PMB TECHNOLOGY BERHAD

PMB TECHNOLOGY BERHAD (Company No.: 584257-X) Lot 1797, Jalan Balakong, Bukit Belimbing, 43300, Sri Kembangan, Selangor Darul Ehsan, Malaysia. Tel. : 603-89615205. Fax. : 603-89611904. PMB TECHNOLOGY BERHAD ( PMBT OR THE COMPANY ) - PROPOSED DISPOSAL OF A WHOLLY-OWNED SUBSIDIARY, AG TERMINAL SDN BHD BY EVERLAST ENVIRONMENTAL MANAGEMENT SDN BHD 1. Introduction The Board of Directors of PMB Technology Berhad ( PMBT ) is pleased to announce that Everlast Environmental Management Sdn Bhd ( EEM ), a whollyowned subsidiary of Everlast Aluminium (M) Sdn Bhd, which in turn is a whollyowned subsidiary of the Company, had on 21 October 2011 entered into a Sale and Purchase Agreement ( Agreement ) with Universal Lubricants Factory (Zinol) LLC of Industrial Area No. 4, behind AL Qasmiah Road, P.O. Box 6527, Sharjah, United Arab Emirates (License Number 3766) (the Purchaser ) for the disposal of the entire equity interest of AG Terminal Sdn Bhd (Company Number: 725045-A) ( AGT ) for a total cash consideration of Ringgit Malaysia Twenty Four Million (RM24,000,000.00) only (the Proposed Disposal ). 2. Details of the Proposed Disposal 2.1 Background information on the Proposed Disposal The Proposed Disposal involves the disposal of One Million (1,000,000) Ordinary Shares of Ringgit Malaysia One (RM1.00) each comprising of One Hundred Per Centum (100%) of the issued and paid-up share capital of AGT ( Sale Shares ) by EEM to the Purchaser for a total cash consideration of RM24,000,000.00 ( Sale Consideration ). EEM will dispose the Sale Shares to the Purchaser free from all liens, charges, pledges and encumbrances but with all rights of whatsoever nature now or hereafter attaching to them subject to the terms and conditions of this Agreement. 2.2 Information on AGT AGT was incorporated on 28 February 2006 as a private limited company under the Companies Act, 1965. The current authorised and issued and paid-up share capital of AGT is RM1,000,000.00 comprising 1,000,000 ordinary shares of RM1.00 each. AGT is principally engaged in the business of liquid bulking handling and storage facilities and logistic, warehousing and related services. Currently, AGT owns bulking facilities in West Port, Selangor erected on a 3-acre land sub-leased from Westports Malaysia Sdn Bhd ( WM ) for its liquid bulking business. The sub-lease agreement entered into between WM and AGT is for the duration from 1 March 2006 to 31 August 2024. 1

Based on the latest audited accounts of AGT as at 31 December 2010, the net assets and net profit for the year amounted to RM8,251,254.00 and RM1,284,522.00 respectively. In addition, the net book value of the fixed assets is RM14,635,385.00. 2.3 Date and original cost of investment The original cost of investment in AGT was RM7,000,000.00 and the date of investment was on 1 December 2006. 2.4 Expected gains or losses arising from the Proposed Disposal The Proposed Disposal is expected to result in a gain of approximately RM9,340,000.00 for the financial year ending 31 December 2011. 2.5 Utilisation of proceeds from the Proposed Disposal The Board proposes to utilise the total cash proceeds amounting to RM24,000,000.00 to be realised from the Proposed Disposal in the following manner: RM million Expected timeframe from Completion Date Working Capital for the Group 14 Within 2 months Repayment of bank borrowings for the Group 10 Within 6 months --------- 24 ===== 3. Information on the Purchaser The Purchaser was incorporated in U.A.E. It is a multinational company operating in more than 45 countries. It is principally engaged in the manufacturing and trading of liquid filling machineries & complete packaging units, fabrication of storage tanks and associated projects, manufacturing of wide range of plastic for various packaging options and manufacturing and marketing of lubricants. 4. Basis for Arriving at the Sale Consideration The Sale Consideration of Ringgit Malaysia Twenty Four Million (RM24,000,000.00) only (the Sale Consideration ) was arrived on a willing buyer-willing seller basis after taking into consideration the potential earnings of AGT and a professional valuation carried out by the independent registered valuers Messrs. Henry Butcher Malaysia for the following: 2

