GUNUNG CAPITAL BERHAD ("GUNUNG" or "Company") PROPOSED CAPITAL REDUCTION; PROPOSED ACQUISITION; AND PROPOSED RIGHTS ISSUE WITH

NEW WARRANTS

(COLLECTIVELY, THE “PROPOSALS”)

1.

INTRODUCTION MIMB Investment Bank Berhad (“MIMB”), on behalf of the Board of Directors (“Board”) of Gunung, is pleased to announce that the Company had on 20 January 2010 entered into a conditional sale and purchase agreement (“SPA”) with Syed Abu Hussin Bin Hafiz Syed Abdul Fasal (the “Vendor”), for the proposed acquisition of 51% equity interest in GPB Corporation Sdn Bhd (“GPB”). In addition, the Board of Gunung had on even date resolved to undertake the following proposals:(i) proposed capital reduction involving 60% reduction in the par value of the Gunung shares in issue, the details of which are set out in Section 2.1 below; and proposed renounceable rights issue with free warrants to raise up to RM27.9 million in proceeds to finance, inter-alia the Proposed Acquisition, the details of which are set out in Section 2.3 below.

(ii)

(collectively, the “Proposals”).

2.

DETAILS OF THE PROPOSALS 2.1 Proposed Capital Reduction The proposed capital reduction entails the reduction of Gunung’s issued and paid-up share capital via the cancellation of RM0.60 in the par value of each ordinary share of RM1.00 each in Gunung (“Gunung Share”) resulting in a new par value of RM0.40 for each ordinary share in Gunung (“Resultant Share”) pursuant to Section 64 of the Companies Act, 1965 (“Act”) (“Proposed Capital Reduction”). In the event that any of the existing 15,999,200 outstanding warrants 2003/2013 in issue of Gunung (“Existing Warrants”) is exercised into new Gunung Share and the corresponding new Gunung Share is credited to the holder of such Existing Warrant on or before the effective date for the Proposed Capital Reduction, the new Gunung Share arising therefrom shall also be subject to the Proposed Capital Reduction. Under the Minimum Scenario, assuming none of the Existing Warrants are exercised, the Proposed Capital Reduction would entail the reduction of the existing issued and paid-up share capital of Gunung of RM50,354,000 comprising 50,354,000 Gunung Shares to RM20,141,600 comprising 50,354,000 ordinary shares of RM0.40 each. Under the Maximum Scenario, assuming all the 15,999,200 Existing Warrants are exercised into 15,999,200 new Gunung Shares on or before the effective date of the Proposed Capital Reduction, the Proposed Capital Reduction would entail the reduction of the enlarged issued and paid-up share capital of RM66,353,200 comprising 66,353,200 Gunung Shares to RM26,541,280 comprising 66,353,200 ordinary shares of RM0.40 each.

