CSC STEEL HOLDINGS BERHAD ( X) PURCHASE OF TWO PIECES OF LEASEHOLD LAND TOGETHER WITH FACTORY BUILDINGS ERECTED THEREON BY CSC STEEL SDN.

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1 CSC STEEL HOLDINGS BERHAD ( X) PURCHASE OF TWO PIECES OF LEASEHOLD LAND TOGETHER WITH FACTORY BUILDINGS ERECTED THEREON BY CSC STEEL SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY FROM TATT GIAP GROUP BERHAD FOR A PURCHASE CONSIDERATION OF RM41,000, INTRODUCTION Pursuant to Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of CSC Steel Holdings Berhad ( CHB or the Company ) wishes to announce that CSC Steel Sdn. Bhd. ( CSCM ), a wholly-owned subsidiary of the Company, had on 31 December 2015 entered into a Sale and Purchase Agreement (the SPA ) with Tatt Giap Group Berhad ( TGGB ) and Tatt Giap Steel Centre Sdn. Bhd. ( TGSC ), a subsidiary of TGGB to purchase two (2) pieces of leasehold land together with a 3½ storey detached factory building erected thereon located at Mukim 11, Seberang Perai Tengah, Pulau Pinang (the Properties ) for a purchase consideration of RM41,000, only ( Purchase Price ) (the Purchase ) to be paid in the following manner: i. the sum of RM20,000, from CSCM s internal funds to Malayan Banking Berhad and Maybank Islamic Berhad ( Maybank ) as full redemption sum to release Maybank s security and legal charges created over the abovementioned Properties; and ii. the remaining RM21,000, shall be utilised towards repayment of trade debts by TGSC to CSCM (amount owing as at 31 August 2015 was RM21,243,078.97). 2. DETAILS OF THE PURCHASE 2.1 Information on CSCM CSCM (Company No P) is a company incorporated in Malaysia on 14 November 1991 with an issued and fully paid-up share capital of RM220,000, comprising 220,000,000 ordinary shares of RM1.00 each. CSCM is in the business of manufacturing and marketing of steel products. The directors of CSCM are as follow:- No. Directors 1. Chen, Chung-Te 2. Liu, Jih-Gang 3. Lee, Samuel Lee 4. Ou, Jenq-Jang 5. Chen, Huo-Kun 1

2 2.2 Information on TGGB TGGB (Company No W) is a company incorporated in Malaysia on 3 May 2006 and is listed on the Main Market of Bursa Malaysia Securities Berhad ( BMSB ) since 22 July The issued and paid up share capital of TGGB is RM77,551, comprising 155,103,402 TGGB Shares have been issued and are fully paid up. TGGB is principally an investment holding company. The directors of TGGB are as follows:- No. Directors 1. Dato Siah Kok Poay 2. Siah Lee Beng 3. Tan Lu Eng 4. Dato Rosely Bin Samsuri 5. Loh Eng Wee 6. Foo Kee Fatt 7. Siah Chin Hoo (Alternate Director to Dato Siah Kok Poay, Steven) 8. Siah Chin Soon, Victor (Alternate Director to Siah Lee Beng, Michael) 2.3 Information on TGSC TGSC (Company No X) is a private limited company incorporated in Malaysia on 9 August 1994 with an issued and fully paid up share capital of RM40,000, comprising 40,000,000 ordinary shares of RM1.00 each ( TGSC Shares ). TGSC operates as a service center for steel products. The directors and shareholders of TGSC are as follows:- No. Directors 1. Dato Siah Kok Poay, Steven 2. Siah Chin Hoo 3. Tan Lu Eng, Christina 4. Siah Chin Soon, Victor 5. Teh Swee Seng 6. Shinichi Matsumura 7. Fan Chiang, Chin-Kang 8. Chang, Che-Chia (Alternate Director to Fan Chiang, Chin- Kang) No. Shareholders % of Shareholdings 1. TGGB CHB Hanwa Co. Ltd CSGT International Corporation 14 Total 100 2

