ngen Wah (“the Vendors”) for the acquisition of 100% equity interest in KLD comprising 250,000 ordinary shares of RM1.00 each in KLD (“KLD Shares”) for a total purchase consideration of RM86,936,588 to be fully satisfied by the issuance of 16,718,574 new Kwantas Shares at an issue price of RM5.20 per Kwantas Share; and

ii) Conditional SSA with the Vendors for the acquisition of 100% equity interest in KOSB comprising 2 ordinary shares of RM1.00 each in KOSB (“KOSB Shares”) for a total purchase consideration of RM3,713,368 to be fully satisfied by the issuance of 714,108 new Kwantas Shares at an issue price of RM5.20 per Kwantas Share.

KLD and KOSB are hereinafter collectively referred to as the “Acquiree Companies” and the new Kwantas Shares to be issued pursuant to the Proposed Acquisitions are hereinafter referred to as “Consideration Shares”.

The Proposed KLD Acquisition and the Proposed KOSB Acquisition are not inter-conditional on each other.

2. DETAILS OF THE PROPOSED ACQUISITIONS

1. Information On The Acquiree Companies To Be Acquired

a) KLD

KLD was incorporated in Malaysia on 11 October 1990 under the Companies Act, 1965 as a private limited company. The present authorised share capital of the company is RM500,000 comprising of 500,000 KLD Shares, of which 250,000 KLD Shares have been issued and fully paid-up.

The principal activity of KLD is the operation of oil palm plantations.

KLD is the registered lessee in respect of 1,040 pieces of land, some of which are located in the District of Kinabatangan while the other lands are located in the District of Lahad Datu. The leases are for a period of 99 years and shall expire on 19 September 2099. KLD is also the lessee in respect of 30 pieces of land, some of which are located in the District of Kinabatangan while the other lands are located in the District of Lahad Datu and the said leases are pending registration at the relevant Land Registry. The leases are for a period of 30 years and shall expire on 24 June 2034.

Further, KLD is the registered owner in respect of 40 pieces of land, some of which are located in the District of Kinabatangan while the other lands are located in the District of Lahad Datu. The said 40 pieces of land are of a tenure of 99 years and shall expire between 31 December 2069 and 31 December 2098. KLD is also the beneficial owner in respect of 13 pieces of land located in the District of Kinabatangan and the said lands are pending registration at the relevant Land Registry. The said 13 pieces of land are of a tenure of 99 years and shall expire between 31 December 2079 and 31 December 2100.

All the said 1,123 pieces of land are hereinafter collectively referred to as “KLD Lands”.

The KLD Lands comprise of seven (7) oil palm estates with a total land area of approximately 6,478.61 hectares (“Ha”) and three (3) agricultural holdings with a total land area of 808.38 Ha. The oil palm estates are known as Ladang Pintasan 4, Ladang Pintasan 5, Ladang Pintasan 6, Ladang Pintasan 7, Ladang Sg Koyah, Ladang Haranky 2 and Km 28 & Km 30 of Jalan Lahad Datu, Sandakan (“KLD Oil Palm Estates”). The three (3) agricultural holdings are known as Koyah Lands, Ladang Pintasan 9 and Km 14.5 of Jalan Lahad Datu, Sandakan (“KLD Agricultural Lands”).

The year of planting and hectarage of the KLD Lands are as follows:

| |Year of Planting |Area (Ha) |

|Oil palm (matured) |1993-1999 |3,528.21 |

|Oil palm (immature) |2000-2004 |1,619.96 |

|Total immature and mature | |5,148.17 |

|Planting reserves* | |1,038.87 |

|Others ^ | |627.94 |

|Overplanting on road reserves | |(336.37) |

|Total titled area for oil palm estates | |6,478.61 |

|Agriculture lands | |808.38 |

|Total titled area for KLD Lands | |7,286.99 |

* Mainly consisting of building sites, roads and streams.

^ Mainly consisting of steep areas, swamps and rocky sites.

