0001
IMPORTANT NOTICE
Responsibility Statements
This Information Memorandum has been approved by the directors of Padiberas Nasional Bhd
(Company No. 295514-U) (the “Issuer” or “Bernas”) and the Issuer accepts full responsibility for the
accuracy of the information contained in this Information Memorandum. The Issuer, after having
made all reasonable enquiries, confirms that all information contained in this Information
Memorandum is true and correct in all material respects, that there is no omission of a material fact
necessary to make the information contained in this Information Memorandum, in the light of the
circumstances under which it is provided, not misleading, and that the opinions and intentions
expressed in the information contained in this Information Memorandum are honestly held. Enquiries
have been made by the Issuer to ascertain all material facts have been disclosed and to verify the
accuracy of all such information and statements. In this context, the Issuer accepts full responsibility
for such information contained in this Information Memorandum.
Important Notice and General Statement of Disclaimer
This Information Memorandum is being furnished on a private and confidential basis solely to
prospective investors to consider the purchase of the Islamic commercial papers (“ICPs”) and/or
Islamic medium term notes (“IMTNs”) (now collectively referred hereinafter as “Sukuk”) falling within
any one or more of the categories of persons specified in Schedule 6 or Section 229(1)(b), and
Schedule 7 or Section 230(1)(b) and Schedule 9 or Section 257(3) of the Capital Markets and
Services Act 2007 as amended from time to time (“CMSA”) at issuance and Schedule 6 or Section
229(1)(b) and Schedule 9 or Section 257(3) of the CMSA thereafter.
It is a condition to issuance of the Sukuk that the ICPs are assigned, on issue, a rating of “P1” and
the IMTNs are assigned, on issue, a rating of “AA3” by RAM Rating Services Berhad (“RAM”). This
rating will relate to the timely payment of amounts due under the Sukuk. A rating is not a
recommendation to buy, sell or hold securities and may be subject to revision, suspension or
withdrawal at any time by the rating agency.
In relation to the prospective investors, each of Bank Muamalat Malaysia Berhad and Standard
Chartered Saadiq Berhad as the joint lead arrangers and/or joint lead managers of the ICP/IMTN
Programme (the “JLAs/JLMs”) states that no representation, warranty or undertaking, expressed or
implied, is given or assumed by the JLAs/JLMs as to the authenticity, origin, validity, accuracy or
completeness of the information or data contained in this Information Memorandum or that such
information or data remains unchanged in any respect after the relevant date shown in this
Information Memorandum. To the fullest extent permitted by law, none of the JLAs/JLMs accept any
responsibility for the contents of this Information Memorandum or for any other statement, made or
purported to be made by the JLAs/JLMs or on their behalf in connection with the Issuer, or the issue
and offering of the Sukuk. The JLAs/JLMs accordingly disclaim all and any liability whether arising in
tort or contract or otherwise (save as referred to herein) which any of them might otherwise have in
respect of this Information Memorandum or any such statement.
The information in this Information Memorandum supersedes all other information and material
previously supplied (if any) to the recipients. By taking possession of this Information Memorandum,
the recipients are acknowledging and agreeing and are deemed to have acknowledged and agreed
that they will not rely on any previous information supplied. No person is authorised to give any
information or data or to make any representation or warranty other than as contained in this
Information Memorandum and, if given or made, any such information, data, representation or
warranty must not be relied upon as having been authorised by the Issuer, the JLAs/JLMs or any
other person.
i
This Information Memorandum has not been and will not be made to comply with the laws of any
jurisdiction other than Malaysia (“Foreign Jurisdiction”), and has not been and will not be lodged,
registered or approved pursuant to or under any legislation of (or with or by any regulatory authorities
or other relevant bodies of) any Foreign Jurisdiction and it does not constitute an issue, offer or sale
of, or an invitation to subscribe or purchase the Sukuk or any other securities of any kind by any
party in any Foreign Jurisdiction.
This Information Memorandum is not and is not intended to be a prospectus. Unless otherwise
specified in this Information Memorandum, the information contained in this Information
Memorandum is current as at the date hereof.
The distribution or possession of this Information Memorandum in or from certain jurisdictions may
be restricted or prohibited by law. Each recipient is required to seek appropriate professional advice
regarding, and to observe, any such restriction or prohibition. Neither the Issuer nor the JLAs/JLMs
accept any responsibility or liability to any person in relation to the distribution or possession of this
Information Memorandum in or from any such Foreign Jurisdiction.