The sale and purchase of the Sale Shares and completion thereof are conditional upon the following. representing 2. 2.530) (318) 39. from the Vendor for a total purchase consideration of RM17.812 (30. and the balance to be kept as a credit reserve as follows: Minimum Scenario RM’000 Maximum Scenario RM’000 Credit arising from the Proposed Capital Reduction Accumulated losses (as at 31 December 2008) (Accumulated losses)/ Credit Reserve after the Proposed Capital Reduction 30.530) 9.550. totaling 4.000 ordinary shares of RM1.000 to be fully satisfied by cash (“Proposed Acquisition”).2% of the total issued and paid up share capital of GPB.2 PROPOSED ACQUISITION The Company proposes to acquire 51% equity stake in GPB.The reduction of RM0. and 2. deposit.2.000. the Company being satisfied with the results of its due diligence investigation into the Vendor’s title to the Sale Shares. 2. and GPB’s title to its respective assets and liabilities. (b) (c) . the Company having obtained a credit facility to finance its purchase of the Sale Shares upon terms acceptable to the Company. assignment or other form of encumbrances) and with all rights attaching to them on and after the completion of the Proposed Acquisition. charge. to the extent possible.000. the Memorandum and Articles of Association of Gunung would be amended accordingly to reflect the new par value of Gunung Share of RM0. The Vendor is desirous to sell the Sale Shares to the Company at the consideration of RM17.00 each in GPB (“Sale Shares”). The Vendor is the registered and beneficial owner of the issued and paid up ordinary shares of RM1.282 In order to facilitate the Proposed Capital Reduction. inter alia: (a) the approval of the Company’s shareholders in general meeting to the Proposed Acquisition. all conditions for drawing on the credit facility have been fulfilled and the facility is ready for utilization by the Company. tax position and prospects of GPB.510.2 million (under the Minimum Scenario) and RM39.40 per share pursuant to the Proposed Capital Reduction (“Proposed M&A Amendments”). The Sale Shares shall be acquired free from any security interest (including mortgage. lien.8 million (under the Maximum Scenario) which will be utilised to reduce Gunung’s accumulated losses.00 (“Purchase Consideration”) and upon the terms and conditions set out in the SPA. legal. contractual. pledge. the financial.60 in par value from each existing Gunung Share will give rise to a credit of between RM30.1 Salient terms of the SPA 1.212 (30.00 each.000 shares representing 90.000.

GPB has an authorised share capital of RM5. Malaysia.510. GPB has purchased 156 coaches and it will also engage the services of other coach provider to service the relevant routes and its contractual commitments under the MOD Contract. As at 8 January 2010. Subject and subsequent to the fulfillment of the conditions precedent stipulated in the SPA. He is a director and substantial shareholder of GPB.000 comprising 5. of which 5. aged 49.8% 100% The Vendor.000 (%) 90. if any. commencing from December 2009. The Directors of GPB as at 8 January 2010 are Syed Abu Hussin Bin Hafiz Syed Abdul Fasal. is a Malaysian.000 190. namely Syed Abu Hussin Bin Hafiz Syed Abdul Fasal.2% equity interest in GPB. As at 8 January 2010.(d) the Vendor causing GPB to notify the relevant Public Authority (where applicable) of the change in equity structure in GPB pursuant to the Proposed Acquisition in accordance with terms and conditions of GPB’s registration with the Ministry of Finance as bumiputera contractor. holding 90.2% 6.000.000 5. 2.2. Ismail Bin Abdullah and Sahipol Baharin Bin Abd. It subsequently changed its name to Alwina Ekspres Sdn Bhd on 24 May 2002 and assumes its present name on 12 April 2007. 4. on a date no later than 30 days from the date of fulfillment of all the conditions precedent or such later date as the Parties may mutually agree (“Completion Date”).000 shares is credited as fully paid-up. completion of the Proposed Acquisition will take place at the office of the Company on a date to be mutually agreed upon between the parties.000.000.000 300. to supply bus transportation services for the National Service (“NS”) Training Program (“MOD Contract”) nationwide.2 Information on GPB GPB was incorporated under the name of Suria Melodi Sdn Bhd in Malaysia on 17 March 1993 as a private limited company under the Act. .00 each in GPB. of shares Syed Abu Hussin Bin Hafiz Syed Abdul Fasal Ismail Bin Abdullah Sahipol Baharin Bin Abd. who are the other existing shareholders of GPB to waive their respective pre-emption rights accruing under the Memorandum and Articles of Association of GPB (or such other shareholders’ agreement between the shareholders of GPB). The Vendor shall cause Ismail bin Abdullah and Sahipol Baharin bin Abd. Kadir. against the Vendor in respect of the sale of the Sale Shares to the Company.000 ordinary shares of RM1. Kadir. Thus far. Kadir Total 4. GPB has obtained a 5-year contract from the Ministry of Defence. The shareholders of GPB and their respective shareholdings in GPB as at 8 January 2010 are as follow: Name As at 8 January 2010 No.0% 3.000. 3. GPB is principally engaged in transportation services. GPB does not have any subsidiary or associate company.