The details of crop production since the commencement of crop production in 2001 are as follows:

| |(------------------Financial years ended 30 June ---------------( |

| |2001 |2002 |2003 |2004 |

| | | | | |

|Fresh fruit bunches (mt) |26,594.59 |33,618.89 |52,303.66 |63,114.48 |

| | | | | |

The financial information on KLD for the past five (5) financial years ended 30 June 2004 are as follows:

| |(------------------Financial years ended 30 June ---------------( |

| |2000 |2001 |2002 |2003 |2004 |

| |RM’000 |RM’000 |RM’000 |RM’000 |RM’000 |

|Turnover |3,809 |3,329 |3,455 |12,925 |15,193 |

|Profit/Loss Before Tax |1,829 |394.5 |(1,577) |4,790 |5,970 |

|(“PBT”)/(“LBT”) | | | | | |

|Taxation |- |- | 465 |(1,369) |(1,723) |

|Profit/Loss After Tax |1,829 |394.5 |(1,112) |3,421 |4,247 |

|(“PAT”)/(“LAT”) | | | | | |

|Earnings/Loss Per Share (RM) |7.31 |1.58 |(4.45) |13.68 |16.99 |

|Share Capital |250 |250 |250 |250 |250 |

|Reserves |10,377 |10,772 |7,964 |11,385 |86,687 |

|Shareholders’ Funds |10,627 |11,022 |8,214 |11,635 |86,937 |

|Net Tangible Assets (“NTA”) per |42.51 |44.09 |37.72 |46.54 |347.75 |

|Share (RM) | | | | | |

b) KOSB

KOSB was incorporated in Malaysia on 12 August 1985 under the Companies Act, 1965 as a private limited company. The present authorised share capital of the company is RM25,000 comprising of 25,000 KOSB Shares, of which 2 KOSB Shares have been issued and fully paid-up.

The principal activity of KOSB is the operation of an oil palm plantation.

KOSB is the registered owner of a piece of land in the District of Kinabatangan which is of a tenure of 99 years and shall expire on 31 December 2097. The said land comprises of Ladang Bikasjaya with a total land area of 202.3 Ha.

The year of planting and hectarage of Ladang Bikasjaya are as follows:

| |Year of Planting |Area (Ha) |

| | | |

|Oil palm (matured) |1998 |129.50 |

|Oil palm (immature) |2000-2003 |10.90 |

|Total immature and mature | |140.40 |

|Planting reserves | |- |

|Others ^ | |61.90 |

|Total titled area | |202.30 |

^ Mainly consisting of estate roads, buildings and a reservoir.

The details of crop production since the commencement of crop production in 2003 are as follows:

| |(---Financial years ended 30 June ---( |

| |2003 |2004 |

| | | |

|Fresh fruit bunches (mt) |1,947.55 |2,402.19 |

| | | |

The financial information on KOSB for the past five (5) financial years ended 30 June 2004 are as follows:

| |(---------------Financial years ended 30 June --------------( |

| |2000 |2001 |2002 |2003 |2004 |

| |RM |RM |RM |RM |RM |

|Turnover |- |- |- |289,437 |531,447 |

|PBT/LBT |(1,909) |(7,514) |(1,806) |44,541 |272,942 |

|Taxation |- |- |478 |(9,782) |(79,193) |

|PAT/LAT |(1,909) |(7,514) |(1,328) |34,759 |193,749 |

|Earnings / (Loss) Per Share |(955) |(3,757) |(664) |17,380 |96,875 |

|Share Capital |2 |2 |2 |2 |2 |

|Reserves |19,227 |11,713 |12,826 |47,585 |3,713,366 |

|Shareholders’ Funds |19,229 |11,715 |12,828 |47,587 |3,713,368 |

|NTA per Share (RM) |9,614.5 |5,857.5 |4,954.5 |23,793.5 |1,856,684 |

Further information on the directors and substantial shareholders’ shareholdings in the Acquiree Companies are as follows:

(a) KLD

The directors and substantial shareholders of KLD and their respective shareholdings therein as at 30 June 2004 are follows:-

| |Direct |Indirect |

|Directors / Substantial Shareholders |No. of Shares held in |Equity interest|No. of Shares held in |Equity |

| |KLD |(%) |KLD |interest |

| | | | |(%) |

|Kwan Ngen Chung |125,000 |50.0 |125,000* |50.0 |

|Kwan Ngen Wah |125,000 |50.0 |125,000* |50.0 |

Note:

* Kwan Ngen Chung and Kwan Ngen Wah are brothers. Hence they are each deemed interested by virtue of the other’s interest in KLD in accordance to Section 6A (4) of the Companies Act, 1965.