By accepting delivery of this Information Memorandum, each recipient agrees to the terms upon
which this Information Memorandum is provided to such recipient as set out in this Information
Memorandum, and further agrees and confirms that (a) it will keep confidential all of such information
and data, (b) it is lawful for the recipient to subscribe for or purchase the Sukuk under all jurisdictions
to which the recipient is subject, (c) the recipient has complied with all applicable laws in connection
with such subscription or purchase of the Sukuk, (d) the Issuer, the JLAs/JLMs and their respective
directors, officers, employees and professional advisers are not and will not be in breach of the laws
of any jurisdiction to which the recipient is subject as a result of such subscription or purchase of the
Sukuk, and they shall not have any responsibility or liability in the event that such subscription or
purchase of the Sukuk is or shall become unlawful, unenforceable, voidable or void, (e) it is aware
that the Sukuk can only be offered, sold, transferred or otherwise disposed of directly or indirectly in
accordance with the relevant selling restrictions and all applicable laws, (f) it has sufficient
knowledge and experience in financial and business matters to be capable of evaluating the merits
and risks of subscribing or purchasing the Sukuk, and is able and is prepared to bear the economic
and financial risks of investing in or holding the Sukuk, (g) it is subscribing or accepting the Sukuk for
its own account, and (h) it is a person to whom an issue, offer or invitation to subscribe or purchase
the Sukuk would constitute persons falling within any one or more of the categories of persons
specified in Schedule 6 or Section 229(1)(b), and Schedule 7 or Section 230(1)(b) and Schedule 9 or
Section 257(3) of the CMSA at issuance and Schedule 6 or Section 229(1)(b) and Schedule 9 or
Section 257(3) of the CMSA thereafter. Each recipient is solely responsible for seeking all
appropriate expert advice as to the laws of all jurisdictions to which it is subject. For the avoidance
of doubt, this Information Memorandum shall not constitute an offer or invitation to subscribe or
purchase the Sukuk in relation to any recipient who does not fall within item (h) above.
This Information Memorandum or any document delivered under or in relation to the issue, offer and
sale of the Sukuk is not, and should not be construed as, a recommendation by the Issuer and/or the
JLAs/JLMs to subscribe or purchase the Sukuk. This Information Memorandum is not a substitute
for, and should not be regarded as, an independent evaluation and analysis and does not purport to
be all-inclusive. Each recipient should perform and is deemed to have made its own independent
investigation and analysis of the Issuer, the Sukuk, the ICP/IMTN Programme and all other relevant
matters, and each recipient should consult its own professional advisers. All information and
statements herein are subject to the detailed provisions of the respective agreements referred to
herein and are qualified in their entirety by reference to such documents.
Neither the delivery of this Information Memorandum nor the offering, sale or delivery of any Sukuk
shall in any circumstance imply that the information contained herein concerning the Issuer is correct
at any time subsequent to the date hereof or that any other information supplied in connection with
the ICP/IMTN Programme is correct as of any time subsequent to the date indicated in the document
containing the same. Neither the JLAs/JLMs nor any other advisers for the ICP/IMTN Programme
undertake to review the financial condition or affairs of the Issuer during the tenor of the ICP/IMTN
Programme or to advise any investor of the Sukuk of any information coming to its attention.
ii
Certain statements, information, estimates and reports in this Information Memorandum are based
on historical data, which may not be reflective of the future, and others are forward-looking in nature
and are subject to risks and uncertainties, including, among others, the Issuer‟s business strategy
and expectation concerning each of its position in the Malaysian economy, future operations, growth
prospects and industry prospects. While the Board of Directors of the Issuer believe that these
forward-looking statements are reasonable, these statements are nevertheless subject to known and
unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements to differ materially from the future results, performance or achievements expressed or
implied in such forward looking statements. In light of all this, the inclusion of forward-looking
statements in this Information Memorandum should not be regarded as a representation or warranty
by the Issuer, its advisers or any other person that the plans and objectives of the Issuer will be
achieved.
This Information Memorandum includes certain historical information, estimates, or reports thereon
derived from sources mentioned in this Information Memorandum and other parties with respect to
the Malaysian economy, the material businesses which the Issuer operates and certain other
matters. Such information, estimates, or reports have been included solely for illustrative purposes.
No representation or warranty is made as to the accuracy or completeness of any information,
estimates and/or reports thereon derived from such sources or from other third party sources.
Acknowledgement
The Issuer hereby acknowledges that it has authorised the JLAs/JLMs to circulate or distribute this
Information Memorandum on its behalf in respect of or in connection with the proposed offer or
invitation to subscribe for and issue of, the Sukuk to prospective investors and that no further
evidence of authorisation is required.
Statements of Disclaimer by the Securities Commission
In accordance with the CMSA, a copy of this Information Memorandum will be deposited with the
Securities Commission (“SC”), which takes no responsibility for its contents.
The issue, offer or invitation in relation to the Sukuk in this Information Memorandum or otherwise are
subject to the fulfilment of various conditions precedent including without limitation the applicable
approval from the SC.
SC’s approval for the issuance of the Sukuk was obtained on 9 June 2010.
Please note that the approval of the SC shall not be taken to indicate that the SC recommends
the subscription or purchase of the Sukuk.
The SC shall not be liable for any non-disclosure on the part of the Issuer and assumes no
responsibility for the correctness of any statements made or opinions or reports expressed in this
Information Memorandum.
The documents published or issued from time to time after the date hereof shall be deemed to be
incorporated in, and to form part of, this Information Memorandum including all supplements or
amendments to this Information Memorandum circulated by the Issuer, if any, save that any
statement contained herein or in a document which is deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for the purpose of this Information Memorandum to
the extent that a statement contained in any such subsequent document which is deemed to be
incorporated by reference herein modifies or supersedes such earlier statement (whether expressly,
by implication or otherwise). Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Information Memorandum.