3 2.4 Information on the Properties The Properties comprise two (2) pieces of leasehold industrial land for 60 years, expiring on 6 December 2052, held under HSD & 14942, PT 2961 & 2960 respectively, both located in Mukim 11, Seberang Perai Tengah, Pulau Pinang measuring in area square metres and square metres respectively together with a 3 ½ storey detached factory building erected thereon bearing municipal address No Lorong Perusahaan Maju 6, Prai Industrial Estate Phase IV, Prai, Penang. The Properties are currently rented out to two (2) tenants as follows:- Tenant 1 Tenant 2 Tenant Nippon Egalv Steel Sdn Bhd MSM Prai Berhad Rental Period Monthly Rental RM169, RM225, Monthly Rental RM97, Expiry of Tenancy Option to Renew 30 June January years expiring on 30 June months expiring on 31 January 2017 Tenant 2 had notified TGGB that they wish to extend the tenancy for a period of six (6) months commencing from 1 February The Properties are currently charged to Maybank for banking facilities variously granted to TGSC and other subsidiary companies of TGGB. As at 31 December 2014, the net book value of the Properties was RM22,173, inclusive of land cost of RM4,440, Property valuations were carried out by TGGB and CSCM respectively. CSCM had appointed C H Williams Talhar & Wong Sdn. Bhd. ( CH Williams ) on 28 April 2015 to carry out the valuation of the Properties. The Properties were valued at RM37.6 million using Comparison Method which entails prices of similar properties in the neighbourhood for comparison purposes with adjustments made for differences in location, size, age and condition of building, tenure, title restrictions if any and other relevant characteristics to arrive at the market value. As for TGGB, Henry Butcher Malaysia (Seberang Perai) Sdn. Bhd. ( Henry Butcher ) has been appointed to conduct the valuation to comply with Securities Commission s Asset Valuation Guidelines. The Properties has been valued with a Market Value of RM43,000, which was arrived at following an indicative assessment based on depreciated replacement cost method and comparison method by Henry Butcher. 3

4 3. SALIENT TERMS OF THE SPA Salient terms of the SPA are as follows:- 3.1 CSCM shall pay the Purchase Price in the following manner: remit the redemption sum of RM20,000,00.00 to Maybank as full redemption sum to release the security and legal charges created in favour of Maybank over the Properties; and the remaining RM21,000, as deemed repayment of trade debts by TGSC to CSCM. 3.2 The SPA is subject to and conditional upon the fulfillment by TGGB of the following Conditions Precedent: TGGB to obtain the consent of the Penang State Authority to the transfer of the Properties to CSCM ( Transfer Consent ) TGGB obtaining a redemption letter from Maybank confirming a redemption sum of not exceeding RM20,000, which is to be utilised solely to reduce the Maybank facilities granted by Maybank to TGSC and the redemption letter shall be and remain valid for a period of not less than 30 days from the Unconditional Date described in Item 3.4 below; TGGB to obtain written confirmation from Tenant 1 that Tenant 1: has waived its right under the terms of the tenancy agreement with TGGB, to purchase the Properties; consents to the sale of the Properties by the TGGB to the Company; has paid to TGGB the sum of RM294, as refundable deposit under the terms of the tenancy agreement; and will, with effect from the Completion Date, as notified to it by the Company s solicitor, remit to the Companyall rental payments due under the tenancy agreement TGGB to obtain written confirmation from Tenant 2 that Tenant 2: has paid to TGGB the sum of RM194, as refundable deposit under the terms of the tenancy agreement; and will, with effect from the Completion Date, as notified to it by the Company s solicitor, remit to the Company all rental payments due under the tenancy agreement. 4

5 3.2.5 TGGB shall have deposited with CSCM s solictors the sum of RM1,718, witihn 14 days from the date of the Transfer Consent made up as follows:- RPGT Retention Sum RM1,230, Release of the refundable deposits RM 488, paid by the existing tenants the passing at an extraordinary general meeting of TGGB of a resolution to approve the transactions comtemplated under the SPA in accordance with terms of the SPA. 3.3 unless CSCM otherwise agrees in writing, the Conditions Precedet shall be required to be fulfilled within the following times:- (a) in respect of Conditions Precedent Items 3.2.2, and (b) in respect of Conditions Precedent Items and (c) in respect of Condition Precedent Item within 30 days from the date of the SPA within 6 months from the date of the SPA within 14 days from the date of the Transfer Consent 3.4 CSCM shall be at liberty as its sole discretion to either grant further accommodation or to treat the SPA as lapsed and of no further effect if any of the deadlines above stated for fulfilment of the Conditions Precendent is not fulfilled for any reason whatsoever. The date when all the Conditions Precedent are fulfilled shall be referred to as the Unconditional Date. 3.5 Completion of the Purchase shall take place on or before 60 days from the Unconditional Date. 3.6 In the event that the Purchase herein contemplated cannot be carried out or be perfected for whatsoever reason in accordance with the provisions of the SPA without any fault on the part of TGGB or the Company, each party hereto shall use its best endeavours to ascertain the cause or reason for such non-registration, to rectify, remedy and/or overcome such cause or impediment and to cause the transfer to be registered. 3.7 If notwithstanding the aforesaid, such cause or impediment is not rectified, remedied and/or overcome within a period of three (3) months from the date such non-registration is made known to the parties hereto without any fault or default of the parties hereto, then the Company shall be entitled at its discretion to terminate the SPA by written notice to TGGB whereupon the SPA shall forthwith terminate and cease to be of any further effect save as otherwise expressly provided in this item and:- 5