(b) KOSB

The directors and substantial shareholders of KOSB and their respective shareholdings therein as at 30 June 2004 are follows:-

| |Direct |Indirect |

|Directors / Substantial Shareholders |No. of Shares held |Equity interest|No. of Shares held |Equity |

| |in KOSB |(%) |in KOSB |interest |

| | | | |(%) |

|Kwan Ngen Chung |1 |50.0 |1* |50.0 |

|Kwan Chiew Giok |- |- |2^ |100.0 |

|Substantial Shareholder | | | | |

|Kwan Ngen Wah |1 |50.0 |1* |50.0 |

Note:

* Kwan Ngen Chung and Kwan Ngen Wah are brothers. Hence they are each deemed interested by virtue of the other’s interest in KOSB in accordance to Section 6A (4) of the Companies Act, 1965.

^ Deemed interested via the direct interests of her brothers, Kwan Ngen Chung and Kwan Ngen Wah, in accordance to Section 6A (4) of the Companies Act, 1965.

2. Basis Of Arriving At Purchase Consideration

The purchase consideration for the Proposed Acquisitions is set out below:

(a) KLD

| | |Equity interest|Purchase Consideration |Consideration Shares to be |

|Vendors |No. of shares held in |(% ) |RM |issued |

| |KLD | | | |

|Kwan Ngen Chung |125,000 |50.0 |43,468,294 |8,359,287* |

| | | | | |

|Kwan Ngen Wah |125,000 |50.0 |43,468,294 |8,359,287* |

| | | | | |

|Total |250,000 |100.0 |86,936,588 |16,718,574 |

| | | | | |

Notes:

* 148,461 of the Consideration Shares from each of the Vendors shall be issued to the Nominee Account (as defined in Section 2.5 herein) to be held in trust for the Vendors as security for the payment obligation of the Vendors for the Suit (as defined in Section 2.5 herein).

The purchase consideration of RM86,936,588 for the Proposed KLD Acquisition is to be satisfied by the issuance of 16,718,574 new Kwantas Shares at an issue price of RM5.20 per Kwantas Share.

The purchase consideration of RM86,936,588 for the Proposed KLD Acquisition was arrived at on a “willing-buyer-willing-seller” basis after taking into consideration the audited net tangible assets (“NTA”) of KLD as at 30 June 2004 of RM86,936,588..

The audited NTA of KLD incorporates was arrived at by taking into account the market valuation of the KLD Lands as at 30 June 2004 as valued by Messrs C H Williams Talhar & Wong, an independent firm of professional valuers of RM128,710,000..

The Comparison Method of Valuation and the Discounted Cashflow/Investment Method of Valuation were adopted by C H Williams Talhar & Wong in arriving at the market values of the KLD Oil Palm Estates while the Comparison Method of Valuation was adopted in arriving at the market values of the KLD Agricultural Lands.

The audited NTA of KLD is set out as follows:

| | |

|Market value of the KLD Lands |128,710,000 |

| | |

|Audited NTA as at 30 June 2004 |86,936,588 |

|Total Consideration |86,936,588 |

|To be settled by: | |

|Issuance of Consideration Shares |16,718,574 |

| | |

(b) KOSB

| | |Equity interest|Purchase Consideration |Consideration Shares to be |

|Vendors |No. of shares held in |(% ) |(RM) |issued |

| |KOSB | | | |

|Kwan Ngen Chung |1 |50.0 |1,856,684 |357,055054 |

| | | | | |

|Kwan Ngen Wah |1 |50.0 |1,856,684 |357,055054 |

| | | | | |

|Total |2 |100.0 |3,713,368 |714,110108 |

| | | | | |

The purchase consideration of RM3,713,368 for the Proposed KOSB Acquisition is to be satisfied by the issuance of 714,108 new Kwantas Shares at an issue price of RM5.20 per Kwantas Share.

The purchase consideration of RM3,713,368 for the Proposed KOSB Acquisition was arrived at on a “willing-buyer-willing-seller” basis after taking into consideration the audited NTA of KOSB as at 30 June 2004 of RM3,713,368..

The audited NTA of KOSB incorporates was arrived at by taking into account the market valuation of Ladang Bikasjaya as at 30 June 2004 as valued by Messrs C H Williams Talhar & Wong, an independent firm of professional valuers of RM5,090,000..

The Comparison Method of Valuation and the Discounted Cashflow/Investment Method of Valuation were adopted by C H Williams Talhar & Wong in arriving at the market value of Ladang Bikasjaya.