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Confidentiality
This Information Memorandum and its contents are strictly confidential and the information herein
contained is given to the recipient strictly on the basis that the recipient shall ensure the same
remains confidential. Accordingly, this Information Memorandum and its contents, or any information,
which is made available to the recipient in connection with any further enquiries, must be held in
complete confidence.
In the event that there is any contravention of the confidentiality undertaking or there is reasonable
likelihood that this confidentiality undertaking may be contravened, the Issuer may, at its discretion,
apply for any remedy available to the Issuer whether at law or equity, including without limitation,
injunctions. The Issuer is entitled to fully recover from the contravening party all costs, expenses and
losses incurred and/or suffered in this regard. For the avoidance of doubt, it is hereby deemed that
this confidentiality undertaking shall be imposed upon the recipient, the recipient‟s professional
advisers, directors, employees and any other persons who may receive this Information
Memorandum (or any part of it) from the recipient.
The recipient must return this Information Memorandum and all reproductions thereof whether in
whole or in part and any other information in connection therewith to the JLAs/JLMs promptly upon
the JLAs/JLMs request, unless that recipient provides proof of a written undertaking satisfactory to
the JLAs/JLMs with respect to destroying these documents as soon as reasonably practicable after
the said request from the JLAs/JLMs.
INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND
RISKS OF THE INVESTMENT.
INVESTORS SHOULD READ THIS ENTIRE INFORMATION MEMORANDUM CAREFULLY AND
AS A WHOLE, INCLUDING THE APPENDICES.
IT IS RECOMMENDED THAT PROSPECTIVE INVESTORS CONSULT THEIR FINANCIAL,
LEGAL AND OTHER ADVISERS BEFORE PURCHASING OR ACQUIRING OR SUBSCRIBING
FOR THE SUKUK.
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TABLE OF CONTENTS
Page
DEFINITIONS .......................................................................................................................................VII
SECTION 1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
BRIEF BACKGROUND OF THE ISSUER ............................................................................................ 1
BRIEF BACKGROUND OF THE MATERIAL SUBSIDIARIES .................................................................. 1
BRIEF SUMMARY OF THE STRUCTURE OF THE ICP/IMTN PROGRAMME .......................................... 1
FINANCIAL HIGHLIGHTS ................................................................................................................ 4
UTILISATION OF PROCEEDS ......................................................................................................... 4
RATING ...................................................................................................................................... 5
SECURITIES COMMISSION‟S APPROVAL ........................................................................................ 5
SHARIAH ADVISER‟S OPINION AND REVIEW OF THE MUSYARAKAH STRUCTURE UNDER THE
ICP/IMTN PROGRAMME ............................................................................................................. 5
PROFIT AND LOSS SHARING RATIO UNDER THE MUSYARAKAH VENTURE ........................................ 5
SECTION 2.0
2.1
INFORMATION ON THE MATERIAL SUBSIDIARIES ........................................... 53
BERAS CORPORATION SDN BHD ................................................................................................ 53
CORPORATE INFORMATION AND PRINCIPAL ACTIVITY ................................................................... 53
SHARE CAPITAL......................................................................................................................... 53
SHAREHOLDING STRUCTURE...................................................................................................... 54
PROFILE OF DIRECTORS ............................................................................................................ 54
KEY FINANCIAL HIGHLIGHTS ...................................................................................................... 56
EDARAN BERNAS NASIONAL SDN BHD ....................................................................................... 56
CORPORATE INFORMATION AND PRINCIPAL ACTIVITY ................................................................... 56
SHARE CAPITAL......................................................................................................................... 56
SHAREHOLDING STRUCTURE...................................................................................................... 57
PROFILE OF DIRECTORS ............................................................................................................ 57
KEY FINANCIAL HIGHLIGHTS ...................................................................................................... 58
SECTION 6.0
6.1
6.2
INFORMATION ON THE ISSUER ........................................................................... 43
CORPORATE INFORMATION AND PRINCIPAL ACTIVITY ................................................................... 43
SHARE CAPITAL......................................................................................................................... 43
SHAREHOLDING STRUCTURE...................................................................................................... 44
CORPORATE STRUCTURE AS AT 30 JUNE 2010 .......................................................................... 44
LIST OF SUBSIDIARIES AND ASSOCIATED COMPANIES IN BERNAS GROUP AS AT 30 JUNE 2010 ..... 44
PROFILE OF DIRECTORS ............................................................................................................ 49
BERNAS‟S AND BERNAS GROUP‟S FINANCIAL HIGHLIGHTS .......................................................... 52
SECTION 5.0
A.
5.1
5.2
5.3
5.4
5.5
B.
