The Lease Agreement pertains to the lease by j3I65T4w

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									PROPOSED LEASE OF LAND IN LANGKAWI MEASURING APPROXIMATELY 36.7 ACRES

1. Introduction

The Board of Directors of Tradewinds Corporation Berhad (“TCB” or “the Company”) wishes to
announce that Benua Mahsuri Sdn Bhd (“BMSB”), an indirect wholly-owned subsidiary of TCB has
on 28 March 2012 entered into a Lease Agreement with Langkawi Development Authority (“LADA”)
for a cash consideration of RM34,714,285 (“the Proposal”).

2. Salient Terms of the Lease Agreement

The Lease Agreement pertains to the lease over 36.7 acres of Malay Reserved Land (“ Leasehold
Land”) located in Mukim Padang Matsirat, Langkawi for a lease period of 81 years from January 2013 to
2093 for a consideration of RM34,714,285 (“Lease Consideration”).

The Lease Agreement is subject to BMSB obtaining declaration from the relevant state authority for it to
be deemed a Malay pursuant to the Kedah Malay Reservations Enactment.

The Lease Consideration is to be settled over 3 payments. The first payment representing 10% of the
Lease Consideration was paid upon signing of the Lease Agreement. The second payment representing
40% of the Lease Consideration is payable within 12 months from the execution of the Lease Agreement.
The final payment representing the balance of the Lease Consideration is payable within 12 months from
the second payment. In the event of default by BMSB, LADA is entitled to terminate the Lease
Agreement and 20% of the Lease Consideration paid shall be forfeited as penalty.

The Leasehold Land is to be handed over as vacant possession to BMSB on 1 January 2013 or such other
date as may be mutually agreed.

BMSB shall commence construction of a new hotel within 3 years from the date of the Lease
Agreement.

3. Basis of the consideration for the Lease Consideration

The Lease Consideration is arrived at on a willing buyer willing seller basis after taking into account the
lease period and after considering the market value of the property determined by Jabatan Penilaian
da n P er k hi d mat an Ha rta La ng k aw i ’ s (“ J P P H ”) v al uat io n .

The Lease Consideration is to be financed by a combination of internal funds and external borrowings.
The final breakdown of which will only be determined at a later stage.

No liabilities will be assumed by BMSB pursuant to the Proposal.
4. Particulars of Leasehold Land

The Leasehold Land is a Malay Reserved leasehold land measuring approximately 36.7 acres. The land is
held under HS(D) 3/96, Lot 1718 Mukim Padang Matsirat, Daerah Langkawi, Kedah on a leasehold basis
expiring on 21 May 2095. The Leasehold Land is presently used as a resort under the name of Mutiara
Burau Bay Beach Resort (“MBBBR”). MBBBR is a 150-room resort complete with swimming pool,
restaurants, meeting rooms and other facilities. It is currently managed by TCB subsidiary, Mutiara – TCB
Hotel Management Sdn Bhd.

The Leasehold Land is free from any encumbrance.

5. Information about LADA

LADA is a statutory body incorporated under Langkawi Development Authority Act 1990 (Act 423) in 1990
to plan, promote and carry out development on the island of Langkawi. It is under the Ministry of Finance.

6. Proposed Use of Leasehold Land

The Leasehold Land will be developed into a world class international hotel and resort. Construction
of the hotel/resort will commence within 3 years from the date of the Lease Agreement. Construction
cost will be in line with acceptable industry standards. The construction of the hotel will be funded
from a combination of internally generated funds and external borrowings.

7. Rationale of the Proposal

The Proposal will enable the Group to develop a luxury resort in the stunning Teluk Burau area to
complement the TCB’s existing luxury hotel, The Danna and Perdana Quay development. This is
expected to enhance the Western hub of Langkawi Island and it is in line with the Langkawi Tourism
Blueprint. The development will also enable the Group to expand its asset base in line with its
aspiration to be a premier hotel and resort developer.