2.000 was arrived at on a willing-buyer willing-seller basis after taking into consideration the following:(i) the potential future earnings contribution from GPB which is backed by the MOD Contract.000 4.000.000 500.6 Estimated financial commitments There are no additional financial commitments required by Gunung in putting the assets/ businesses acquired on-stream. maintenance and service requirements.000 4. The existing liabilities of GPB will be settled by GPB in its normal course of business.000 10. of shares acquired/ subscribed Syed Abu Hussin Bin Hafiz Syed Abdul Fasal 5 June 2009 20 June 2008 24 December 2007 4.2. and the synergistic benefits arising from the utilisation of Gunung’s existing landed property and purpose-built bus building factory in Kamunting. 2.510.2.000 2.000 4. (ii) The Proposed Acquisition will initially be funded by bank borrowing and subsequently refinanced by the proceeds to be raised from the Proposed Rights Issue with New Warrants.510. .2.000 500.000. Perak which can serve as central base for GPB’s bus transportation business.4 Original date and cost of investment The original dates and costs of investment in GPB by the Vendor are as follows:Original date of investment Original cost of investment (RM) No.000.2.000 10.2.3 Basis of arriving at and justification for the purchase consideration The purchase consideration for the Proposed Acquisition of RM17.5 Liabilities to be assumed Gunung will not assume any liability pursuant to the Proposed Acquisition.

Coincidentally. The increase was mainly due to the commencement of bus charter services to a third party contractor under the NS training program.7 million recorded in the FYE 31 December 2006.46) (562) 1.5 million recorded in the previous financial year. FYE 31 December 2007 During the FYE 31 December 2007.2. which comprised of fourteen (14) months.2 million recorded in the FYE 31 December 2007 due to lower depreciation charges following the disposal of 2 units of buses. (GPB changed its financial year end from 30 September to 31 December in 2005).337 237 (16) 221 158 2008 RM’000 3. Accordingly.3 million compared to approximately RM0. As a result.3 million to approximately RM3.FYE 31 December -----------------> 2006 RM’000 Revenue Profit before taxation (“PBT”)/ (Loss before taxation) (“LBT”) Taxation Profit after taxation (“PAT”)/ (Loss after taxation) (“LAT”) Shareholders’ funds Borrowings 683 (0.2 million compared to a LBT of RM460 for the FYE 31 December 2006.2. the GPB registered an increase in PBT to approximately RM0.4 million with continued business from bus charter services for the NS training program.7 Financial information of GPB The audited financial information of GPB for the past three (3) financial years ended (“FYE”) 31 December 2008 as well as the commentary provided by the management of GPB are set out below:<----------------------. GPB recorded a lower LBT of RM460 as compared with LBT of approximately RM0. The decrease in revenue was mainly caused by a shorter financial period under review. GPB’s revenue increased by 388% to approximately RM3. GPB’s revenue increase marginally from approximately RM3.0 million recorded in the previous financial year.415 324 (211) 113 272 - Commentary FYE 31 December 2006 During the FYE 31 December 2006.3 million from approximately RM0. . FYE 31 December 2008 For the FYE 31 December 2008.46) (0.7 million as opposed to approximately RM1. GPB registered revenue of approximately RM0. GPB experienced a slight improvement in PBT to approximately RM0.057 2007 RM’000 3.

