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CAB Cakaran Corporation Berhad CAB

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					CAB CAKARAN CORPORATION BERHAD (“CAB”)

TYPE          :        ANNOUNCEMENT
SUBJECT       :        PROPOSED SUBSCRIPTION BY CAB CAKARAN SDN BHD, A
                       WHOLLY-OWNED SUBSIDIARY OF CAB OF 50,000 NEW ORDINARY
                       SHARES OF RM1.00 EACH IN CAPITAL PIXEL SDN BHD (“CPSB”)
                       REPRESENTING 50% OF THE ENLARGED SHARE CAPITAL IN
                       CPSB FOR A CASH CONSIDERATION OF RM9.05 MILLION
                       (“PROPOSED SUBSCRIPTION”)


1.    INTRODUCTION

      The Board of Directors of CAB Cakaran Corporation Berhad (“CAB”) is pleased to announce that
      CAB Cakaran Sdn Bhd (“CABC”), a wholly-owned subsidiary of CAB had on May 20 2005
      entered into a Share Subscription Agreement (“SSA”) with Capital Pixel Sdn Bhd (“CPSB”) to
      subscribe for 50,000 new ordinary shares of RM1.00 each in CPSB (“CPSB Shares”) representing
      50% of the enlarged share capital of CPSB for a cash consideration of RM9.05 million (“Proposed
      Subscription”).

      The Proposed Subscription is expected to be completed by September 11, 2005.


2.    DETAILS OF THE PROPOSED SUBSCRIPTION

2.1   Salient Terms and Conditions of the SSA

      (i)     Consideration for the Proposed Subscription

              The consideration of RM9.05 million (“Consideration”) shall be paid by CABC to CPSB
              in the following manner:-

              (a)      a sum of RM4.5 million shall be paid on or before June 11, 2005 (“the First
                       Payment”);

              (b)      a sum of RM1.05 million shall be paid on or before August 11, 2005 (“the
                       Second Payment”); and

              (c)      a sum of RM3.5 million shall be paid on or before September 11, 2005 (“the
                       Balance Payment”).

              The First Payment was made by CABC to CPSB on May 11, 2005.


      (iii)   Other Salient Terms and Conditions

               The other salient terms of the SSA are as follows:-

              (a)      Immediately upon payment of the First Payment, CPSB shall allot and issue to
                       CABC 50,000 new CPSB Shares. Upon allotment and issuance of the new
                       CPSB Shares, the shareholding structure of CPSB shall be as follows:-
                                  Shareholders                          Number of          Percentage
                                                                      CPSB Shares                (%)
                         Tan Ah Baa @ Tan Chye Khoon                       25,500                25.5
                         Tan Chee Hee                                      24,500                24.5
                         CABC                                              50,000                50.0

                                          Total                             100,000              100.0

              (b)      Immediately upon payment of the First Payment, the board of directors and
                       management committee of CPSB shall comprise the following persons:-

                         Directors                                                      Designation
                         Chuah Ah Bee                                                     Chairman
                         Tan Chee Hee                                              Managing Director
                         Tan Ah Baa @ Tan Chye Khoon                                        Director
                         Loo Choo Gee                                                       Director

                       Subject to the Articles of Association of CPSB, any question arising at any
                       meeting of Directors shall be decided by a majority of votes and a determination
                       by a majority of Directors shall for all purposes be deemed a determination of
                       the Directors. In the case of an equality of votes, the Chairman of the meeting
                       shall have a second or casting vote.

2.2   Basis of the Consideration and Source of Funding

      The Consideration was arrived at based on a willing buyer willing seller basis after taking into
      consideration, inter alia, the market value of the fixed assets of CPSB together with all parent
      stocks and farm equipment of CPSB; the future potential earnings of CPSB and synergistic
      benefits of the Proposed Subscription to CAB and its subsidiaries (“CAB Group”).

      In arriving at the market value of the fixed assets of CPSB, the Board of Directors of CPSB had
      appointed, Abu Hassan & Co (V/E No. (3) 0013), an independent professional property consultant
      & valuation surveyor to revalue the fixed assets of CPSB which comprised land and building,
      chicken coops and farm equipment. Based on the valuation report by Abu Hassan & Co dated
      April 28, 2005, the total market value of the land and building, chicken coops and farm equipment
      (excluding parent stocks) as at April 28, 2005 is RM19.1 million.

      The Consideration for the Proposed Subscription will be funded through the CAB Group’s
      internally generated funds and/or borrowings.