The audited NTA of KOSB is set out as follows:

| | |

|Market value of Ladang Bikasjaya |5,090,000 |

| | |

|Audited NTA as at 30 June 2004 |3,713,368 |

|Total Consideration |3,713,368 |

|To be settled by: | |

|Issuance of Consideration Shares |714,108 |

| | |

3. Basis Of Arriving At The Issue Price Of The Consideration Shares

The proposed issue price of RM5.20 per Kwantas Share is determined after taking into account the five (5)-day weighted average market price of Kwantas Shares as at [2226] November 2004. The proposed issue price of RM5.20 per Kwantas Share represents a premium of RM[0.08] or [1.56]% over the five (5)-day weighted average market price of Kwantas Shares as at [18]26 November 2004 of RM[5.12].

The proposed issue price of RM5.20 also represents a premium of approximately RM2.72 or approximately 109.7% over the audited NTA value per share of Kwantas and its subsidiaries (“Kwantas Group”) as at 30 June 2004 of RM2.48.

The Consideration Shares to be issued pursuant to the Proposed Acquisitions shall upon allotment and issue, rank pari passu in all respects with the existing shares of the Company but shall not be entitled to any dividends, rights and/or any distributions which may be declared or paid before the allotment of new Kwantas Shares pursuant to the Proposed Acquisitions.

Upon completion of the Proposed Acquisitions, the Consideration Shares issued pursuant to the Proposed Acquisitions will be listed and quoted on the Main Board of Bursa Malaysia Securities Berhad (“Securities Exchange”).

4. Shares Acquired Free From Encumbrances

The issued and paid-up share capital of each of the Acquiree Companies comprised in the Proposed Acquisitions shall be acquired free from all charges, liens and other encumbrances and with all rights thereto.

Apart from the existing liabilities of the respective Acquiree Companies, Kwantas is not expected to assume any other liabilities pursuant to the Proposed Acquisitions.

2.5 Salient Terms of the SSAs

The salient terms of the SSAs are as follows:

|(a) |Proposed KLD Acquisition |

| |Date |[ ]29 November 2004 |

| |Parties |Vendors : Kwan Ngen Wah and Kwan Ngen Chung |

| | | |

| | |Purchaser : Kwantas |

| |Subject Matter |The Purchaser entered into a conditional share sale agreement with |

| | |the Vendors for the proposed acquisition of 250,000 ordinary shares |

| | |of RM1.00 each in KLD representing the entire equity interest thereof|

| | |(“Sale Shares”) for a purchase consideration of RM86,936,588 to be |

| | |satisfied by the allotment and issue of 16,718,574 new ordinary |

| | |shares of RM1.00 each in the capital of the Purchaser (“KLD |

| | |Consideration Shares”) at an issue price of RM5.20 per KLD |

| | |Consideration Share. |

| |Purchase Consideration |RM86,936,588 |

| |Rights Attached to Sale Shares |The Sale Shares will be acquired free from all charges liens and |

| | |other encumbrances and with all rights thereto from the Completion |

| | |Date including but without limitation all dividends allotments rights|

| | |and/or other distributions declared paid or made in respect thereof |

| | |as from the Completion Date. |

| |Issue Price of KLD Consideration |RM5.20 |

| |Shares | |

| |Rights Attached to KLD |Upon issue and allotment, the KLD Consideration Shares shall rank |

| |Consideration Shares |pari passu in all respects with the existing shares in the Purchaser |

| | |but shall not be entitled to any dividends, rights and/or any |

| | |distributions which may be declared or paid by the Purchaser prior to|

| | |the allotment thereof. |

| |Conditions Precedent |The sale and purchase is conditional upon the following being |

| | |obtained on or before the Stop Date :– |

| | |approval or non-objection of the SC for the acquisition; |

| | |approval or non-objection of the FIC for the acquisition; |

| | |approval in principle of Securities Exchange for the listing and |

| | |quotation of the new shares of Kwantas to be issued pursuant to the |

| | |Proposed KLD Acquisition; and |

| | |approval of the shareholders of Kwantas. |

| |Stop Date |The date falling six (6) months from the date of the SSA or such |

| | |later date as the parties thereto may mutually agree in writing. |

| |Completion Date |A date to be agreed between the parties but not later than thirty |