New Warrants and Resultant Shares to be issued pursuant to the exercise of the New Warrants. In the event that an Entitled Shareholder decides to accept partially his Rights Shares entitlement.200 new ordinary shares of RM0.42 per share. The renunciation of the Rights Shares by the Entitled Shareholders of Gunung will accordingly entail the renunciation of the New Warrants to be issued together with the Rights Shares pursuant to the Proposed Rights Issue with New Warrants.177.600 free detachable warrants (“New Warrants”) on the basis of one (1) New Warrant for every two (2) Rights Shares subscribed by the entitled shareholders of the Company whose names appear in the Record of Depositors of the Company (“Entitled Shareholders”) on an entitlement date to be determined later (“Entitlement Date”) by the Board of Gunung (“Proposed Rights Issue with New Warrants”).200 Existing Warrants are exercised into 15.43 or 50.176.8%. being a 2 sen premium above the new par value of the Resultant Shares of RM0.2.000 New Warrants.3 PROPOSED RIGHTS ISSUE WITH NEW WARRANTS The proposed renounceable rights issue entails the issuance of up to 66. Any fractional entitlements under the Proposed Rights Issue with New Warrants will be disregarded and shall be dealt with in such manner as the Board of Gunung shall in their absolute discretion think expedient in the interest of the Company.999.8% from the five (5)day weighted average market price of Gunung Shares up to 19 January 2010 (being the market day preceding the date of this announcement) of RM0. . under the Minimum Scenario. However.1 Basis of determination of the issue price of the Rights Shares and exercise price of the New Warrants The Board of Gunung has fixed the issue price of the Rights Shares at RM0. 2.40 each (“Rights Shares”) on a renouceable basis of one (1) Rights Share for every one (1) Resultant Share held after the Proposed Capital Reduction together with up to 33. the highest percentage ratio of the Proposed Acquisition is 85. the Proposed Rights Issue with New Warrants would only entail the issuance of 50.999. he shall then be entitled to the New Warrants in the proportion of his acceptance to the Rights Shares entitlement. on the Main Market of Bursa Securities. The issue price also represents a discount of approximately RM0. 2.353. The New Warrants will be immediately detached from the Rights Shares upon issuance and will be separately traded. The salient terms of the New Warrants are set out in Table 1.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”). assuming none of the Existing Warrants are exercised.200 new Gunung Shares on or before the Entitlement Date.354. The above maximum number of Rights Shares and New Warrants under the Maximum Scenario assumes all the 15.3. The New Warrants will be issued in registered form and constituted by a Deed Poll to be executed by the Company.854 per share.8 Percentage ratio Pursuant to Paragraph 10.40 each and the proforma net assets value per Gunung Shares (based on the Minimum Scenario) after the Proposals of approximately RM0.000 Rights Shares together with 25. An application will be made to Bursa Securities for the listing of and quotation for the Rights Shares.2.40 each.

50 per share. has given its written irrevocable undertaking to subscribe in full for its entitlement under the Proposed Rights Issue with New Warrants (“Entitlement Undertaking”) as follows:Name Erayear Equity No. 2. . allotments and/ or any other distributions that may be declared. being a 10 sen premium above the new par value of the Resultant Shares of RM0. upon allotment and issue. the Company will procure for the underwriting of the remaining portion of the Rights Shares for which no undertaking is provided.327. rank pari passu in all respects with the then existing Resultant Shares except that they will not be entitled to any dividends. 2. rights.01 In addition. a substantial shareholder of Gunung.40 each and the proforma net assets value per Gunung Shares (based on the Minimum Scenario) after the Proposals of approximately RM0.2 Ranking of the Rights Shares and new Resultant Shares arising from the exercise of the New Warrants The Rights Shares to be issued shall.599.The share premium arising from the Proposed Rights Issue with New Warrants of up to RM1. The Board has also fixed the exercise price of the New Warrants at RM0. of Gunung Shares held as at 8 January 2010 13.35 or 41.3.40 each. The new Resultant Shares to be issued arising from the exercise of the New Warrants shall.01 Entitlement of Rights Shares 13.854 per share.064 would be made available to set off the expenses relating to the Proposed Rights Issue with New Warrants. rights. rank pari passu in all respects with the then existing Resultant Shares except that they will not be entitled to any dividends.3 Shareholders’ undertakings and underwriting arrangement Erayear Equity Sdn Bhd (“Erayear Equity”). The exercise price also represents a discount of approximately RM0. upon allotment and issue.5% from the five (5)-day weighted average market price of Gunung Shares up to 19 January 2010 (being the market day preceding the date of this announcement) of RM0.3.129 % 27.599. allotments and/ or any other distributions that may be declared.129 % 27. made or paid prior to the relevant allotment date of the said new Resultant Shares. made or paid prior to the relevant date of allotment and issue of the Rights Shares.

