3 Proposed Put and Call Option

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					LUSTER INDUSTRIES BHD (“LIB” OR “COMPANY”)
Proposed Regularisation Plan

For consistency, the abbreviations used throughout this announcement shall have the same
meanings as previously defined in the announcement dated 7 July 2009 unless otherwise stated.

1.     INTRODUCTION

       We refer to LIB’s announcement on 7 July 2009 in relation to the Company’s proposal to
       implement the following:

       (i)     Proposed capital reduction wherein the issued and paid-up share capital of the
               Company of RM61,183,000 comprising 61,183,000 ordinary shares of RM1.00
               each shall be reduced to RM24,473,200 comprising 61,183,000 ordinary shares
               of RM0.40 each (“Proposed Capital Reduction”);

       (ii)    Proposed reduction of RM2,337,541 in the share premium account of the
               Company and the credit arising therefrom to be set-off against the accumulated
               losses of the Company (“Proposed Share Premium Reduction”);

       (iii)   Proposed share split involving the subdivision of every one (1) ordinary share of
               RM0.40 each into four (4) ordinary shares of RM0.10 each (“LIB Shares”)
               (“Proposed Share Split”);

       (iv)    Proposed settlement of the debt owing to the financial institution creditors (“FI
               Creditors”) (“Proposed Debt Settlement”);

       (v)     Proposed renounceable rights issue of 34,961,715 new ordinary shares of RM0.10
               each (“Rights Share”) on the basis of one (1) Rights Share for every seven (7)
               LIB Shares held after the Proposed Share Split at an issue price of RM0.10 per
               Rights Share, together with 69,923,430 free detachable warrants (“Warrants”) on
               the basis of two (2) Warrants for every one (1) Rights Share (“Proposed Rights
               Issue”); and

       (v)     Proposed placement of 39,878,285 LIB Shares together with 79,756,570 free
               detachable Warrants on the basis of two (2) Warrants for every one (1) LIB Share
               (“Proposed Placement”).

       Following the above, on behalf of the Board, Public Investment Bank Berhad (“PIVB”)
       would like to announce that LIB had finalised the details on the Proposed Debt Settlement
       with the FI Creditors, as disclosed in Section 2.1 of this announcement (“Revised
       Proposed Debt Settlement”).

       In addition, PIVB on behalf of the Board, wish to announce that LIB is proposing to
       undertake the following:

       (i)     Proposed increase in the authorised share capital of LIB from RM100,000,000
               comprising 100,000,000 ordinary shares of RM1.00 each to RM200,000,000
               comprising 2,000,000,000 ordinary shares of RM0.10 each (“Proposed
               Increase in Authorised Share Capital”); and

       (ii)    Proposed amendments to the Memorandum and Articles of Association of the
               Company (“Proposed Amendments”).

       The Proposed Capital Reduction, Proposed Share Premium Reduction, Proposed Share
       Split, Revised Proposed Debt Settlement, Proposed Rights Issue, Proposed Placement,
       Proposed Increase in Authorised Share Capital and Proposed Amendments are
       collectively referred to as the “Proposals”.
                                               -1-
2.   DETAILS OF THE PROPOSALS
     Save for the Revised Proposed Debt Settlement, Proposed Increase in Authorised Share
     Capital and Proposed Amendments, the details of the other proposals remain unchanged
     in the announcement dated 7 July 2009.

     2.1    Revised Proposed Debt Settlement

            The aggregate amount of outstanding debts due to the FI Creditors of
            RM66,894,494 based on the cut-off date as at 31 December 2008 as confirmed by
            the FI Creditors, shall be settled and compromised via the following:

            (i)       proposed issuance of RM19,559,371 nominal value of eight (8) classes of
                      redeemable convertible secured loan stocks (“RCSLS”) to the Secured FI
                      Creditors;

            (ii)      proposed issuance of 27,566,670 ordinary shares of RM0.10 each in LIB
                      (“Settlement Shares-A”) at an issue price of RM0.10 per share to the
                      Secured FI Creditors;

            (iii)     proposed issuance of 69,470,410 ordinary shares of RM0.10 each in LIB
                      (“Settlement Shares-B”) at an issue price of RM0.10 per share to the
                      Secured FI Creditors together with 34,735,205 free detachable Warrants
                      on the basis of one (1) Warrant for every two (2) Settlement Shares-B;
                      and

            (iv)      proposed issuance of 198,000,320 Settlement Shares-B at an issue price
                      of RM0.10 per share to the Unsecured FI Creditors together with
                      99,000,160 free detachable Warrants on the basis of one (1) Warrant for
                      every two (2) Settlement Shares-B.