5.6
5.7
5.8
5.9
5.10
INVESTMENT CONSIDERATIONS ........................................................................ 37
GENERAL CONSIDERATIONS ...................................................................................................... 37
CONCESSION RISK .................................................................................................................... 38
EXPOSURE TO INTERNATIONAL RICE PRICES .............................................................................. 39
W EATHER CONDITIONS ............................................................................................................. 39
PESTS AND DISEASES ............................................................................................................... 40
COMPETITION FROM PRIVATE MILLERS ...................................................................................... 40
THE GOVERNMENT‟S INTEREST IN BERNAS ................................................................................. 40
RISKS CONSIDERATIONS RELATING TO THE ISSUER AND THE ICP/IMTN PROGRAMME ................. 40
SECTION 4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
THE ICP/IMTN PROGRAMME .................................................................................. 6
SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE ICP/IMTN
PROGRAMME .......................................................................................................................... 6
SECTION 3.0
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
EXECUTIVE SUMMARY ........................................................................................... 1
THE CONCESSION AGREEMENT ......................................................................... 59
RIGHT TO IMPORT RICE AND ITS EXCEPTIONS .............................................................................. 59
EXTENSION OF RIGHT TO IMPORT RICE ....................................................................................... 59
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6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
SOCIAL OBLIGATIONS ................................................................................................................ 59
LEASES .................................................................................................................................... 60
MANAGEMENT OF STOCKPILE .................................................................................................... 60
GUARANTEED MINIMUM PRICE ................................................................................................... 60
BUYER OF LAST RESORT ........................................................................................................... 61
PADI PRICE SUBSIDY SCHEME ................................................................................................... 61
BUMIPUTERA RICE MILLERS SCHEME ......................................................................................... 61
TERMINATION OF CONCESSION .................................................................................................. 62
CONSEQUENCES OF TERMINATION ............................................................................................. 62
SECTION 7.0
BUSINESS OVERVIEW OF BERNAS GROUP ...................................................... 63
SECTION 8.0
INDUSTRY OVERVIEW .......................................................................................... 69
8.1
8.2
8.3
8.4
GLOBAL ECONOMY.................................................................................................................... 69
OVERVIEW OF THE ECONOMY OF MALAYSIA ............................................................................... 70
MALAYSIAN ECONOMY OUTLOOK IN 2010 .................................................................................. 70
OVERVIEW OF PADDY AND RICE INDUSTRY IN 2010 .................................................................... 71
SECTION 9.0
9.1
9.2
9.3
9.4
MATERIAL LITIGATION ................................................................................................................ 73
MATERIAL CONTRACTS OUTSIDE THE ORDINARY COURSE OF BUSINESS ..................................... 76
RELATED PARTY TRANSACTIONS ................................................................................................ 77
MATERIAL CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS.................................................. 78
SECTION 10
10.1
OTHER INFORMATION .......................................................................................... 73
CONFLICT OF INTEREST .......................................................................................... 79
CONFLICT OF INTEREST SITUATIONS AND APPROPRIATE MITIGATING MEASURES ......................... 79
APPENDIX I .......................................................................................................................................... 82
Audited Financial Statements of the Issuer for .............................................................................. 82
the Financial Year Ended 31 December 2009 ............................................................................... 82
APPENDIX II ......................................................................................................................................... 83
Corporate Group Structure of Bernas as at 30 June 2010 ............................................................ 83
APPENDIX III ........................................................................................................................................ 84
Shariah Adviser’s Opinion and Review on the Musyarakah structure dated 15 July 2010 ........... 84
vi
DEFINITIONS
In this Information Memorandum, the following words or expressions shall have the following
meanings except where the context otherwise requires:
Beras Corp
- Beras Corporation Sdn Bhd (Company No. 480493-H);
Bernas Group
- Bernas and its subsidiaries and associated companies;
BMMB
- Bank Muamalat Malaysia Berhad (Company No. 6175-W);
BNM
- Bank Negara Malaysia;
Bumiputera Rice
Millers Scheme
- The “Sekim Upah Kisar”, Sekim Upah Mengering dan Kisar and
