Contents :

1. INTRODUCTION

 

•  
  We refer to the earlier announcements dated 24 November 2006 and 25 April 2007.
  
  On behalf of the Board of Directors of AHB ("Board"), AFFIN Investment Bank Berhad ("AFFIN Investment") is pleased to announce that the Company proposes to undertake a proposed placement of new ordinary shares of RM1.00 each ("Placement Shares") representing up to 15% of the issued and paid-up share capital in AHB.

2. DETAILS OF PROPOSED PLACEMENT

2.1 Particulars

•  
  •  
    •  
      The Proposed Placement will entail the issuance of the Placement Shares to The Bank of East Asia, Limited (“BEA”) and/or its affiliates.
      
      The actual number of Placement Shares that may be issued to BEA and/or its affiliates will be 15% of the issued and paid-up share capital of AHB as at the date immediately after all the conditions precedent of the Share Subscription Agreement to be entered into between AHB and BEA in relation to the Proposed Placement have been obtained (“Unconditional Date”), provided that the aggregate number of existing AHB Shares held by BEA and the number of Placement Shares do not exceed 25% of the issued and paid-up share capital of AHB as at the Unconditional Date (“Strategic Equity Interest”).
    •  
      If as at the Unconditional Date, the Strategic Equity Interest exceeds 25% of the issued and paid-up share capital of AHB, the total number of Placement Shares to BEA and/or its affiliates shall be reduced such that as at the Unconditional Date, the Strategic Equity Interest shall be equal to 25% of the issued and paid-up share capital of AHB then.
    •  
      Listing will be sought for the Placement Shares on the Main Board of Bursa Malaysia Securities Berhad (“Bursa Securities”).

2.2 Issue price and basis of pricing of Placement Shares

•  
  •  
    •  
      Under the terms of the Price-Fixing Agreement which was announced on 25 April 2007, the issue price for the Placement Share has been determined at RM2.58 based on a multiple of 1.3 times to the consolidated net asset value based on the latest audited consolidated financial statements of AHB for the financial year ended 31 December 2006 minus goodwill, over the total number of AHB Shares as at 31 December 2006.
      

2.3 Ranking of Placement Shares

•  
  •  
    •  
      The Placement Shares shall, upon allotment and issue, rank pari passu in all respects with the existing issued and fully paid-up AHB Shares, save and except that they shall not be entitled to participate in any dividends, rights, allotments and / or any other distributions, the entitlement date of which is prior to the date of the allotment of the Placement Shares.

2.4 Utilisation of proceeds

•  
  •  
    •  
      The proceeds from the Proposed Placement shall be utilised for repayment of borrowings, working capital and for capital injection into subsidiaries of the AHB Group.
      
      Further details of the utilisation of proceeds from the Proposed Placement are set out in Table 1 below.

2.5 Rationale for Proposed Placement

•  
  •  
    •  
      The Proposed Placement will provide the Group with a strategic partner that has the expertise and technical know-how to contribute significantly to the banking business and strategies of the AHB Group. This would position the AHB Group as a major player in the financial services industry to meet the challenges of a liberalised banking arena, in line with AHB’s strategic objectives.
      
      The partnership with BEA will also enable the AHB Group to leverage on the international platform and strengths of BEA. This in turn would enable the AHB Group to enhance its competitive edge. Further, such partnership will create a unique growth opportunity for both the AHB Group and BEA based on AHB Group’s customer franchise and BEA's strengths in service innovation. It will also provide a strong foundation for advancing the AHB Group's strategy to be one of Malaysia's premier consumer and business focused financial group.
      
      The cash injection by BEA through the Proposed Placement will strengthen the capital base of AHB and provide the funds for repayment of borrowings, working capital and for capital injection into subsidiaries of the AHB Group.

3. EFFECTS OF PROPOSED PLACEMENT

3.1 Share capital

•  
  •  
    •  
      The effects of the Proposed Placement on the issued and paid-up share capital of AHB are shown are Table 2 below.