            (Settlement Shares-A and Settlement Shares-B herein will be collectively referred
            to as the “Settlement Shares”)

            The issue price of RM0.10 per LIB Share was arrived at after taking into
            consideration the par value of LIB Shares after the Proposed Share Split of
            RM0.10 each.




                    THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK




                                           -2-
              A summary of the Revised Proposed Debt Settlement are set out below:

                     Outstanding        Revised Proposed Debt Settlement
                    principal and
                    interest as at                  Issuance of      Issuance of
                    31 December       Issuance      Settlement       Settlement     Amount of debts
FI Creditor             2008         of RCSLS       Shares-A(1)      Shares-B(2)        waived
                         RM              RM             RM               RM           RM        %
Maybank                17,031,493      6,259,000       1,333,334        5,663,496  3,775,663   22.17
CIMB                   13,857,488      4,270,000       1,423,333        4,898,492  3,265,663   23.57
RHB                     9,858,813              -                -       5,915,288  3,943,525   40.00
DBS                     8,060,371      8,060,371                -                -         -        -
UOB                     7,665,694        970,000                -       4,017,416  2,678,278   34.94
AmIslamic               5,543,658              -                -       3,326,195  2,217,463   40.00
HLBB                    3,857,626              -                -       2,314,576  1,543,050   40.00
AmBank                  1,019,351              -                -         611,610    407,741   40.00
Total                  66,894,494    19,559,371        2,756,667      26,747,073 17,831,383    26.66
              Notes:
              (1)
                         The 13,333,340 Settlement Shares-A to be issued to Maybank and the 14,233,330
                         Settlement Shares-A to be issued to CIMB for the Revised Proposed Debt
                         Settlement are not entitled to the free detachable Warrants.
              (2)
                         The 267,470,730 Settlement Shares-B to be issued to the FI Creditors are
                         entitled to 133,735,365 free detachable Warrants on the basis of one (1)
                         Warrant for every two (2) Settlement Shares-B.

              As at to-date, LIB had received the agreement-in-principles from all the FI
              Creditors in relation to the Revised Proposed Debt Settlement. The Company
              and four (4) of its subsidiary companies will enter into debt settlement
              agreements with the FI Creditors for the Revised Proposed Debt Settlement.

              The indicative terms of the Revised Proposed Debt Settlement are set out below:

              (i)        all interest, penalties accrued and other charges of a similar nature in
                         connection with any failure to pay or delay in payment of such
                         indebtedness, cost, charges, expenses, fees and other incidental payments
                         thereto (including but not limited to all legal fees) accruing from 1
                         January 2009 until the Revised Proposed Debt Settlement becomes
                         effective shall be completely waived by the FI Creditors; and

              (ii)       there shall be a waiver of an aggregate RM17,831,383, representing
                         approximately 26.66% of the total debt outstanding as at 31 December
                         2008 by the FI Creditors.

              On the completion of the Revised Proposed Debt Settlement, all outstanding
              debts owing to the FI Creditors and all claims whatsoever against the Company
              and its subsidiaries and/or the individual guarantors in respect of any corporate
              and personal guarantees provided or given by the Company and/or by the
              individual guarantors in respect of any credit facility or debts owing shall be (and
              shall be deemed to be), fully and irrevocably settled, satisfied, released,
              discharged and cancelled by the issuance of the RCSLS and new LIB Shares and
              the Company and the individual guarantors shall be (and will be deemed to be)
              irrevocably released from its obligations, claims and liabilities in respect thereof.