i. Plant and machinery at liquid bulk complex for petroleum/chemicals at the Estimated New Replacement Value ( ENRV ) of RM23,075,000.00 ( P&M Valuation ) ii. A parcel of leasehold industrial land measuring approximately 3 acres erected with several industrial buildings located at Westport, Selangor at a market value of RM 970,000.00 based on the sub lease agreement entered with WM ( Land Valuation ). 5. Liabilities to be assumed There are no liabilities including contingent liabilities or guarantees to be assumed by the Purchaser arising from the Proposed Disposal. 6. The Rationale for the Proposed Disposal The Proposed Disposal will enable PMBT Group to focus more on its core business whilst enhancing the Group s liquidity and strengthening its financial position. 7. Approval Required The Proposed Disposal is not subject to the approval of the shareholders of PMBT and other government authorities. 8. Salient features of the Agreement The Sale Shares are disposed free from all liens, charges, pledges and encumbrances but with all rights of whatsoever nature now or hereafter attaching to them. 8.1 Payment terms The Sale Consideration shall be satisfied in the following manner:- (a) (b) A total sum of RM480,000.00 ( Initial Sum ) equivalent to 2% of the Sale Consideration has been paid by the Purchaser to EEM. A total sum of RM1,920,000.00 ( 2 nd Payment ) equivalent to 8% of the Sale Consideration has been paid upon signing of the Agreement (c) A total sum of RM9,600,000.00 ( 3 rd Payment ) equivalent to 40% of the Sale Consideration shall be paid to EEM s solicitors within thirty (30) days from the date of the Agreement provided that the Purchaser shall have a right to issue a portion of the 3 rd Payment directly in favour of Bangkok Bank Berhad for the redemption and cancellation of the loan facility. (d) The 50% balance of the Sale Consideration equivalent to RM12,000,000.00 ( the Final Payment ) of the Sale Consideration 3

shall be paid by the Purchaser to EEM s solicitors within sixty (60) days from the date of the Agreement. If the Purchaser is unable to pay the 3 rd Payment or the Final Payment by their respective due date(s), an extension of thirty (30) days commencing from the expiry of the respective due date(s) shall automatically be accorded to the Purchaser subject to payment of interest at 12% per annum on a daily basis on the 3 rd Payment or the Final Payment respectively and the Purchaser shall be deemed in default of the Agreement if the Purchaser fails to pay the 3 rd Payment or the Final Payment upon the expiry of any of the respective said thirty (30) days extension. The Final Payment will be released to EEM upon complying with its obligation stipulated in the Agreement. 8.2 Joint covenants EEM agrees to pay all the debts and liabilities of the Company prior to the Completion Date except the book provision of a Deferred Taxation and Provision for Taxation under the Accounts, any form of tax assessed or additionally assessed on the Company by any competent revenue authority for any period ending after the Completion Date and deposits and prorated payments stipulated in the Agreement. AGT shall be authorised to repay EEM an amount equivalent to net of all receivables collected or to be collected and payables of AGT as at the Completion Date as the full and final settlement for the advances by EEM. 8.3 Completion The Proposed Disposal will be deemed completed when the Sale Shares are registered under the name of the Purchaser and the relevant share certificate constituting the Sale Shares have been duly endorsed and registered in favour of the Purchaser ( Completion Date ). Upon the clearance of the cheque(s) for the Final Payment, EEM s solicitors shall be authorised to release the Sale Consideration to EEM. 8.4 Termination 8.4.1 In the event that the Sale Shares cannot be registered in favour of the Purchaser for any reasons not attributable to both parties, the Purchaser shall be entitled to terminate the Agreement and EEM shall refund or cause to be refunded to the Purchaser the Sale Consideration, free of interest. 8.4.2 In the event that the Sale Shares is not or cannot be registered in favour of the Purchaser for any reasons attributable to the Purchaser, EEM shall be entitled to terminate this Agreement and the sum equivalent to ten percent (10%) of the Sale Consideration shall be forfeited absolutely in favour of EEM and any excess shall be refunded to the Purchaser, free of interest. 8.4.3 In the event that the Sale Shares is not or cannot be registered in favour of the Purchaser for any reasons attributable to EEM, the Purchaser shall be entitled to terminate this Agreement and the 4