“Sekim Pusat Belian” as described in Section 6.9 herein and which
detailed terms and conditions are set out in the Concession
Agreement;
Business Day(s)
- A day (other than Saturday, Sunday and public holiday) on which
banks and financial institutions licensed under the Banking and
Financial Institutions Act 1989 are open for business in Kuala
Lumpur;
CMSA
- Capital Markets and Services Act 2007 (as amended);
Concession
Agreement
- The concession agreement entered into between the Government
and Bernas dated 12 January 1996;
Director General
- The Director General for the control of padi and rice;
Edaran
- Edaran Bernas Nasional Sdn Bhd (Company No. 390534-M);
Federal Lands
Commissioner
- The Federal Lands Commissioner appointed under the Federal
Lands Commissioner Act 1957;
Government
- Government of Malaysia;
Guaranteed
Minimum Price
In relation to padi, means the minimum price from time to time
determined by the Director General as being the minimum price at
which Bernas shall purchase padi from the padi farmers at any of
its rice mills;
ICP/IMTN
Programme
- As defined in Section 1.3 below;
Issuer or Bernas
- Padiberas Nasional Berhad (Company No. 295514-U);
Joint Principal
Advisers/ Joint Lead
Managers/ Joint
Lead Arrangers or
JLAs/JLMs
- Collectively BMMB and SCSB;
vii
Leases
- The lease agreements to be entered into between the Federal
Land Commissioner and Bernas in respect of the properties
described in the Concession Agreement;
Material Subsidiaries - Beras Corporation Sdn Bhd (Company No. 480493-H) and Edaran
Bernas Nasional Sdn Bhd (Company No. 390534-M);
National Padi / Rice
Stockpile
The stockpile of padi and/or rice as referred to in Section 6.5
below;
Padi Price Subsidy
Scheme
- The scheme of granting subsidies by the Government to
registered padi farmers as referred to in Section 6.8 herein;
Registered Padi
Farmers
Ringgit or RM and
sen
Schemes
Such padi farmers registered with Lembaga Padi dan Beras
Negara and/or Bernas;
- Ringgit Malaysia and sen respectively, being the lawful currency of
Malaysia;
The Padi Price Subsidy Scheme and the Bumiputra Rice Millers
Schemes;
SCSB
- Standard Chartered Saadiq Berhad (Company No. 823437-K);
Sekim Pusat Belian
or SPB
- As described in Section 6.9(iii) herein and which detailed terms
and conditions are set out in the Concession Agreement;
Sekim Upah
- As described in Section 6.9(ii) herein and which detailed terms
Mengering dan Kisar
and conditions are set out in the Concession Agreement;
or SUMK
Sekim Upah Kisar or - As described in Section 6.9(i) herein and which detailed terms and
SUK
conditions are set out in the Concession Agreement;
Subsidy Account
- Such bank accounts operated by Bernas pursuant to the
Concession Agreement for the purpose of disbursements of
subsidies to the Registered Padi Farmers;
Subsidy Fund
- In relation to the Padi Price Subsidy Scheme, means the total
amount of subsidies deposited by the Government into the
Subsidy Account in any particular year;
Sukuk
- The ICPs and/or IMTNs issued pursuant to the ICP/IMTN
Programme; and
Sukukholders
- The holders of the Sukuk issued pursuant to the ICP/IMTN
Programme.
[The rest of this page is intentionally left blank]
viii
SECTION 1.0 EXECUTIVE SUMMARY
This summary is qualified by and must be read in conjunction with the more detailed
information and financial statements appearing elsewhere in this Information Memorandum.
Each investor should read this entire Information Memorandum carefully, including the
appendices.
1.1
Brief background of the Issuer
The Issuer is a company incorporated by the Government for the purpose of taking
over all property, rights and liabilities of Lembaga Padi dan Beras Negara (a statutory
body established under the Lembaga Padi dan Beras Negara Act 1971). The Issuer
was incorporated as a public company limited by shares in Malaysia under the
Companies Act, 1965 on 14 April 1994 under the name of Syarikat Padiberas
Nasional Berhad. With effect from 30 March 1995, the Issuer‟s name was changed to
Padiberas Nasional Berhad.
The principal activity of the Issuer is to procure, collect, import, export, purchase rice,
paddy and other grains and carry on activities in relation to the distribution of rice and
investment holding. Pursuant to a privatisation agreement signed with the
Government in 1996, the Issuer was entrusted with, inter alia, maintaining the
nation‟s rice stockpile, acting as the buyer of last resort for paddy farmers, managing
the Bumiputera Rice Millers Scheme and the distribution of paddy price subsidies
under the Paddy Price Subsidy Scheme to Registered Padi Farmers on behalf of the
Government.
Please refer to Section 4 of this Information Memorandum for further details of the
Issuer.
1.2
Brief background of the Material Subsidiaries
Beras Corporation Sdn Bhd (Company No. 480493-H) (“Beras Corp”) and Edaran
Bernas Nasional Sdn Bhd (Company No. 390534-M) (“Edaran”) are the material
subsidiaries of the Issuer.
Beras Corp was incorporated as a private company limited by shares in Malaysia
under the Companies Act on 8 April 1999. The principal activity of Beras Corp is to
deal in paddy, rice and other grains, operate rice mill and carry on business as
dealers in rice.
Edaran was incorporated as a private company limited by shares in Malaysia under
the Companies Act on 14 June 1996. The principal activity of Edaran is to trade,
distribute and supply rice.
Please refer to Section 5 of this Information Memorandum for further details of the
material subsidiaries of the Issuer.
1.3
Brief summary of the structure of the ICP/IMTN Programme
The Issuer proposes to issue up to RM750.0 million nominal value of Islamic
Commercial Papers (“ICPs”) and/or Medium Term Notes (“IMTNs”) under an Islamic
commercial papers and/or medium term notes programme (“ICP/IMTN Programme”).
The ICPs and/or IMTNs shall hereinafter be referred to as “Sukuk”.
1
The Sukuk shall be issued under the Islamic principle of Musyarakah.
The investors with the Issuer from time to time, will enter into a Musyarakah
Agreement as partners (each a “partner” and collectively the “Musyarakah Partners”)
for the purpose of undertaking a venture (“Musyarakah Venture”) to invest directly
into the Shariah-compliant business of the Issuer (“Business”).