                                                -3-
               2.1.1   Secured FI Creditors

                       The settlement of debts owing to the Secured FI Creditors will be made
                       via the issuance of RM19,559,371 nominal value of eight (8) classes of
                       RCSLS, 27,566,670 Settlement Shares-A at an issue price of RM0.10 per
                       share and 69,470,410 Settlement Shares-B at an issue price of RM0.10
                       per share together with 34,735,205 free detachable Warrants on the basis
                       of one (1) Warrant for every two (2) Settlement Shares-B as set out
                       below:

                       RCSLS              Settlement Shares-A         Settlement Shares-B
                                         No. of new                  No. of new                  No. of
FI Creditors   Class              RM     LIB Shares           RM     LIB Shares        RM       Warrants
Maybank        RCSLS-A         650,000    2,166,670        216,667    1,082,450    108,245        541,225
Maybank        RCSLS-B      4,100,000    11,166,670      1,116,667   32,566,310   3,256,631     16,283,155
CIMB           RCSLS-C      4,270,000    14,233,330      1,423,333    4,989,860    498,986       2,494,930
DBS            RCSLS-D      8,060,371              -             -            -             -            -
Maybank        RCSLS-E         509,000             -             -    4,471,340    447,134       2,235,670
Maybank        RCSLS-F         480,000             -             -    2,559,270    255,927       1,279,635
Maybank        RCSLS-G         520,000             -             -   15,955,590   1,595,559      7,977,795
UOB            RCSLS-H         970,000             -             -    7,845,590    784,559       3,922,795
Total                      19,559,371    27,566,670      2,756,667   69,470,410   6,947,041     34,735,205

               The indicative principal terms of the eight (8) classes of RCSLS are set out in
               Appendix II of this announcement.

               2.1.2   Unsecured FI Creditors

                       The settlement of debts owing to the Unsecured FI Creditors will be
                       made via the issuance of 198,000,320 Settlement Shares-B at an issue
                       price of RM0.10 per share together with 99,000,160 free detachable
                       Warrants on the basis of one (1) Warrant for every two (2) new
                       Settlement Shares-B, as set out below:

                                                       Settlement Shares-B
                                                No. of new                               No. of
                         FI Creditors           LIB Shares                   RM        Warrants
                         RHB                       59,152,880         5,915,288       29,576,440
                         CIMB                      43,995,060         4,399,506       21,997,530
                         UOB                       32,328,570         3,232,857       16,164,285
                         AmIslamic                 33,261,950         3,326,195       16,630,975
                         HLBB                      23,145,760         2,314,576       11,572,880
                         AmBank                     6,116,100          611,610         3,058,050
                         Total                  198,000,320          19,800,032       99,000,160

               The issue price of RM0.10 per Settlement Share was arrived at after taking into
               consideration the par value of LIB Shares after the Proposed Share Split.



                                             -4-
           The Settlement Shares to be issued to the FI Creditors and the new LIB Shares to
           be issued arising from the conversion of the RCSLS and exercise of the Warrants
           pursuant to the Revised Proposed Debt Settlement shall, upon issue and
           allotment, rank pari passu in all respects with the then existing LIB Shares,
           except that they shall not be entitled to any dividends, rights, allotments and/or
           other distributions, the entitlement date of which is prior to the date of allotment
           of the Settlement Shares and the new LIB Shares arising from the conversion of
           the RCSLS and exercise of the Warrants.

           The Settlement Shares are not entitled to the Rights Shares.

           2.1.3   Proposed Put and Call Option

                   Pursuant to the settlement of debts owing to the FI Creditors as disclosed
                   in Section 2.1.1 and Section 2.1.2 above, Lim See Chea and the FI
                   Creditors intends to enter into a put and call option agreements in respect
                   of the 267,470,730 Settlement Shares-B (“Option Shares”) to be issued to
                   the FI Creditors pursuant to the Revised Proposed Debt Settlement
                   (“Proposed Put and Call Option”).

     2.2   Proposed Increase in Authorised Share Capital

           The Company proposes to increase its authorised share capital from
           RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each to
           RM200,000,000 comprising 2,000,000,000 ordinary shares of RM0.10 each.

     2.3   Proposed Amendments

           The Proposed Amendments are to facilitate the change in the par value of LIB’s
           ordinary share from RM1.00 to RM0.10 pursuant to the Proposed Capital
           Reduction and Proposed Share Split as well as to effect the consequential
           amendments resulting from the proposed increase in its authorised share capital
           as set out above.