sum equivalent to ten percent (10%) of the Sale Consideration and all other monies already paid by the Purchaser to EEM shall be refunded to the Purchaser, free of interest. A further sum equivalent to ten percent (10%) of the Sale Consideration shall be paid by EEM to the Purchaser as agreed liquidated damages. 9. Salient terms of the valuation reports 9.1 P&M Valuation The basis of valuation adopted for the plant and machinery is the ENRV, which is the cost of replacing an existing asset with an identical or substantially similar new asset having similar production service capacity, including costs of transport, installation, commissioning, consultant s fees and non-recoverable taxes and duties. 9.2 Land Valuation The basis of valuation adopted for the leasehold industrial land is the Depreciated Replacement Cost method of evaluation which is based on an estimate of the current Market Value of the land for its existing use plus the current gross replacement (or reproduction) costs of improvements less allowance for physical deterioration and all relevant forms of obsolescence and optimisation subject to adequate potential profitability or service potential of the enterprise. As a countercheck, the Comparison Method of valuation was also considered an approach for comparing the property being appraised with similar properties that were either transacted recently or listed for sale within the sale location or other comparable localities. In comparing properties, due consideration was given to factors such as remaining lease, location, size, site terrain, accessibility, land use, improvements, facilities and amenities, time element and other relevant factors to arrive at the opinion of value. 10. Effects of the Proposed Disposal Share capital The Proposed Disposal shall not have any effect on the share capital. Substantial shareholders shareholding The Proposed Disposal will not have any effect on the substantial shareholders shareholdings of PMBT as there will be no issuance of securities in PMBT. Gearing Based on the audited consolidated financial statements of PMBT for the financial year ended 31 December 2010, the proforma effects of the Proposed Disposal on the gearing of PMBT are set out in Table 1 herein. 5

Earnings Per Share Upon completion, the Proposed Disposal will result in an estimated gain of approximately RM9,340,000.00 to the Group for the financial year ending 31 December 2011 and is expected to increase the earnings per share of the Group by 12.05 sen. Net Assets ( NA ) Per Share Based on the audited consolidated financial statements of PMBT for the financial year ended 31 December 2010, the proforma effects of the Disposal on the net assets per share of PMBT are set out in Table 1 herein. 11. Percentage Ratio Based on the latest audited financial statements for the year ended 31 December 2010, the highest percentage ratio under Paragraph 10.02(g) of Chapter 10 of Bursa Malaysia Securities Berhad s Main Market Listing Requirements applicable to the Proposed Disposal is 24.68%. 12. Statement by Directors The Board, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interests of PMBT Group. 13. Directors and Major Shareholders Interest None of the Directors, major shareholders and/or persons connected to the Directors and/or major shareholders of PMBT, has any interest, direct or indirect, in the Proposed Disposal. 14. Estimated Time Frame for Completion of the Proposed Disposal Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed within 3 months from the date of the Agreement (i.e. 21 October 2011). 15. Risk Factors The Company does not foresee any material risk pursuant to the Proposed Disposal. 16. Document for Inspection The Agreement may be inspected at the Registered Office of PMBT at Lot 6.05, Level 6, KPMG Tower, 8, First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, during normal business hours from Mondays to Fridays (except public holidays) within 3 months from the date of this announcement. 6

17. Securities Commission s Policies and Guidelines on Issue/Offer of Securities The Securities Commission's Policies and Guidelines on Issue/Offer of Securities is not applicable, as the Proposed Disposal will be satisfied entirely by cash. Table 1 Effects on gearing and net asset per share Share capital Non-distributable share premium Translation reserve Treasury Shares Retained profits Minority interest Total Equity Audited FYE 31 December 2010 RM 000 40,000 6,941 (5,014) (2,220) 57,536 97,243-97,243 After Disposal RM 000 40,000 6,941 (5,014) (2,220) 66,876 106,583-106,583 Number of Ordinary Shares ( 000) Net assets per Ordinary Shares(RM) Total borrowings Gearing (times) 77,479.80 1.26 90,863 0.93 77,479.80 1.38 80,863 0.76 7