| | |(30) days after the date on which the last of the conditions |

| | |precedent has been fulfilled. |

| |Affected Lands |Approximately 300 acres (121.41 Ha) of the KLD Lands (“Affected |

| | |Lands”) are subject of a claim filed in the High Court of in Sabah & |

| | |Sarawak at Sandakan in which the plaintiff thereto claims against the|

| | |Vendors for inter alia a declaration that the plaintiff is the |

| | |beneficial and legal ownership of the Affected Lands (“the Suit”). |

| | |The Vendors agree to pay to the Company damages and/or the agreed |

| | |value of the Affected Lands in the event the outcome of the said |

| | |claim is against the Company. The Vendors also agree to 296,922 of |

| | |the KLD Consideration Shares shall to be issued into an nominee |

| | |account opened and maintained by a nominee, to be agreed upon between|

| | |the Vendors and the Company (“the Nominee Account”), to be held in |

| | |trust for the Vendors as security for the payment obligation of the |

| | |Vendors. |

| | | |

|(b) |Proposed KOSB Acquisition |

| |Date |[ ]29 November 2004 |

| |Parties |Vendors : Kwan Ngen Wah and Kwan Ngen Chung |

| | | |

| | |Purchaser : Kwantas |

| |Subject Matter |The Purchaser entered into a conditional share sale agreement with |

| | |the Vendors for the proposed acquisition of 2 ordinary shares of |

| | |RM1.00 each in KOSB representing the entire equity interest thereof |

| | |(“Sale Shares”) for a purchase consideration of RM3,713,368 to be |

| | |satisfied by the allotment and issue of 714,108 new ordinary shares |

| | |of RM1.00 each in the capital of the Purchaser (“KOSB Consideration |

| | |Shares”) at an issue price of RM5.20 per Consideration Share. |

| |Purchase Consideration |RM3,713,368 |

| |Rights Attached to Sale Shares |The Sale Shares will be acquired free from all charges liens and |

| | |other encumbrances and with all rights thereto from the Completion |

| | |Date including but without limitation all dividends allotments rights|

| | |and/or other distributions declared paid or made in respect thereof |

| | |as from the Completion Date . |

| |Issue Price of KOSB Consideration |RM5.20 |

| |Shares | |

| |Rights Attached to KOSB |Upon issue and allotment, the KOSB Consideration Shares shall rank |

| |Consideration Shares |pari passu in all respects with the existing shares in the Purchaser |

| | |but shall not be entitled to any dividends, rights and/or any |

| | |distributions which may be declared or paid by the Purchaser prior to|

| | |the allotment thereof. |

| |Conditions Precedent |The sale and purchase is conditional upon the following being |

| | |obtained on or before the Stop Date :– |

| | |approval or non-objection of the SC for the acquisition; |

| | |approval or non-objection of the FIC for the acquisition; |

| | |approval in principle of Securities Exchange for the listing and |

| | |quotation of the new shares of Kwantas to be issued pursuant to the |

| | |Proposed KOSB Acquisition; and |

| | |approval of the shareholders of Kwantas. |

| |Stop Date |The date falling six (6) months from the date of the SSA or such |

| | |later date as the parties thereto may mutually agree in writing. |

| |Completion Date |A date to be agreed between the parties but not later than thirty |

| | |(30) days after the date on which the last of the conditions |

| | |precedent has been fulfilled. |

2.6 Original cost of investment

Kwan Ngen Chung and Kwan Ngen Wah acquired the Acquiree Companies as follows:

i. KLD

| | |Cost of investment | |

| |Date of investment |(RM) |No. of shares acquired / |

|Vendor | | |subscribed |

|Kwan Ngen Chung |23 October 1990 |1 |1 |

| |23 April 1998 |124,999 |124,999 |

| | | | |

|Kwan Ngen Wah |23 October 1990 |1 |1 |

| |23 April 1998 |124,999 |124,999 |

| | | | |

ii. KOSB

| | |Cost of investment | |

| |Date of investment |(RM) |No. of shares acquired / |

|Vendor | | |subscribed |

|Kwan Ngen Chung |18 January 1989 |1 |1 |

| | | | |

|Kwan Ngen Wah |18 January 1989 |1 |1 |

| | | | |

3. Brief Information on the Estates

The Estates are located in the State of Sabah and are adjacent or within the vicinity of the existing oil palm estates of the Kwantas Group. 69.2% of the oil palm trees on the Estates are matured and aged between 5 to 11 years.