3.   RATIONALE

     3.1   Revised Proposed Debt Settlement

           The rationale and justification for the Revised Proposed Debt Settlement is as
           follows:-

           (i)     to substantially reduce the total borrowings of the Group and its
                   consequential interest expense burden, specifically the Company’s
                   liability arising from the FI Creditors of RM66,894,494;

           (ii)    to reduce the Group’s debt to a more manageable level, hence improving
                   the gearing and reducing the interest expense of the Group. The Revised
                   Proposed Debt Settlement will lower the gearing ratio from 11.88 times
                   to 0.38 times and contribute to interest savings of approximately RM3.8
                   million to the Group; and




                                          -5-
            (iii)   to allow the Group to immediately improve its cash flows to a more
                    favourable and manageable level, and to term out the repayment of its
                    borrowings from the FI Creditors over a period of five (5) years via
                    issuance of RCSLS that will enable the Group to match its future cash
                    flows from operations with its financial obligations.

     3.2    Proposed Increase in Authorised Share Capital

            The rationale for the Proposed Increase in Authorised Share Capital is to
            accommodate the increase in the number of new shares to be issued pursuant to
            the Proposals and any future issuance of new shares.

     3.3    Proposed Amendments

            The rationale for the Proposed Amendments is to facilitate the Proposed Capital
            Reduction and Proposed Share Split as well as to effect the consequential
            amendments resulting from the Proposed Increase in Authorised Share Capital.

     The Proposals would also enable the Company to regularise its condition and cease to be
     an affected listed issuer pursuant to the amended PN 17.


4.   EFFECTS OF THE PROPOSALS

     4.1    Share Capital

            The effects of the Proposals on the issued and paid-up share capital of the
            Company are as set out in Table 1.

     4.2    Net Assets and Gearing

            The effects of the Proposals on the net assets and gearing of the Group, based on
            the audited consolidated balance sheets of LIB as at 31 December 2008, are as set
            out in Table 2.

     4.3    Earnings

            The Proposals are not expected to have any material effect on the earnings of the
            Group for the financial year ending 31 December 2009 as the Proposals are
            expected to be completed by the end of the first (1st) quarter of 2010.

            Upon completion, the Board expects the Proposals to contribute positively to the
            future earnings of the Group.

     4.4    Substantial Shareholders’ Shareholding

            The effects of the Proposals on the shareholdings of the substantial shareholders
            of LIB based on the Record of Depositors as at 31 July 2009, assuming that the
            Proposals had been effected on that date, are as set out in Table 3 below.




                                          -6-
5.   APPROVALS         REQUIRED          AND       INTER-CONDITIONALITY             OF    THE
     PROPOSALS

     The approvals required for the Proposals are as follows:-

     (i)     Bursa Securities for:

             (a)     the Proposals;

             (b)     the admission of the Warrants to the Official List of Bursa Securities; and

             (c)     the listing and quotation of the new LIB Shares and Warrants to be issued
                     pursuant to the Proposals as well as new LIB Shares to be issued pursuant
                     to the exercise of the Warrants and conversion of the RCSLS;

     (ii)    the SC (Private Debt Securities Department) for the issuance of RCSLS pursuant
             to the Revised Proposed Debt Settlement;

     (iii)   the High Court of Malaya for the Proposed Capital Reduction and Proposed
             Share Premium Reduction;

     (iv)    Bank Negara Malaysia for the issuance of the Warrants to non-residents pursuant
             to the Proposed Rights Issue and/or Proposed Placement;

     (v)     the shareholders of LIB at the forthcoming EGM to be convened for the
             Proposals; and

     (vi)    any other relevant authorities, if required.

     The Proposed Capital Reduction, Proposed Share Premium Reduction, Proposed Share
     Split, Revised Proposed Debt Settlement, Proposed Rights Issue, Proposed Increase in
     Authorised Share Capital and Proposed Amendments are inter-conditional upon each
     other but are not conditional upon the Proposed Placement.

     The Proposed Placement is conditional upon all the aforementioned proposals. As such, if
     no investors can be identified for the Proposed Placement, the Proposed Placement will
     not be implemented.


6.   INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS
     CONNECTED WITH THEM

     Lim See Chea, a Director of LIB, is deemed interested in the Revised Proposed Debt
     Settlement in view of the Proposed Put and Call Option. Lim See Hua, a Director of LIB,
     is deemed interested in the Revised Proposed Debt Settlement by virtue of him being a
     person connected to Lim See Chea as he is a brother of Lim See Chea.