2.3   Liabilities to be assumed by CABC

      There are no liabilities to be assumed by CABC pursuant to the Proposed Subscription

2.4   Information on CPSB

      CPSB was incorporated in Malaysia as a private limited company under the Companies Act, 1965
      on March 25, 2005. The authorised share capital of CPSB is RM100,000.00 comprising 100,000
      CPSB Shares of which RM50,000.00 comprising 50,000 CPSB Shares have been fully paid up as
      at to-date. CPSB is principally involved in the farming of parent stocks and hatching of eggs into
      day-old-chicks.
     At present, there is no audited financial data available as CPSB was recently incorporated on
     March 25, 2005. However, the list of fixed assets of CPSB is available as follows:-

     (i)      A poultry farm measuring 41.579 acres with breeder farm houses and farm building
              erected thereon located at along off Jalan Changkat, Nibong Tebal, held under Lots 1512
              & 3037, Grant Nos. 38752 & 7314, Mukim 11, Province Wellesley South, Penang
              together with farm equipment and parent stocks; and

     (ii)     A poultry farm measuring 21.65 acres with breeder farm houses and farm building
              erected thereon located at along Jalan Kerian Kedah, Sungai Bakap, held under Lots 43,
              49, 368, 373, 256, 255, 251, 252, 253, 249, 257, 258, 246, 247, 248 & 250, Mukim Grant
              Nos. 120, 121, 152, 153, 154, 155, 156, 157, 158, 159, 169, 161, 173, 174, 175 & 179,
              Mukim 6, Province Wellesley South, Penang together with farm equipment and parent
              stocks.

     At present, the shareholders and directors of CPSB are as follows:

                                                                        No. of
                                                                  CPSB Shares                        %
      Shareholders
      Tan Ah Baa @ Tan Chye Khoon                                         25,500                   51.0
      Tan Chee Hee                                                        24,500                   49.0

      Directors
      Tan Ah Baa @ Tan Chye Khoon                                         25,000                   50.0
      Ong Sew Ean                                                            Nil                    Nil


3.   RATIONALE FOR THE PROPOSED SUBSCRIPTION

     The CAB Group is constantly seeking opportunity to expand its core business in poultry farming
     to strengthen its standing as one of the leading integrated poultry and food producers in the
     country. The Proposed Subscription is expected to play a significant role in further strengthening
     the in-house supply of day-old-chicks (“DOCs”) so as to be in line with the expansion of broiler
     farming of the CAB Group. With the Proposed Subscription, the CAB Group would have an
     immediate access to additional supply of DOCs from CPSB.


4.   RISKS FACTORS

     The Proposed Subscription will result in CABC owning 50% of the issued and paid-up share
     capital of CPSB which is involved in the same business as the CAB Group. Save for the normal
     business risk inherent in the poultry industry which the CAB Group operates in, the Board of
     Directors of CAB is not aware of any other risk factors which may arise as a result of the Proposed
     Subscription. The Directors of the CAB Group believe that these are risks which they are well
     placed to understand given their own experience as an integrated poultry producer.


5.   INDUSTRY OVERVIEW AND FUTURE PROSPECTS

     In spite of the challenges faced by the livestock industry such as high feed prices and the bird flu
     in 2003/4, the livestock industry has remained resilient. This is largely due to the increasing meat
     consumption in line with rising income level. Per capital consumption of meat, poultry and milk
     products in Malaysia are still well below those of developed countries.
      The livestock industry in Malaysia is projected to grow strongly with increased emphasis from the
      Government to attract investments in the agro-based sector. The Government has outlined its plan
      to turn Malaysia into a net food exporter and as such, has announced a number of incentives that
      will spur the growth of this sector. This includes upgrading production techniques, improving
      breed, handling, processing and special emphasis on waste management for sustained growth.


6.    EFFECTS OF THE PROPOSED SUBSCRIPTION

6.1   Share capital and substantial shareholders' shareholdings

      The Proposed Subscription will not have any effect on the share capital and substantial
      shareholders' shareholdings in CAB as it will be satisfied entirely in cash.

6.2   Net Tangible Assets (“NTA”)

      The Proposed Subscription is not expected to have a material effect on the consolidated NTA of
      the CAB Group.

6.3   Earnings

      The Proposed Subscription is not expected to have a material effect on the consolidated earnings
      of CAB for the financial year ending September 30, 2005 Barring any unforeseen circumstances,
      the Proposed Subscription is expected to contribute positively to the future earnings of the CAB
      Group.


7.    APPROVALS REQUIRED

      The Proposed Subscription is not subject to the approval of the shareholders of CAB and any
      regulatory approvals save for the approval of Foreign Investment Committee (“FIC”), if required.


8.    DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

      Insofar as the Directors of CAB are able to ascertain, none of the Directors and substantial
      shareholders of CAB and/or persons connected to the Directors and substantial shareholders of
      CAB have any interest, direct or indirect, in the Proposed Subscription.


9.    DIRECTORS' STATEMENT

      The Directors of CAB, having considered all aspects of the Proposed Subscription, are of the
      opinion that the Proposed Subscription is in the best and long term interests of CAB.


10.   DOCUMENTS AVAILABLE FOR INSPECTION

      The SSA will be made available for inspection by the shareholders of CAB at the registered office
      of CAB at 3rd Floor, Wisma Wang, 251-A, Jalan Burma, 10350 Penang from Monday to Friday
      (except public holidays) during normal business hours for a period of 3 months from the date of
      this announcement.
11.   DEPARTURE FROM POLICIES AND GUIDELINES ON ISSUE/OFFER                                     OF
      SECURITIES OF THE SECURITIES COMMISSION (“SC’s GUIDELINES”)

      There is no departure from the SC’s Guidelines in respect of the Proposed Subscription.

				
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