6 3.7.1 TGGB shall within 14 days refund and/or cause to be refunded to the Company, free of interest, the Purchase Price of RM41,000, in exchange for the Company: withdrawing or causing to be withdrawn or removed, at the Company s own cost and expense, all encumbrances in relation to the Properties (including but not limited to caveats, prohibitory orders and injunctions) attributable to the Company and/or any person claiming through or under the Company; returning the original issue document of title to the Properties, if the same has been delivered to the Company together with all the documents forwarded to the Company (if any) (with TGGB s interest intact); thereafter neither party shall have any claim against the other in respect of the SPA or at law in respect of the subject matter of the SPA. 3.8 In the event, either of the parties shall breach or fail to observe or perform any of the terms, stipulations and obligations herein contained on its part to be observed or performed, then the non-defaulting party shall on performing all the terms and conditions and stipulations herein contained on its part to be performed be entitled either to the remedy at law for specific performance against the defaulting party and to all relief flowing there from or to terminate the SPA and claim damages and all costs and expenses incurred in exercising such right shall be borne and paid by the defaulting party. 4. BASIS OF ARRIVING AT AND JUSTIFICATION FOR THE PURCHASE PRICE The Price of RM41,000, is arrived at on a willing buyer and willing seller basis taking into account the median of the market valuations of the Properties given by each of the independent valuers respectively engaged by TGGB and CSCM as well as the value of fixed assets in the Properties including but not limited to the net book value of 13 units of overhead cranes and a unit weight bridge of approximately RM454, RATIONALE AND BENEFIT The Purchase is beneficial to the Group for the following reasons:- (i) the Properties, which are rented to reputable tenants, currently generate rental income of not less than RM3,180, per annum (computed based on current tenancy agreements); 6

7 (ii) (iii) part of the Purchase Price amounting to RM21,000, will be used towards repayment of trade debts owing by TGSC to CSCM (amount outstanding as at 31 August 2015 was RM21,243,078.97); TGSC has made substantial debts to TGGB as its holding company. TGGB has agreed to utilise the whole of the Purchase Price of RM41,000, toward reduction of its advances from TGSC. With the sale proceeds, TGSC will be able to reduce its borrowing cost with Maybank and improve its financial record. As CHB is a 20% shareholder of TGSC, this will enhance CHB s investment value in TGSC. The Purchase will be funded by CSCM s internal funds. 6. PROSPECTS OF THE PURCHASE The Purchase is expected to generate rental income from the existing tenancies, which will not be less than RM3,180, per year. 7. LIABILITIES TO BE ASSUMED There is no liability, including contingent liability, to be assumed by CHB arising from the Purchase. 8. RISK FACTORS The Purchase is not expected to have a material impact on the business risks of CHB. Business risks include, but not limited to, changes in general economic conditions, government legislations and changes in business conditions such as increase in operational costs, labour supply and fluctuations in steel prices. CHB will take effective measures such as prudent and efficient operational and financial management and procedures to mitigate these risks. 9. ESTIMATED TIME FRAME FOR COMPLETION Barring unforeseen circumstances, the Purchase is expected to complete by May FINANCIAL EFFECTS OF THE PURCHASE The Purchase is expected to have positive contribution towards Earning Per Share of CHB Group while the Net Asset per share, gearing and share capital expected to remain unchanged in year

8 11. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE PURCHASE The highest percentage ratio applicable to the Purchase pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Securities Malaysia Berhad is 5.63% based on the audited financial statements of the CHB Group for the financial year ended 31 December APPROVALS REQUIRED The Purchase is not subject to the approval of the shareholders of CHB or any regulatory authorities save as mentioned under Item 3.2 above. 13. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS Save that CHB has a 20% shareholding in TGSC, none of the Directors and/or major shareholders of the Company nor person(s) connected to them have any interest, direct or indirect, in the Purchase. 14. STATEMENT BY DIRECTORS The Board of Directors of CHB is of the opinion that the Purchase is in the best interests of the CHB Group. 15. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the SPA and valuation report will be available for inspection at the registered office of CHB at 49-B Jalan Melaka Raya 8, Taman Melaka Raya, Melaka during normal business hours on Mondays to Fridays (except public holiday) for a period of three (3) months from the date of this announcement. This announcement is made on 31 December