     Accordingly, Lim See Chea and Lim See Hua have abstained and shall continue to
     abstain from all deliberations and votings at all Board meetings in relation to the Revised
     Proposed Debt Settlement.

     In addition, Lim See Chea and Lim See Hua shall also abstain from voting in respect of
     their direct and/or indirect shareholdings and have undertaken to ensure that persons
     connected to them will abstain from voting on the resolutions pertaining to the Revised
     Proposed Debt Settlement at the EGM to be convened.


                                             -7-
       Save as disclosed above, none of the Directors and/or major shareholders of LIB or
       persons connected to them have any interest, direct or indirect in the Proposals beyond
       their respective entitlements under the Proposed Rights Issue which are to be allocated on
       a rights basis to all shareholders of the Company.


7.     DIRECTORS’ RECOMMENDATION

       The Board, after having considered all aspects of the Proposed Capital Reduction,
       Proposed Share Premium Reduction, Proposed Share Split, Proposed Rights Issue,
       Proposed Placement, Proposed Increase in Authorised Share Capital and Proposed
       Amendments, is of the opinion that the said proposals are in the best interests of the
       Group.

       The Board, save and except for Lim See Chea and Lim See Hua who are deemed
       interested in the Revised Proposed Debt Settlement, after having considered all aspects of
       the Revised Proposed Debt Settlement, is of the opinion that the Revised Proposed Debt
       Settlement is in the best interest of the Group.


8.     APPLICATION TO THE AUTHORITIES

       The applications to the relevant authorities in relation to the Proposals will be made
       within one (1) week from the date of this announcement.


9.     ESTIMATED TIMEFRAME FOR COMPLETION

       Barring any unforeseen circumstances and subject to all the required approvals, the
       Proposals are expected to be completed by the first (1st) quarter of 2010.


This announcement is dated 17 September 2009.




                                             -8-
                                                                                      Appendix I

LUSTER INDUSTRIES BHD
Indicative principal terms of the Warrants

The indicative principal terms of the Warrants are set out below:-

Issuer                : LIB

Number of             : A total of 283,415,365 Warrants to be issued based on the followings:
Warrants
                         (i)     133,735,365 Warrants to be issued on the basis of one (1) Warrant
                                 for every two (2) Settlement Shares-B to be issued to the FI
                                 Creditors pursuant to the Proposed Debt Settlement;

                         (ii)    69,923,430 Warrants to be issued pursuant to the Proposed Rights
                                 Issue on the basis of two (2) Warrants for every one (1) Rights
                                 Share subscribed at a book closure date to be determined; and

                         (iii)   79,756,570 Warrants to be issued pursuant to the Proposed
                                 Placement on the basis of two (2) Warrants for every one (1)
                                 Placement Share subscribed.

Form                  : The Warrants to be issued are immediately detachable upon issuance and
                        will be separately traded. The Warrants will be issued in registered form
                        and constituted by a Deed Poll to be executed by the Company.

Exercise Price        : The exercise price is RM0.10 per Warrant, which was determined based
                        on the par value of LIB Shares of RM0.10, subject to any adjustments in
                        accordance with the provisions of the Deed Poll.

Exercise Period       : Ten (10) years commencing on and including the date of issue of the
                        Warrants until the last market day prior to the tenth (10th) anniversary of
                        the date of issue of the Warrants.

Exercise Rights       : Each Warrant entitles the registered holder to subscribe for one (1) new
                        LIB Share at the Exercise Price during the Exercise Period and shall be
                        subjected to adjustments in accordance with the provisions of the Deed
                        Poll.

Board Lots            : The Warrants are tradeable upon listing in board lots of 100 units
                        carrying rights to subscribe for 100 new LIB Shares.


Rights of Warrants    : The warrant holders are not entitled to any voting rights or to participate
                        in any distribution and/or offer of further securities in the Company until
                        and unless such warrant holders exercise their Warrants for new LIB
                        Shares.

Status of new         : All new LIB Shares to be issued arising from the exercise of the
shares to be issued     Warrants will upon allotment and issue rank pari passu in all respects
pursuant to the         with the then existing LIB Shares except that such new LIB Shares shall
exercise of the         not be entitled to any dividends, rights, allotments and/or other
Warrants                distributions on or prior to the date of allotment of the new LIB Shares
                        arising from the exercise of the Warrants.