000 27.60 for each existing Gunung Share will give rise to a credit reserve which will be utilised to reduce Gunung’s accumulated losses. the Board has proposed to acquire the controlling stake in GPB. The site can also be easily converted into a base for purpose of routine repair and maintenance of the fleet of buses operated by GPB. The gross proceeds are expected to be utilised in the following manner:Timeframe for utilisation from the completion of the Proposals 6 months Minimum Scenario RM (‘000) 17. RATIONALE FOR THE PROPOSALS 4. Previously.868 (c) Total 1 month 1. .40 each. The Board of Gunung is of the view that the existing landed property of Gunung in Kamunting.4 Utilisation of proceeds The Proposed Rights Issue with New Warrants is expected to raise gross proceeds of between RM21. The Proposed Capital Reduction would also facilitate the Company to issue new shares at the reduced par value of RM0.78 on 19 January 2010 (being the market day preceding the date of this announcement). Perak would be ideal to be used as a central hub for the bus transportation business of GPB which basically provides bus transportation services to all NS centres in Malaysia.000 Proposed utilisation (a) Refinance bank borrowing taken up by Gunung to finance the Proposed Acquisition Working capital of Gunung and its subsidiaries (“Gunung Group”) Estimated expenses relating to the Proposals (b) 12 months 3.000 21.149 9. which amounts to approximately RM30.1 Proposed Capital Reduction Proposed Capital Reduction serves to write off part of the share capital of the Company against the accumulated losses of the Company.868 All proceeds arising from the exercise of the New Warrants will be utilised for working capital of the Gunung Group.2.5 million as at 31 December 2008. The par value reduction of RM0.39 per share as at 31 December 2008 and the current trading price of Gunung shares which was last traded at RM0. Perak.3. which is more reflective of the existing audited net assets value of Gunung Group which stood at RM0.1 million (under the Minimum Scenario) and RM27.149 1. 4.000 Maximum Scenario RM (‘000) 17. the Gunung Group was principally involved in business of providing bus transportation services as well as the business of fabrication of buses at its fabrication site in Kamunting.2 Proposed Acquisition In order to put the Gunung Group on a stronger financial footing.9 million (under the Maximum Scenario). the Gunung Group would effectively revert back to the business of bus transportation services. By undertaking the Proposed Acquisition. 4.

