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| 1. INTRODUCTION |
| AmMerchant Bank Berhad (a member of AmInvestment Group) ("AmMerchant Bank") on behalf of the Board of Directors of PacificMas ("Board"), wishes to announce that the Company proposes to merge its local and foreign shares quoted and listed on the Main Board of Bursa Malaysia Securities Berhad ("Bursa Securities"). |
| In 1996, Bursa Securities (then known as Kuala Lumpur Stock Exchange) had granted its approval for the separate quotation for the shares of PacificMas (then known as The Pacific Bank Berhad) held by foreign shareholders on the Main Board of Bursa Securities. The purpose for the separate quotation was to enable easy monitoring of foreign shareholdings in PacificMas due to the prescribed limit of 30% foreign shareholdings imposed by Bank Negara Malaysia ("BNM") on local banks. |
| In 2001, PacificMas (then known as The Pacific Bank Berhad) disposed of its banking business to Malayan Banking Berhad and assumed its present name. Following the disposal of its banking business, the Company, being an investment holding company, is not required to comply with the prescribed limit on foreign shareholdings imposed by BNM. |
| Further details of the Proposed Merger of Local and Foreign Shares are set out in the ensuing sections. |
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| 2. PROPOSED MERGER OF LOCAL AND FOREIGN SHARES |
| 2.1 Details of the Proposed Merger of Local and Foreign Shares |
| PacificMas is proposing to merge its foreign shares with that of its local shares which are currently separately quoted and listed on the Main Board of Bursa Securities. |
| The merger of the local and foreign shares will be undertaken without any form of compensation to the local or foreign shareholders, as the case may be, for the share price differential between the local shares and foreign shares, if any. |
| Upon completion of the Proposed Merger of Local and Foreign Shares, the entire issued and paid-up share capital of PacificMas will be quoted under the local counter on the Main Board of Bursa Securities. |
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| 2.2 Basis for non-compensation of share price differential |
The Company will not compensate the share price differential, if any, between the foreign and local shares in carrying out the Proposed Merger of Local and Foreign Shares.
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This is after taking into consideration that PacificMas had not previously undertaken any corporate exercise that distinguished the local and foreign shareholders in terms of pricing of securities. In addition, all its local and foreign shareholders were given equal entitlement to the capital repayment undertaken by PacificMas in 2001 to return part of the sale proceeds of its banking business to shareholders. As such, the difference in the pricing of the Company's local and foreign shares as quoted on Bursa Securities is entirely driven by market forces.
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2.3 Reference price upon merger
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On the effective date of merger ("Effective Date"), the entire issued and paid-up share capital of PacificMas will be quoted under the counter 'PACMAS' on the Main Board of Bursa Securities. The Company's foreign counter, 'PACMAS-O1', will be removed from the Official List of Bursa Securities on the Effective Date.
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| The reference opening price of the merged local and foreign shares will be the last closing price of the local shares on the market day immediately prior to the Effective Date or any other price as may be determined by Bursa Securities. |
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| 2.4 Amendments of Articles of Association |
| PacificMas' Articles of Association ("Articles") currently contain provisions in relation to the 30% foreign shareholdings' limit in the Company including the rights, benefits, powers and privileges associated with such shareholdings whereby shares held by foreigners beyond the said limit shall not be entitled to voting rights at general meetings but shall be entitled to all other rights and entitlements attached to the shares. |
| The Company will seek its shareholders' approval for the amendments to its Articles at the forthcoming annual general meeting to be convened whereby the said limitations shall be removed from its Articles. |
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| 3. RATIONALE FOR THE PROPOSED MERGER OF LOCAL AND FOREIGN SHARE |
As the 30% foreign shareholdings' limit imposed by BNM then on The Pacific Bank Berhad is no longer applicable to PacificMas, the mechanism of separate quotation to monitor the foreign shareholdings is not relevant. Further, upon PacificMas amending its Articles to remove the 30% foreign shareholding limit, the rights, benefits, powers and privileges associated with the local and foreign shareholders would be the same. In this respect, there is no requirement for separate quotation of PacificMas shares.
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The Proposed Merger of Local and Foreign Shares is expected to expand the investors base of PacificMas as foreigners will be able to invest in the shares of PacificMas without restriction on voting rights as well as to increase the marketability and liquidity of the shares.
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| On 21 February 2003, PacificMas received the approval of BNM for the Company to, inter alia, begin negotiation with GEL Capital (Malaysia) Berhad ("GCMB") for the transfer of equity of Great Eastern Life Assurance (Malaysia) Berhad and Overseas Assurance Corporation (Malaysia) Berhad, both wholly-owned subsidiaries of Great Eastern Holdings Limited ("GEH") to PacificMas and subsequently with GEH holding 51% equity interest in PacificMas ("Proposed Equity Restructuring"). |
| Both PacificMas and GCMB are working with their advisers on the valuations of the entities involved in the Proposed Equity Restructuring and the final scheme has not been determined at this stage. Upon completion of the valuation exercises, the pricing and final scheme for the restructuring of equity/businesses will be negotiated which, if mutually acceptable, will lead to both parties making submissions to the relevant authorities for approval. |
| The Proposed Merger of Local and Foreign Shares will facilitate the Proposed Equity Restructuring to allow GEH, a foreign shareholder to hold 51% equity interest in PacificMas together with voting rights upon completion of the Proposed Equity Restructuring. |
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| 4. FINANCIAL EFFECTS OF THE PROPOSED MERGER OF LOCAL AND FOREIGN SHARES |
| The Proposed Merger of Local and Foreign Shares will not have any impact on the share capital, earnings, net tangible assets and the substantial shareholders' shareholdings of the Company/Group. |
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| 5. APPROVALS REQUIRED |
| The Proposed Merger of Local and Foreign Shares is subject to the following approvals being obtained:- |
| (i) Bursa Securities; |
| (ii) the shareholders of PacificMas at an extraordinary general meeting to be convened; and |
| (iii) any other relevant authority, if required. |
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| 6. DIRECTORS' AND MAJOR SHAREHOLDERS' INTEREST |
None of the Directors or major shareholders or persons connected to them (as defined in the Listing Requirements of Bursa Securities) have any interest, direct or indirect, in the Proposed Merger of Local and Foreign Shares.
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| 7. STATEMENT BY THE BOARD OF DIRECTORS |
| The Board, after careful deliberation, is of the opinion that the Proposed Merger of Local and Foreign Shares is in the best interest of the Company. |
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| 8. ADVISER |
| AmMerchant Bank has been appointed as Adviser to PacificMas for the Proposed Merger of Local and Foreign Shares. |
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| 9. DEPARTURE FROM THE SECURITIES COMMISSION'S ("SC") GUIDELINES
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| The Board is not aware of any departure from the Policies and Guidelines on Issue/Offer of Securities issued by the SC, in respect of the Proposed Merger of Local and Foreign Shares. |
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| 10. ESTIMATED TIMEFRAME FOR COMPLETION |
| Barring any unforeseen circumstances, the Board expects the Proposed Merger of Local and Foreign Shares to be completed by the fourth quarter of 2005. |
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| This announcement is dated 26 May 2005. |
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