The Issuer will from time to time issue Sukuk to investors (“Sukukholders”). Proceeds
raised from the Sukuk shall be used as capital contribution of the Sukukholders in the
Musyarakah Venture. Each Sukuk shall represent the respective Sukukholder‟s
undivided proportionate interest in the Musyarakah Venture. Simultaneously, the
Issuer shall make a declaration that it holds in trust over all its interest in the
Business for the benefit of the Sukukholders. The participation by the Sukukholders
in the Musyarakah Venture is via the subscription of Sukuk issued by the Issuer.
Meanwhile, the Issuer will, from time to time, contribute its Business as capital
contribution into the Musyarakah Venture. The capital contribution ratio of the
Musyarakah Partners in the Musyarakah Venture shall be based on their respective
capital contribution.
The expected return to the Sukukholders under the Musyarakah Venture shall be the
yield for the Sukuk up to the maturity date of the Sukuk (“Expected Return”). Any
profit derived from the Musyarakah Venture will be distributed based on a pre-agreed
profit sharing ratio which will be determined prior to issuance of the Sukuk from time
to time. Any losses derived from the Musyarakah Venture shall be borne by each
partner in proportion to each partner‟s respective capital contribution in the
Musyarakah Venture.
The Issuer shall be appointed as the manager (“Manager”) to manage the
Musyarakah Venture. The Sukukholders shall agree that any profit in excess of the
Expected Return shall be retained by the Manager as an incentive fee.
In respect of Sukuk with periodic distribution, income from the Musyarakah Venture
of up to an amount equal to a certain percentage of the face value of the Sukuk per
annum, calculated on the basis of the actual number of days in the relevant period
(“Expected Periodic Distribution”) shall be distributed semi annually, or such other
period to be determined and agreed prior to each issuance in the form of periodic
distribution (“Periodic Distribution”). Any shortfall between the Expected Periodic
Distribution and the actual income generated for such relevant period shall be paid
by the Issuer as an advance part payment of the Exercise Price (see below). The
advance part payment will be set off against the Exercise Price payable by the Issuer
pursuant to the Purchase Undertaking or Sale Undertaking, as the case may be.
In respect of Sukuk without Periodic Distribution, income from the Musyarakah
Venture of up to the Expected Return shall be distributed on a one-off basis upon the
maturity date or the Dissolution Date (“One-off Distribution”), whichever is applicable.
Any shortfall between the One-off Distribution and the actual income generated for
such relevant period shall be paid by the Issuer as an advance part payment of the
Exercise Price. The advance part payment will be set off against the Exercise Price
payable by the Issuer pursuant to the Purchase Undertaking or Sale Undertaking, as
the case may be.
The Issuer shall declare and issue a Purchase Undertaking to the Trustee for and on
behalf of the Sukukholders, wherein the Issuer undertakes to purchase the
2
Sukukholders‟ interest in the Musyarakah Venture at an Exercise Price upon
declaration of any Dissolution Event(s).
Pursuant to a Sale Undertaking declared and issued by the Trustee for and on behalf
of the Sukukholders, in favour of the Issuer, the Trustee for and on behalf of the
Sukukholders undertakes to sell the Sukukholders‟ interest in the Musyarakah
Venture to the Issuer at an Exercise Price on the Maturity Date of the Sukuk.
Purchase Undertaking
Under a Purchase Undertaking, Bernas as Obligor shall grant an undertaking to the
Trustee (on behalf of the Sukukholders) pursuant to which Bernas shall purchase the
Sukukholder‟s interest in the Musyarakah Venture at the Exercise Price upon the
declaration of any Dissolution Event.
(a)
Exercise Price
In the case of Sukuk with Periodic Distributions, the Exercise Price payable for the
Sukuk under a Purchase Undertaking is equivalent to the nominal value of the Sukuk
plus all Expected Periodic Distributions less the aggregate Periodic Distributions
made and received and less the Unearned Periodic Distribution (as defined below).
Any advance part payment will be set off against the Exercise Price payable by the
Issuer pursuant to the Purchase Undertaking.
In the case of Sukuk without Periodic Distributions, the Exercise Price payable for the
Sukuk under a Purchase Undertaking is equivalent to the nominal value of the Sukuk
less One-off Distribution made and received and less the sum of advance part
payment. Where applicable, the Exercise Price is to be adjusted based on the
dissolution date upon the declaration of a Dissolution Event(s) and the adjusted
Exercise Price will be calculated based on a formula to be determined.
(b)
Unearned Periodic Distribution
Unearned Periodic Distribution means the aggregate amount of all Expected Periodic
Distributions falling due after the declaration of a Dissolution Event(s) and shall
exclude the remaining Periodic Distributions falling due immediately after the date of
a Dissolution Event.
Sale Undertaking
Pursuant to a Sale Undertaking declared and issued by the Trustee for and on behalf
of the Sukukholders, in favour of the Issuer, the Trustee for and on behalf of the
Sukukholders undertakes to sell the Sukukholders‟ interest in the Musyarakah
Venture to the Issuer at an Exercise Price on the Maturity Date of the Sukuk.
(a)
Exercise Price
In the case of Sukuk with Periodic Distributions, the Exercise Price payable for the
Sukuk under a Sale Undertaking is equivalent to the nominal value of the Sukuk plus
all Expected Periodic Distributions less the aggregate Periodic Distributions made
and received. Any advance part payment will be set off against the Exercise Price
payable by the Issuer pursuant to the Sale Undertaking.