8. Financial Effects on the Proposal

(i)     Issued and Paid-up Share Capital
        The Proposal has no impact on the issued and paid-up share capital of the Company;

(ii)    Net Assets
        The Proposal will not have any material impact to the net assets per share of the Group;

(iii)   Earnings
        The Proposal will not have any material impact on the earnings per share of the Group;

(iv)    Gearing
        The Proposal will not have material effect on the Group gearing although future gearing
        may be affected depending on the funding structure of the future development; and
(v)     Substantial Shareholder’s Shareholding
        The Proposal will not have any effect on TCB’s substantial shareholders’ shareholding.

9. Approvals from the relevant authorities
The Leasehold Agreement is subject to BMSB obtaining declaration from the relevant state authority for it to
be deemed a Malay pursuant to the Kedah Malay Reservations Enactment prior to the registration of the
Lease.

10. Prospects and Risk Factors

10.1 Political, Economic and Regulatory Considerations

Adverse developments in political, economic and regulatory conditions in Malaysia could materially and
adversely affect the financial prospects of the TCB Group. Political and economic uncertainties including
but are not limited to changes in labour laws, availability of labour, a switch in political leadership and/or
changes in the government’s policies on interest rates, methods of taxation and licensing regulations.
These factors affect all players in the property and hotel industry and are generally beyond the
management’s control.

As Langkawi is a premier tourist destination in Malaysia, hotel players are increasingly positive that
Langkawi hotel market is poised for further growth. Langkawi rebranded as Langkawi Geo Park has
been successfully marketed internationally as an eco destination. There are many international and
local events continuously being held in Langkawi to promote its natural attractions. One of the most
prominent events is the bi-annual Langkawi International Maritime and Aerospace (“LIMA”) exhibition
showcasing the latest maritime and aerospace technology.

Whilst sharing this optimism on the prospects in Langkawi, the Group will continue to take reasonable
steps to mitigate the risks mentioned above and to respond and adapt to the ever-changing economic
and regulatory environment in order to alleviate any difficulties arising from the changes in the political,
economic and regulatory circumstances should they arise in the future.

10.2. Business Risk

As TCB Group is principally involved in hotel business, the Group is subject to certain business risks
inherent in the hotel and tourism industry. These business risks may include but not limited to changes
in general economic conditions, global economic conditions, availability of flights and connectivity into
Langkawi, government regulations, inflation, competition from existing players and new entrants,
shortage of labour, disruption in the supply of building materials and non-renewal of licenses.

Despite the fact that management continuously seeks to limit and mitigate these risks through the
implementation of prudent business strategies, continuous review of the operations and marketing
strategies, efforts to improve efficiency, as well as close monitoring of the Group’s hotels
refurbishment and new projects and the Group’s cash flows, there can be no assurance that any change
to these risks would not have any material adverse impact on TCB Group’s business.
10.3. Competition

TCB Group business faces competition from various competitors including local and foreign branded
hotel investors and operators.

The Group believes that the location of the Leasehold Land is conducive for a hotel/resort. However, no
assurance is given that the Group will be able to maintain its competitive advantage in the hotel market
in the future.

11. Directors and/or Major Shareholders’ Interest

None of the Directors and/or major shareholders or persons connected with the Directors and/or major
shareholders have any direct or indirect interest in the Proposals.

12. Statement by the Board of Directors

The Board of Directors is of the opinion that the Proposal is in the best interest of the Group.

13. The Highest Percentage Ratio

The highest percentage ratio applicable to the Proposal pursuant to Paragraph 10.02(g) of the Main
Market Listing Requirement is 1.8%.

14.Documents Available for Inspection

The Lease Agreement will be available for inspection at the registered office of TCB at 21st Floor,
Wisma Zelan, No. 1, Jalan Tasik Permaisuri 2, Bandar Tun Razak, Cheras, 56000 Kuala Lumpur, during
normal business hours from Mondays to Fridays (except public holidays) for a period of one (1) month
from the date of this announcement.

This Announcement is dated 28 March 2012.

								
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