3.2 Net assets ("NA")

•  
  •  
    •  
      The proforma effects of the Proposed Placement on the consolidated NA per AHB Share based on the audited financial statements as at 31 December 2006, are tabulated in Table 3 below.

3.3 Earnings

•  
  •  
    •  
      The Proposed Placement is not expected to have any material effect on the earnings of the AHB Group for the financial year ending 31 December 2007 as the Proposed Placement is only expected to be completed by the end of third quarter of 2007. Thereafter, the proposed utilisation of the proceeds from the Proposed Placement is expected to contribute positively to the future earnings per share of the AHB Group.

3.4 Substantial shareholding structure

•  
  •  
    •  
      The proforma effects of the Proposed Placement on the substantial shareholding structure of the Company based on the Register of Substantial Shareholders as at 30 June 2007 are shown in Table 4 below.

3.5 Dividends

•  
  •  
    •  
      AHB declared and paid dividends amounting to 5% for the financial year ended 31 December 2006. The Proposed Placement is not expected to have any material effect on the dividend policy of AHB. Barring unforeseen circumstances, any dividends to be declared by AHB for the financial year ending 31 December 2007 would depend on, inter-alia, the profitability and cashflow position of the Group.

3.6 Gearing

•  
  •  
    •  
      The proforma effects of the Proposed Placement on the consolidated gearing of AHB based on the audited financial statements as at 31 December 2006 are shown in Table 5 below.
      

4. APPROVALS REQUIRED

•  
  The Proposed Placement is subject to the approvals of the following, all of which are still pending:

•  
  (i) Minister of Finance (“MOF”) via Bank Negara Malaysia (“BNM”) pursuant toSections 45, 46 and 49 of the Banking and Financial Institutions Act, 1989, Section 22 of the Islamic Banking Act, 1983 and Section 67 of the Insurance Act, 1996;
  
  (ii) Securities Commission ("SC") for the Proposed Placement and listing of and quotation for the Placement Shares on the Main Board of Bursa Securities;
  
  (iii) Licensing Department of the SC, for the change in the indirect shareholding of AFFIN Fund Management Berhad (formerly known as AFFIN Fund Management Sdn Bhd), a wholly-owned subsidiary of AFFIN Investment which in turn is a wholly-owned subsidiary of AHB, pursuant to the fund manager’s licence;
  
  (iv) Equity Compliance Unit (“ECU”) of the SC, pursuant to the Foreign Investment Committee’s Guideline on the Acquisition of Interests, Mergers and Takeovers by Local and Foreign Interests;
  
  (v) Bursa Securities for the listing of and quotation for the new AHB Shares to be issued pursuant to the Proposed Placement;
  
  (vi) shareholders of AHB at an extraordinary general meeting (“EGM”) to be convened;
  
  (vii) shareholders of BEA (if necessary);
  
  (viii) Hong Kong Monetary Authority (if required) for BEA to acquire the Placement Shares; and
  
  (ix) other relevant authorities in Malaysia, Hong Kong or elsewhere, if any.

5. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM

•  
  
  None of the Directors and major shareholders of AHB and persons connected to them, have any interest, either directly or indirectly, in the Proposed Placement.

6. DIRECTORS' OPINION

•  
  After considering all aspects of the Proposed Placement, the Board, is of the opinion that the terms of the Proposed Placement are fair and reasonable and in the best interests of the Company. As such, the Board recommends that you vote in favour of the resolution pertaining to the Proposed Placement at the forthcoming EGM.

7. ADVISER

AFFIN Investment has been appointed as the Adviser for the Proposed Placement.


8. APPLICATION TO THE RELEVANT AUTHORITIES

•  
  Barring unforeseen circumstances, the submission to the SC pertaining to the Proposed Placement will be made within one (1) month from the date of this announcement. The application to MOF via BNM was made on 11 July 2007 and the application to the other relevant authorities will be made within three (3) months from the date of this announcement.