The proforma profile and past four (4)-year crop production of the Estates are as follows:

| | |Company | |

| |Year of Planting |KLD |KOSB |Total Area (Ha) |

|Oil palm (matured) |1993 - 1999 |3,528.21 |129.50 |3,657.71 |

|Oil palm (immature) |2000 - 2004 |1,619.96 |10.90 |1,630.86 |

|Planted | |5,148.17 |140.40 |5,288.57 |

|Planting reserves | |1,038.87 |- |1,038.87 |

|Others | |627.94 |61.90 |689.84 |

|Overplanting on road reserves | | | | |

| | |(336.37) |- |(336.37) |

| | |6,478.61 |202.30 |6,680.91 |

|Agricultural lands | |808.38 |- |808.38 |

|Total | |7,286.99 |202.30 |7489.29 |

The details of the proforma crop production since the commencement of crop production in 2001 are as follows:

| |(---------------Financial years ended 30 June ---------------( |

|Fresh fruit bunches (mt) |2001 |2002 |2003 |2004 |

| | | | | |

|KLD |26,594.59 |33,618.89 |52,303.66 |63,114.48 |

|KOSB |- |- |1,947.55 |2,402.19 |

|Total |26,594.59 |33,618.89 |54,251.21 |65,516.67 |

| | | | | |

The salient features of the Estates held by the Acquiree Companies are as follows:

i) KLD

|KLD Oil Palm Estates |

| |Land Area |No. of Titles |Tenure / Expiry Date of | |Encumbrances |

| |(Ha) | |Lease |District | |

|Ladang Pintasan 4 |1,597.57 |2 Country Leases; |99 years / Range from 31|Kinabatangan |2 Country Leases and |

| | |316 Native Titles |December 2093 to 19 | |246 Native Titles are |

| | | |September 2099 | |charged to The |

| | | | | |Hongkong and Shanghai |

| | | | | |Banking Corporation |

| | | | | |Limited. |

| | | | | |The remaining titles |

| | | | | |are unencumbered. |

| | | | | | |

| |Land Area |No. of Titles |Tenure / Expiry Date of | |Encumbrances |

| |(Ha) | |Lease |District | |

|Ladang Pintasan 5 |1,626.18 |16 Country Leases; |99 years / Range from 24|Kinabatangan |3 Country Leases and |

| | |134 Native Titles |June 2034 to 19 | |99 Native Titles are |

| | | |September 2099 | |charged to The |

| | | | | |Hongkong and Shanghai |

| | | | | |Banking Corporation |

| | | | | |Limited. |

| | | | | |The remaining titles |

| | | | | |are unencumbered. |

| | | | | | |

|Ladang Pintasan 6 |878.93 |1 Country Lease; |Range from 30-99 years /|Kinabatangan |Nil |

| | |171 Native Titles |Range from 24 June 2034 | | |

| | | |to 19 September 2099 | | |

| | | | | | |

|Ladang Pintasan 7 |2,079.57 |21 Country Leases; |99 years / Range from 24|Kinabatangan |6 Country Leases and |

| | |293 Native Titles |June 2034 to 31 December| |289 Native Titles are |

| | | |2100 | |charged to The |

| | | | | |Hongkong and Shanghai |

| | | | | |Banking Corporation |

| | | | | |Limited. |

| | | | | |The remaining titles |

| | | | | |are unencumbered. |

| | | | | | |

|Ladang Sg Koyah |83.42 |5 Country Leases |99 years / Range from 31|Kinabatangan |Nil |

| | | |December 2083 to 31 | | |

| | | |December 2096 | | |

| | | | | | |

|Ladang Haranky 2 |205.01 |6 Country Leases; |99 years / Range from 24|Lahad Datu |Nil |

| | |23 Native Titles |June 2034 to 31 December| | |

| | | |2091 | | |

| | | | | | |

|Km 28 & 30 of |7.93 |2 Native Titles |99 years / 31 December |Lahad Datu |Nil |

|Jalan Lahad Datu | | |2098 | | |

| | | | | | |

|Sub-Total (1) |6,478.61 |51 Country Leases; | | | |

| | |939 Native Titles | | | |

| | | | | | |

| |Land Area |No. of Titles |Tenure / Expiry Date of | |Encumbrances |

| |(Ha) | |Lease |District | |

|KLD Agricultural Lands |

| | | | | | |

|Ladang Pintasan 9 |522.33 |1 Country Lease; |99 years / Range from 31|Kinabatangan |Nil |