14 October 2009) 5. (Source: Malaysian Institute of Economic Research. ECONOMIC OUTLOOK AND PROSPECTS 5. possibly through reduction in energy subsidies and/or tax reform. public spending had cushioned the economy from a deeper slide. Any balance proceeds will be utilised as working capital for the Gunung Group after defraying expenses relating to the Proposals. The healing from the current crisis will be difficult compared to previous ones because of the synchronised nature of the downturn. The weak external sector will impede a faster recovery.2% in 1st Quarter 2009) after rebound in the external sector. Malaysia may not regain more strength until the global economy is back on track. the services sector had turned positive in 2nd Quarter 2009. limiting the flow of funds to firms. In view of improving macro indicators. while the manufacturing sector reported a smaller decline.4. 5. With the MOD Contract and sound management. Upon exercise of the New Warrants. and the lower commodity prices are not helping either. the Company would potentially receive additional proceeds of up to RM16. the enlarged Gunung group of companies is expected to be able to capitalise on the steady revenue stream as well as opportunities that will arise resulting from the expected rebound of the Malaysian economy. but there are stronger positive influences that led to MIER's upward revision.2% earlier. Although the external sector was still weak.3% year-on-year from -4. Banks are becoming more cautious as bad loans could rise soon.2 Prospects of GPB The Proposed Acquisition is expected to enhance Gunung’s revenue stream via the bus transportation services carried out by GPB. and somewhat better Consumer Sentiment Index and Business Conditions Index as well as the sectoral indices.7% year-on-year from 2. the Malaysian Institute of Economic Research (“MIER”) is revising Malaysia's gross domestic products (“GDP”) growth forecast upwards for 2009 to -3.3 Proposed Rights Issue with New Warrants The purpose of the Proposed Rights Issue with New Warrants is for the Company to raise new funds to refinance the bank borrowing which will be taken up to finance the Proposed Acquisition. the government plans to reduce its expenditure in the 2010 Budget. The technical recession in the 1st Half 2009 is likely to continue into 3rd Quarter 2009 before the economy could exit from it in the 4th Quarter 2009.8% previously. On the supply side. The services sector will be the pillar of strength amidst a glum manufacturing sector. However. . the GDP growth for 2010 is also upgraded to 3.1 The Malaysian economy Malaysia's GDP registered a smaller contraction of -3. The Proposed Rights Issue with New Warrants represents an opportunity for the Entitled Shareholders to continue to participate in the future growth of the Company.9% year-on-year in 2nd Quarter 2009 (6. but the recovery is expected to be sluggish and uneven. There are glimmer signs that the global downturn has stabilised somewhat. In view of the widening fiscal deficit. which is going to be at a disappointingly slow pace. In addition. It will take time and huge resources to revive the deeply entangled United States financial sector while policy options are running out. Downside risks are still prevalent and might perturb the road to recovery.6 million as and when any of the New Warrants are exercised.

which shall be valid for five (5) years from December 2009. whereby a licence must be obtained from the Commercial Vehicles Licensing Board (“CVLB”) for every intended route to be serviced. including strict control on repair and maintenance cost of buses. certain mitigating measures are in place. 1987.1 Risk of rising operating cost The provision of bus services segment has seen an increase in operating cost such as wages. there is no assurance that the MOD Contract will not be disrupted or that the MOD Contract may be renewed. and centralised bulk purchase for diesels and spare parts. 1987. or whether GPB will be able to successfully renew its licences in the future.3 Risks of non renewal of the MOD Contract The provision of bus services is the core business of GPB. the high start-up cost coupled with experienced personnel required to manage the business may deter potential bidders for future MOD Contract. it is anticipated that the majority of the revenue will be derived from the MOD Contract. there can be no assurance that operating costs of GPB can be effectively contained with the implementation of such measures. With high volume of diesel consumed in its day-to-day operations. Moreover. bus operators are required to comply with the relevant laws and regulations of other authorities such as the Department of Environment (DOE) on emission and noise pollution. 6. there can be no assurance that any changes in the present regulations or the introduction of new regulations will not have an adverse effect on the operations of GPB. Even if the MOD Contract is renewed. Although GPB has ensured and will continue to ensure the provision of quality services. fuel. which will lead to greater cost savings. GPB’s licences issued by the CVLB are valid for a period of five (5) years. In this regard. Going forward. constant servicing of its fleet of buses to ensure the safety of NS trainees and the engagement of reliable subcontractors. Although GPB has ensured and will continue to ensure compliance with all laws and regulations of the authorities. any adverse movement in the price of diesel would significantly impact the profitability of GPB. On average.6. RISK FACTORS 6. the Ministry of Defence may impose additional terms or restrictions which may not be beneficial to GPB. In addition. To a certain extent. To-date. spare parts and maintenance. Jabatan Pengangkutan Jalan (JPJ) on compliance with Road Traffic Ordinances. Nevertheless. Wages and fuel are the primary cost to GPB’s operations due to its huge fleet size. CVLB may issue licences which are valid for not more than seven (7) years with a right given to the holder to apply for a renewal of the said licence. 6. . the management of GPB also carefully monitors and ensures all the resources are efficiently employed to contain cost and reduce wastage. GPB has successfully obtained the necessary licences from the CVLB for all the buses in service. Under the Commercial Vehicles Licensing Board Act. Pusat Pemeriksaan Kenderaan Berkomputer (Puspakom) on compulsory inspection of new and existing buses and traffic police department on observance of road traffic regulations.2 Licensing and regulations risks The provision of bus services is regulated by the Ministry of Entrepreneur Development.