3
In the case of Sukuk without Periodic Distributions, the Exercise Price payable for the
Sukuk is equivalent to the nominal value of the Sukuk less One-off Distribution made
and received and less the sum of advance part payment.
Ta’widh
In the event of any overdue payments of any amounts due, including but not limited
to, under the Exercise Price pursuant to the Purchase Undertaking or Sale
Undertaking, as the case may be the Issuer shall pay compensation (Ta‟widh) on
such overdue amounts at the rate and manner prescribed by Shariah Advisory
Council of the SC or such other relevant regulatory authority from time to time in
accordance with the Shariah principles.
Musyarakah Capital
The proceeds received from the Sukukholders pursuant to their subscription for the
Sukuk, and the capital contribution of the Issuer (i.e. the Business) for the purpose of
participating in the relevant Musyarakah Venture.
A diagram depicting the facility description is set out as Annexure A in Section 2.1:
Summary of the Principal Terms and Conditions of the ICP/IMTN Programme below.
1.4
Financial highlights
Bernas Group‟s financial highlights for the previous three (3) financial years are as tabulated
below:
Bernas Group
Revenue
Operating profit
Profit before taxation
Net profit
Net current assets
Total assets
Long-term borrowings
Total liabilities
Total shareholders‟ funds
1.5
2007
(RM’000)
2,240,064
137,623
145,139
107,343
548,485
1,423,319
13,390
410,715
967,495
2008
(RM’000)
2,501,954
(119,231)
(94,329)
(57,472)
378,425
2,034,141
12,785
1,109,231
861,255
2009
(RM’000)
3,259,876
223,984
238,326
179,537
551,212
2,175,043
12,791
1,086,770
1,018,254
Utilisation of Proceeds
The proceeds raised from the issuance of the Sukuk shall be utilized by the Issuer
and/or its subsidiaries for the following purposes:
(i)
to finance current and/or future working capital requirements;
(ii)
to finance current and/or future investments and/or capital expenditure; and/or
(iii)
to refinance any of the Issuer‟s existing
securities
(including
any
securities issued under this ICP/IMTN Programme) and/or borrowings
(whether in whole or in part).
In any case, all utilization of funds from the issuance of the Sukuk shall be for Shariah
compliant purposes only.
4
1.6
Rating
The Sukuk have been assigned the following ratings by RAM Rating Services
Berhad:
1.7
(i)
in respect of the ICP, an initial rating of P1; and
(ii)
in respect of the IMTN, an initial rating of AA3.
Securities Commission’s Approval
The ICP/IMTN Programme has been approved by the SC via its letter dated 9 June
2010 pursuant to section 212 of the CMSA.
1.8
Shariah Adviser’s Opinion and Review of the Musyarakah structure under the
ICP/IMTN Programme
Please refer to the Shariah Adviser‟s opinion and review on the Musyarakah
structure as set out in Appendix III herein.
1.9
Profit and Loss Sharing Ratio under the Musyarakah Venture
The profit and loss sharing entitlement ratio between the Issuer and the
Sukukholders will only be determined at the point of issuance of the Sukuk and shall
thereafter be disclosed in FAST.
[The rest of this page is intentionally left blank]
5
SECTION 2.0 THE ICP/IMTN PROGRAMME
2.1
(A)
SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE ICP/IMTN
PROGRAMME
Names of the parties involved in the proposed transaction (where applicable)
(i)
Principal Adviser(s)/ Lead : Bank Muamalat Malaysia Berhad (“BMMB”)
Arranger(s)
and Standard Chartered Saadiq Berhad
(“SCSB”), as Joint Principal Advisers (“JPAs”)
and Joint Lead Arrangers (“JLAs”)
(ii)
Arranger(s)
: Not applicable
(iii)
Valuers
: Not applicable
(iv)
Solicitors
: Adnan Sundra & Low
(v)
Financial Adviser
: Not applicable
(vi)
Technical Adviser
: Not applicable
(vii)
Guarantor
: Not applicable
(viii)
Trustee
: Mayban Trustees Berhad
(ix)
Facility Agent
: BMMB
(x)
Primary Subscriber(s) and : The Primary Subscriber(s) will be determined
Amount subscribed (where
prior to issuance in the event of a bought-deal
applicable)
issue.
(xi)
Underwriter(s) and amount : The Sukuk (as hereinafter defined) may be
underwritten
underwritten if the Issuer and the JPA/JLA
mutually agree based on terms and
conditions, including those relating to the
underwritten rate and the participation and
underwriting fees, to be agreed.
In the event underwriting (either partial or full)
is required, the Sukuk shall be underwritten by
a consortium of eligible financial institutions to
be arranged by the JPA/JLA on a best efforts
basis.
(xii)
Shariah Adviser
: Shariah Committee of SCSB
(xiii)
Central Depository
: Bank Negara Malaysia (“BNM”)
(xiv)
Paying Agent
: BNM
6
(xv)
Reporting Accountant
(xvi)
Others (please specify)
: Not applicable
Joint Lead Managers
: BMMB and SCSB
Obligor
: BERNAS
External Auditor
: Hanafiah Raslan & Mohamad (A Member of
Ernst & Young Global) (who will be performing
agreed-upon procedures as an external
auditor of the Issuer as agreed with the Issuer
and Joint Lead Managers).