                                               -1-
Listing               : Application will be made for the admission of the Warrants to the
                        Official List of Bursa Securities and for the listing of and quotation for
                        the Warrants and the new LIB Shares to be issued arising from the
                        exercise of the Warrants.

Rights in the event   : If a resolution is passed for a members’ voluntary winding-up of the
of winding-up,          Company or where there is a compromise or arrangement, then:
compromise and/or
arrangement              (a)   if such winding-up, compromise or arrangement has been
                               approved by the warrant holders, or some person designated by
                               them for such purpose by special resolution, the terms of such
                               winding-up, compromise and arrangements shall be binding on all
                               the warrant holders; and

                         (b)   In any other case, every warrant holder shall be entitled within six
                               (6) months after the passing of such resolution for a members’
                               voluntary winding-up of the Company or the granting of court
                               order approving the compromise or arrangement, to elect to be
                               treated as if he had immediately prior to the commencement of
                               such winding-up, compromise or arrangement exercised the
                               Subscription Rights. All Subscription Rights which have not been
                               exercised within six (6) weeks of the passing of such resolution or
                               granting of the court order shall lapse and the Warrant shall cease
                               to be valid for any purpose.

                         If the Company is wound up (other than by way of a members’
                         voluntary winding-up), all Subscription Rights which have not been
                         exercised prior to the date of commencement of the winding-up shall
                         cease to be valid for any purpose.

Adjustment in the     : Subject to the provisions of the Deed Poll, the Exercise Price and/or the
Exercise Price          number of Warrants held by each warrant holder shall be adjusted by the
and/or the number       Board in consultation with the adviser and if deemed necessary,
of Warrants held by     certification of the external auditors appointed by the Company, in the
warrant holders in      event of alteration to the share capital of the Company in accordance
the event of            with the provisions as set out in the Deed Poll.
alteration to the
share capital

Further issues        : Nothing in the Deed Poll shall prevent the Company from issuing shares,
                        and the Company reserves the right to issue shares or other securities
                        convertible to shares to the shareholders for cash or as a bonus
                        distribution or otherwise, or to any other persons or for any purpose. In
                        the event of an issue of shares or other securities convertible to shares by
                        the Company, the warrant holders shall not have any participating rights
                        in respect of such issue unless otherwise resolved by the Company in a
                        general meeting.

Transferability       : The Warrants shall be transferable in the manner to be set out in the
                        Deed Poll subject always to the provisions of the Central Depositories
                        Act and the Rules of Bursa Depository.

Deed Poll             : The Warrants will be constituted by a Deed Poll to be executed by LIB.

Governing Law         : Laws of Malaysia.




                                               -2-
                                                                                     Appendix II

LUSTER INDUSTRIES BHD
Indicative principal terms of the RCSLS

Save for the subscribing parties/holders and the security of the RCSLS, the terms and conditions
of the RCSLS are the same for each of the eight (8) classes of RCSLS.

The principal terms of the eight (8) classes of RCSLS to be issued pursuant to the Revised
Proposed Debt Settlement are set out below:-

 Issuer              :   Luster Industries Berhad (“LIB” or “Company”)

 Issue size          :    Class                          RM
                          RCSLS-A           -              650,000
                          RCSLS-B           -            4,100,000
                          RCSLS-C           -            4,270,000
                          RCSLS-D           -            8,060,371
                          RCSLS-E           -              509,000
                          RCSLS-F           -              480,000
                          RCSLS-G           -              520,000
                          RCSLS-H           -              970,000
                          Total                         19,559,371

 Form and            :   The RCSLS will be issued in registered form and in multiples of
 denomination            RM0.10 each.

 Issue price         :   100% of nominal value of the RCSLS

 Issue Date          :   The date of the issue of the RCSLS

 Tenure              :   5 years

 Maturity Date       :   5 years from Issue Date

 Coupon rate         :   The RCSLS shall bear a 5% p.a. coupon, on an outstanding balance basis

 Coupon Payment :        Payment of the interest will be semi-annually in arrears.
 Date, if any


 Redeemability       :   (a) Redemption

                         Unless previously converted or purchased as provided in (b) below, the
                         RCSLS is redeemable at the option of the Company for cash anytime
                         after the Issue Date at its nominal value. Unless previously converted,
                         the RCSLS held by the Secured FI Creditors (debts settled through the
                         Proposed Debt Settlement) are to be redeemed by the Company
                         proportionately on a straight line basis of 20% annually.