The future success of GPB will also depend upon its ability to attract and retain skilled personnel.5 Business risks GPB is subject to certain risks inherent in the bus services sector. These may include changes in general economic conditions and political conditions. 6. Whilst the par value of Gunung shares will reduced from RM1. GPB is grooming existing personnel to support senior management and/or to shoulder more responsibilities in preparation for future opportunities and in ensuring a smooth transition should there be any change in the organisation structure of GPB. no assurance can be given that any change in these factors will not have a material adverse effect on the GPB's business. Amongst the political.4 Political. but not limited to. nationalisation.40 each. The Proposed Acquisition would not have any impact on the issued and paid-up share capital of Gunung as it would be financed entirely by bank borrowing. there is no assurance that any change in the above factors will not have a material adverse effect on the business and operations of GPB. FINANCIAL EFFECTS 7. efforts are continuously made to attract skilled and experience staff through attractive remuneration and incentives and good human resource management for continual future performance. The loss of any member of its key management team may have an adverse impact on the operations of GPB.00 to RM0. Although GPB seeks to limit these risks through.6.1 Share Capital The Proposed Capital Reduction would have an immediate impact of reducing the issued and paid-up share capital of Gunung. economic and regulatory uncertainties are the changes in political leadership.6 Dependence on key personnel The success of GPB will depend to a significant extent upon the abilities and continued efforts of its current key management team. The proforma effects of the Proposed Capital Reduction and Proposed Rights Issue with New Warrants on the issued and paid-up share capital of Gunung are set out in Table 2. prudent financial policies. economic and regulatory conditions in Malaysia. inter-alia. interest rates and changes in business conditions such as. In order to mitigate this. The issued and paid-up share capital of Gunung will be immediately increased after the Proposed Rights Issue with New Warrants. changes in political. could materially and adversely affect the financial and business prospects of GPB. deterioration in prevailing market conditions. While GPB will seek to limit the impact of such risks to its business by focusing on its core competencies. re-negotiation or nullification of existing contracts. the number of Gunung shares in issue would remain unchanged pursuant to the Proposed Capital Reduction. labour and material supply shortages. taxation. increase in costs of labour and materials. economic and regulatory risks Like all other business entities. The exercise of the New Warrants will also have impact of increasing the issued and paid-up share capital of Gunung as and when such New Warrants are exercised into new Gunung shares. . inflation. 7. 6. maintenance of a reliable pool of subcontractors (for the supply of buses) and effective human resource management. interest rates and method of taxation. expropriation.