| | |112 Native Titles |December 2096 to 19 | | |

| | | |September 2099 | | |

| | | | | | |

|Koyah Lands |114.55 |19 Native Titles |99 years / 19 September |Kinabatangan |Nil |

| | | |2099 | | |

| | | | | | |

|Km 14.5 of Jalan |171.50 |1 Country Lease |99 years / 31 December |Lahad Datu |Nil |

|Lahad Datu | | |2098 | | |

|Sub-Total (2) |808.38 |2 Country Leases; | | | |

| | |131 Native Titles | | | |

| | | | | | |

|Total |7,286.99 |53 Country Leases; | | | |

|(1) +(2) | |1,070 Native Titles| | | |

| | | | | | |

ii) KOSB

|Oil Palm Estate |Land Area | |Tenure / Expiry Date of | | |

| |(Ha) |No. of Titles |Lease |District |Encumbrances |

|Ladang Bikasjaya |202.30 |1 Country Lease |99 years / 31 December |Kinabatangan |Nil |

| | | |2097 | | |

| | | | | | |

The Estates were valued by Messrs C H Williams Talhar & Wong (Sabah) Sdn Bhd as at 30 June 2004 and their market values as provided by the valuers are as follows:

|Acquiree Companies |Estate / Land |Market value |

| | |RM |

|KLD | | |

| | | |

|KLD Oil Palm Estates |Ladang Pintasan 4 |32,000,000 |

| |Ladang Pintasan 5 | 31,820,000 |

| |Ladang Pintasan 6 |12,550,000 |

| |Ladang Pintasan 7 |38,630,000 |

| |Ladang Sg Koyah |770,000 |

| |Ladang Haranky 2 | 5,920,000 |

| |Km 28 & 30 of Jalan Lahad Datu |240,000 |

|KLD Agricultural Lands |Ladang Pintasan 9 |3,920,000 |

| |Koyah Lands |570,000 |

| |Km 14.5 of Jalan Lahad Datu |2,290,000 |

| | | 128,710,000 |

| | |, |

|KOSB |Ladang Bikasjaya |5,090,000 |

| | | |

The independent registered valuer used the comparison method of valuation and discounted cashflow/investment method of valuation in arriving at the market value for the Estates.

3.1 Special conditions of land

All the Estates are for the purpose of agricultural cultivation. One or other of the following restrictions in interest / covenants appear on the titles of some of the Estates:

(i) no transfer or sublease unless with the written permission of the Director of Lands and Surveys;

(ii) no transfer and sublease until such time as the said lands has been fully developed in accordance with the terms and conditions in the title;

(iii) no transfer and subdivision unless with written permission of the Director who will charge additional premium and enhanced rent upon granting such permission;

(iv) the owner’s covenant to ensure that an approved development plan is continuously extended until the said land is fully developed and maintained; and

(v) the owner’s covenant, before fulfilment of the cultivation clause in the title, to notify the Director of Lands and Surveys any transfer of shares with details, not later than one month after such transfer has been registered.

4. RATIONALE

The cultivation of oil palm and processing of palm oil is the core business of Kwantas. The Proposed Acquisitions will increase Kwantas' core plantation holdings by approximately 7,489.29 Ha or 73.7% from 10,162.81 Ha to 17,652.10 Ha.

The Proposed Acquisitions will also enable Kwantas to expand its business operations as Kwantas will be able to increase the hectarage of its plantation lands which is expected to enhance the future earnings of Kwantas Group.

5. EFFECTS

1. Share capital

The effect of the Proposed Acquisitions on the share capital of Kwantas is as follows:

| |No. of ordinary shares of RM1.00 |

| |each |

| | |

|Existing issued and paid-up share capital of Kwantas as at 30 June 2004 |141,794,000 |

| | |

|To be issued pursuant to the Proposed Acquisitions |17,432,682 |

|Enlarged issued and paid-up share capital after Proposed Acquisitions |159,226,682 |

| | |

5.2 NTA

The proforma effect of the Proposed Acquisitions on the NTA per share of Kwantas is as follows:

| |Audited as at |After the Proposed Acquisitions |

| |30 June 2004 | |

|Share capital |141,794,000 |159,226,682 |

|Share premium |53,820 |73,271,101 |

|Reserves |214,045,107 |214,045,107 |

|Shareholders’ funds |355,892,927 |446,542,890 |

|NTA |351,167,163 |441,817,126 |

|No of shares |141,794,000 |159,226,682 |

|NTA per share (RM) |2.48 |2.77 |

5.3 Earnings

The Proposed Acquisitions are expected to contribute positively to the consolidated earnings of the Kwantas Group for the financial year ending 30 June 2005 due to the revenue generated by the Acquiree Companies on the basis that the Proposed Acquisitions are expected to be completed in the first half of 2005..

5.4 Substantial Shareholders’ Shareholdings

The effect of the Proposed Acquisitions on the substantial shareholding structure of Kwantas is as follows:

| | |(I) |

|Names of substantial shareholders |Audited as at 30 June 2004 |Subsequent to Proposed Acquisitions |

| |Direct |Indirect |Direct |Indirect |

| |No of Kwantas |Equity interest |

| |Shares held |(%) |

| |Direct |Indirect |Direct |Indirect |

| |No of shares held | |

| | | |

| | |% |

| |No of Kwantas Shares held |% |No of Kwantas Shares held |% |

|Kwan Jin Nget |90,000 |0.06 |81,119,000* |57.21 |

|Kwan Min Nyet |119,000 |0.08 |81,090,000^ |57.19 |

Notes:

* Deemed interested by virtue of the shareholdings of her siblings, namely Kwan Ngen Chung Kwan Ngen Wah and Kwan Min Nyet in accordance to Section 6A (4) of the Companies Act, 1965.

^ Deemed interested by virtue of the shareholdings of her siblings, namely Kwan Ngen Chung, Kwan Ngen Wah and Kwan Jin Nget in accordance to Section 6A (4) of the Companies Act, 1965.

Based on the above, Kwan Ngen Chung, Kwan Ngen Wah, Kwan Jin Nget and Kwan Min Nyet are deemed interested in the Proposed Acquisitions and have and will abstain from any Board deliberations in Kwantas and abstain from voting on the resolution in relation to the Proposed Acquisitions in respect of their direct and indirect shareholdings at an EGM of Kwantas to be convened.

Save as disclosed above, none of the Directors, substantial shareholders and persons connected with such Directors and substantial shareholders in Kwantas have any interest, either directly or indirectly, in the Proposed Acquisitions.

6. DIRECTORS STATEMENT

The Directors of Kwantas, after having considered all aspects of the Proposed Acquisitions, are of the opinion that the Proposed Acquisitions are in the best interest of the Company and its shareholders.

7. ADVISER

Alliance has been appointed as the Adviser to the Company for the Proposed Acquisitions.

In view of the interest of Kwan Ngen Chung, Kwan Ngen Wah, Kwan Jin Nget and Kwan Min Nyet in the Proposed Acquisitions as disclosed above, Avenue Securities Sdn Bhd has been appointed as the independent adviser to comment as to whether the Proposed Acquisitions are fair and reasonable so far as the shareholders are concerned and whether the transactions are to the detriment of minority shareholders.

8. SUBMISSION

Barring any unforeseen circumstances, applications to the relevant authorities in respect of the Proposed Acquisitions will be made within three (3) months from the date of this announcement.

9. DEPARTURE FROM GUIDELINES

As far as can be ascertained at this juncture, there is no departure from the guidelines stipulated by the SC in respect of the Proposed Acquisitions.

10. ESTIMATED TIMEFRAME FOR COMPLETION

The Proposed Acquisitions are expected to be completed by the first half of 2005.

14. DOCUMENTS FOR INSPECTION

The SSAs and valuation reports in respect of the Proposed Acquisitions are available for inspection at the Registered Office of Kwantas, at Lot 1-4, 1st Floor, Fordeco Building, Jalan Singa Mata, Lahad Datu, 91100 Sabah during normal business hours from Monday to Friday (except for public holidays) for a period of fourteen (14) days from the date of this announcement.

This announcement is dated [ ]29 November 2004.

-----------------------

AUTHORISED FOR RELEASE ON

29 NOVEMBER 2004 FOR AND ON BEHALF OF KWANTAS CORPORATION BERHAD

………………………………………

Name:

Designation:

Date:

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