                                                -1-
Redeemability          (b) Purchase
(Cont’d)
                       The Issuer or any of its subsidiaries may at any time purchase or
                       otherwise acquire the RCSLS (and such RCSLS purchased or acquired
                       shall be deemed not to remain outstanding) at any price to be negotiated.
                       All the RCSLS, which are purchased or redeemed, shall forthwith be
                       cancelled (together with all interest accrued cancelled therewith). All the
                       RCSLS so cancelled may not be reissued or resold.

Convertibility     :   Convertible into ordinary shares at the option of the holder(s) from the
                       Issue Date. If not converted by the RCSLS holders, the RCSLS will be
                       redeemed by the Issuer based on the terms of Redemption above. All
                       outstanding RCSLS shall be fully redeemed on the Maturity Date. The
                       outstanding RCSLS held by the FI Creditors will thereafter create an
                       event of default.

Conversion Price   :   The indicative conversion rate of RM0.10 nominal amount of RCSLS
                       into one (1) new LIB Share, credited as fully paid-up.

                       The indicative conversion price of RM0.10 was arrived at based on the
                       par value of LIB Shares.

Trust Deed         :   Not applicable. As each class of the RCSLS will be held by a single
                       holder, a trust deed is not required to be executed by virtue of item 4 of
                       Schedule 8 of the CMSA.

Event of Default   :   The RCSLS will have the following events of default:

                       (i)   the Issuer defaults in the payment of the nominal value or interest
                             owing in respect of the RCSLS as and when they fall due; and

                       (ii) the Issuer commits any material breach of their representations,
                            warranties, covenants, or obligations under the provision of the
                            Subscription Agreement.

                       At any time after the RCSLS have become immediately due and payable
                       the holders may at its discretion and without notice, institute such
                       proceedings as it may think fit against the Issuer to enforce payment of
                       all amounts due and payable under the provision of the Subscription
                       Agreement.

Penalty Interest   :   If any moneys (whether principal, interest or otherwise) is not paid by
                       the Issuer on the due date, the Issuer shall pay to the holders of the
                       RCSLS default interest thereon at the rate of one per cent (1%) per
                       annum above the coupon rate payable under the terms of the RCSLS,
                       calculated from the due date of payment up to the date of actual
                       payment. All unpaid interest including such additional interest shall be
                       compounded on monthly basis and shall thereafter bear interest at the
                       said default rate.

Listing            :   The RCSLS will not be listed on any stock exchange. However, an
                       application will be made to Bursa Securities for the listing and quotation
                       of the new LIB Shares to be issued pursuant to the conversion of the
                       RCSLS.

Transferability    :   The RCSLS are non–transferable and non-tradable.

                                            -2-
Security   :   The RCSLS will be secured against the assets that were pledged for the
               debt facilities, as follows:

               RCSLS-A

               A charge by Maybank on the 2 units of 1 ½ storey semi-detached
               factories and buildings known as:

               1. Lot 7, Kawasan MIEL, Phase V, Bakar Arang Industrial Estate,
                   08000 Sungai Petani, Kedah Darul Aman held under HS(D) 18108,
                   PT 68802, Bandar Sungai Petani, Daerah Kuala Muda, Kedah;

               2. Lot 8, Kawasan MIEL, Phase V, Bakar Arang Industrial Estate,
                   08000 Sungai Petani, Kedah Darul Aman held uder HS(D) 18109,
                   PT 68803, Bandar Sungai Petani, Daerah Kuala Muda, Kedah

               RCSLS-B

               1. A lien’s holder caveat lodged by Maybank on the factory and office
                  building leased to Luster Precision Engineering Sdn Bhd held under
                  Lot No. 37 (formerly PT 18861) and Lot No. 38 (formerly PT
                  18862), Titles No. GRN 54391 (formerly HSD 83/92) and GRN
                  54392 (formerly HSD 84/92) respectively, Section 65, Bandar
                  Sungai Petani, District of Kuala Muda, State of Kedah

               2. A fixed and floating charge over all Luster Precision Engineering
                  Sdn Bhd’s machinery as described in Schedule 1 of the Specific
                  Debenture dated 08.10.2005 together with all equipment accessories
                  and parts.