2 Shareholdings of Substantial Shareholders The Proposals will not have any effect on the percentage shareholdings of the existing substantial shareholder of the Company. upon completion of the Proposed Acquisition in 2010. 7. . cash flow position and the funding requirements of the Gunung Group. including the retained profits. However.5 Dividends The Proposals are not expected to have any direct impact on the dividend policy of the Company. its number of shareholdings will increase proportionately. The proforma effects of the Proposals on the NA and gearing of the Gunung Group based on its audited financial statements of Gunung and GPB for the FYE 31 December 2008 are set out in Table 3. Nevertheless. Whist the Proposed Acquisition is not expected to have any immediate effect on the NA of the Gunung Group.4 Earnings and Earnings Per Share (“EPS”) The Proposed Capital Reduction will not have any impact on the earnings or EPS of the Gunung Group. 7. the gearing of Gunung Group is expected to increase as a result of the new bank borrowing which will be taken up by Gunung to finance the Proposed Acquisition as well as the consolidation of the bank borrowings of GPB upon completion of the Proposed Acquisition. provided that it fully subscribes for its rights entitlement under the Proposed Rights Issue with New Warrants. The Proposed Rights Issue with New Warrants would strengthen the NA of the Gunung Group whilst reducing the gearing level of the Gunung Group as the proceeds raised therefrom will be immediately used to refinance the bank borrowings to be taken up to finance the Proposed Acquisition. Any dividend to be declared by the Company in respect of the subsequent financial years and periods shall depend on various factors. GPB is expected to contribute to the earnings of the Gunung Group for the financial year ending 31 December 2010 and thereafter. namely Erayear Equity. The EPS of the Company is also expected to be diluted as a result of the increase in the number of shares in issue as and when the New Warrants are exercised into new Gunung shares.3 Net Assets (“NA”) and Gearing The Proposed Capital Reduction will not have any impact on the NA and gearing of the Gunung Group. The Proposed Rights Issue with New Warrants would in turn is expected to result in dilution in the EPS of the Company as a result of the additional new Gunung shares to be issued.7. 7.

As a result of the Proposed Capital Reduction and Proposed Rights Issue with New Warrants.6 Convertible Securities Save for the Existing Warrants. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS Save for their interests as shareholders of Gunung. Gunung does not have any other convertible securities in issue.7. the Board is of the opinion that the Proposals are in the best interest of Gunung. (ii) (iii) (iv) (v) The Proposed Capital Reduction and the Proposed M&A Amendments are inter-conditional but they are not conditional upon the implementation of the Proposed Acquisition or Proposed Rights Issue with New Warrants. 8. Such adjustments shall be subject to agreement by the Company’s external auditors in accordance with the provisions under the deed poll dated 20 August 2003 constituting the Existing Warrants. . A notice to holders of the Existing Warrants explaining the adjustments to the exercise price and additional number of new Existing Warrants will be issued to the Existing Warrants holders at a later date. in the Proposals. APPROVALS REQUIRED The Proposals are conditional upon obtaining the following:(i) Bursa Securities for the listing of and quotation for the Rights Shares and New Warrants to be issued and the new Resultant Shares upon exercise of the New Warrants on Bursa Securities. direct or indirect. the Board of Gunung proposes to adjust the exercise price and the number of Existing Warrants which remain unexercised as at the effective date for the Proposed Capital Reduction and the entitlement date for the Proposed Rights Issue with New Warrants respectively. 9. the sanction of the High Court of Malaya for the Proposed Capital Reduction. 10. and any other relevant authorities/parties. the approval of the shareholders of Gunung at an extraordinary general meeting to be convened by the Company. Bank Negara Malaysia for the Proposed Rights Issue with New Warrants (including to nonresidents). DIRECTORS' STATEMENT After considering all aspects of the Proposals. none of the Directors and major shareholders of Gunung together with persons connected with them (if any) have any interest.

. Perak Darul Riszuan during business hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement: This announcement is dated 20 January 2010. 13. Jalan Perusahaan Satu. the Proposals are expected to be completed by the end of the second quarter of 2010. Taiping. The application to the relevant authorities for the Proposals is expected to be made within three (3) months from the date of this announcement. A circular to shareholders containing further information on the Proposals shall be issued to the shareholders of Gunung in due course. 12. ADVISER MIMB has been appointed as the Adviser to the Company for the Proposals. DOCUMENTS AVAILABLE FOR INSPECTION The SPA will be available for inspection at the registered office of Gunung at Lot 5911.11. 34600 Kamunting. EXPECTED COMPLETION OF THE PROPOSALS Barring unforeseen circumstances and subject to obtaining all the required approvals. Kamunting Industrial Estate.

Sign up to vote on this title
UsefulNot useful