               RCSLS-C

               A charge by CIMB Bank on the 1½ storey factory cum office building
               leased to Luster Plastic Industries Sdn Bhd known as:

               1. Lot No. 35 (formerly PT 18859), Geran 54389 (formerly known as
                  HS(D) 81/92), Seksyen 65, Bandar Sungai Petani, Daerah Kuala
                  Muda, Kedah bearing assessment address Lot 35, Jalan PKNK
                  Utama, Kawasan Perusahaan LPK Sungai Petani, 08000 Sungai
                  Petani, Kedah Darul Aman.

               2. Lot No. 36 (formerly PT 18860), Geran 54390 (formerly HSD
                  82/92), Seksyen 65, Bandar Sungai Petani, District of Kuala Muda,
                  State of Kedah bearing assessment address Lot 36, Jalan PKNK
                  Utama, Kawasan Perusahaan LPK Sungai Petani, 08000 Sungai
                  Petani, Kedah Darul Aman.

               RCSLS-D

               1. A charge by DBS Bank on the factory and office building subleased
                  to Luster Industries Berhad held under Lot No. Plot 49, Title No.
                  HSM 19057; Lot No. Plot 50, Title No. HSM 19064; Lot No. PT
                  8549, Title No. HSM 19012; and Lot No. PT8550, Title No. HSM
                  19014, all within Bandar Sungai Petani, District of Kuala Muda,
                  State of Kedah


                                    -3-
Security (Cont’d)   RCSLS-D (Cont’d)

                    2. To be secured by the existing specific debenture in respect of the
                       plant and machinery equipment including parts more particularly
                       described in Appendices A (Old SMT Production Line) & B (New
                       SMT Production Line) of the Machinery Charge dated 26.07.2004.

                    RCSLS-E

                    To be secured by the existing specific debenture over those plant and
                    machineries as described in Schedule 1 of the Specific Debenture dated
                    14.04.2005 and 15.12.2006 known as:

                    1. JSW Injection Moulding Model J 85ELIII Injection Machine
                       (Electr servo)- 2 sets;

                    2. JSW Injection Moulding Model J 100EIII Injection Machine
                       (Hydraulic)- 2 sets;

                    3. JSW Injection Moulding Model J 150EIII Injection Machine
                       (Hydraulic)- 2 sets;

                    4. JSW Injection Moulding Model J 280EIII Injection Machine
                       (Hydraulic)- 2 sets;

                    5. JSW Injection Moulding Model J 350EIII Injection Machine
                       (Hydraulic)- 1 set;

                    6. JSW Injection Moulding Model J 450EIII Injection Machine
                       (Hydraulic)- 1 set

                    RCSLS- F

                    To be secured by the existing specific debenture over those machines
                    known as SMT machines with accessories

                    RCSLS-G

                    To be secured by the existing specific debenture over those machines
                    known as:

                    1. Haitian Injection Moulding Model HTF 2800/3300X;

                    2. Motor High Speed Traverse SC 3000D;

                    3. 240L Dustbin Base; and

                    4. 240L Dustbin Cover




                                         -4-
Security (Cont’d)       RCSLS-H

                        To be secured by the existing specific debenture over those machines
                        known as:-

                        1. New Haitian Plastic Injection Moulding Machine Model : HTF-
                           2800/3300X;

                        2. New Apex Brand SC Series CNC Servo Motor High Speed
                           Traverse Robot Model : SC-3000D;

                        3. New Haitian Plastic Injection Moulding Machine Model : HTF-
                           1000X;

                        4. New Haitian Plastic Injection Moulding Machine Model : HTF-
                           2000X;

                        5. Plastic Injection Mould
                           240L Dustbin Base
                           240L Dustbin Cover

                        6. Plastic Injection Mould
                           120L Dustbin Base
                           120L Dustbin Cover

                        7. A Fixed Charge over the machinery and equipment as described in
                           Schedule of the Supplemental Agreement dated 18.07.2005

                            Mould Description
                            Dustbin cover, dustbin inner plate, plug, key, lock hook, lock axle,
                            bon, cap & holder

Rating              :   Not rated




                                             -5-

				
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