(b)
Islamic principle used
: Musyarakah.
(c)
Facility description
: Islamic Commercial Papers (“ICPs”) and/or
Medium Term Notes (“IMTNs”) under an
Islamic programme (“ICP/IMTN Programme”).
The ICPs and/or IMTNs shall hereinafter be
referred to as “Sukuk”.
The Sukuk shall be issued under the Islamic
principle of Musyarakah.
The investors with the Issuer from time to
time, will enter into a Musyarakah Agreement
as partners (each a “partner” and collectively
the “Musyarakah Partners”) for the purpose of
undertaking a venture (“Musyarakah Venture”)
to invest directly into the Shariah-compliant
business of the Issuer (“Business”).
The Issuer will from time to time issue Sukuk
to investors (“Sukukholders”). Proceeds raised
from the Sukuk shall be used as capital
contribution of the Sukukholders in the
Musyarakah Venture. Each Sukuk shall
represent the respective Sukukholder‟s
undivided proportionate interest in the
Musyarakah Venture. Simultaneously, the
Issuer shall make a declaration that it holds in
trust over all its interest in the Business for the
benefit of the Sukukholders. The participation
by the Sukukholders in the Musyarakah
Venture is via the subscription of Sukuk issued
by the Issuer. Meanwhile, the Issuer will, from
time to time, contribute its Business as capital
contribution into the Musyarakah Venture.
The capital contribution ratio of the
Musyarakah Partners in the Musyarakah
Venture shall be based on their respective
capital contribution.
7
The expected return to the Sukukholders
under the Musyarakah Venture shall be the
yield for the Sukuk up to the maturity date of
the Sukuk (“Expected Return”). Any profit
derived from the Musyarakah Venture will be
distributed based on a pre-agreed profit
sharing ratio which will be determined prior to
issuance of the Sukuk from time to time. Any
losses derived from the Musyarakah Venture
shall be borne by each partner in proportion to
each partner‟s respective capital contribution
in the Musyarakah Venture.
The Issuer shall be appointed as the manager
(“Manager”) to manage the Musyarakah
Venture. The Sukukholders shall agree that
any profit in excess of the Expected Return
shall be retained by the Manager as an
incentive fee.
In respect of Sukuk with periodic distribution,
income from the Musyarakah Venture of up to
an amount equal to a certain percentage of
the face value of the Sukuk per annum,
calculated on the basis of the actual number of
days in the relevant period (“Expected
Periodic Distribution”) shall be distributed semi
annually, or such other period to be
determined and agreed prior to each issuance
in the form of periodic distribution (“Periodic
Distribution”). Any shortfall between the
Expected Periodic Distribution and the actual
income generated for such relevant period
shall be paid by the Issuer as an advance part
payment of the Exercise Price (as defined in
item 2(z) (i) and (ii) ). The advance part
payment will be set off against the Exercise
Price payable by the Issuer pursuant to the
Purchase Undertaking or Sale Undertaking, as
the case may be.
In respect of Sukuk without Periodic
Distribution, income from the Musyarakah
Venture of up to the Expected Return shall be
distributed on a one-off basis upon the
maturity date or the Dissolution Date (“One-off
Distribution”), whichever is applicable. Any
shortfall between the One-off Distribution and
the actual income generated for such relevant
period shall be paid by the Issuer as an
advance part payment of the Exercise Price.
The advance part payment will be set off in the
Exercise Price payable by the Issuer pursuant
to the Purchase Undertaking or Sale
Undertaking, as the case may be.
8
The Issuer shall declare and issue a Purchase
Undertaking to Trustee for and on behalf of
the Sukukholders, wherein the Issuer
undertakes to purchase the Sukukholders‟
interest in the Musyarakah Venture at an
Exercise Price upon declaration of any
Dissolution Event(s).
Pursuant to a Sale Undertaking declared and
issued by the Trustee for and on behalf of the
Sukukholders, in favour of the Issuer, the
Trustee for and on behalf of the Sukukholders
undertakes to sell the Sukukholders‟ interest in
the Musyarakah Venture to the Issuer at an
Exercise Price on the Maturity Date of the
Sukuk.
A diagram depicting the facility description is
annexed in Annexure A.
(d)
Issue size (RM)
: Up to RM750.0 million in nominal value with a
sublimit of outstanding ICPs not exceeding
MYR375 million and subject to the following
amortisation table.
The available limit of the ICP/IMTN
Programme shall be reduced according to the
following amortisation schedule (“Amortisation
Schedule”) below, the first of such reduction to
commence on the 5th anniversary date from
the date of first issue of the ICPs and/or
IMTNs:Annual
Amortisation
Date
Issue
Date
(date of first
issuance of the
ICPs/IMTNs)
Amount of Available Limit
Amortisation (RM’ Million)
(RM’Million)
Total
ICP
-
750.0
375.0
th
250.0
500.0
250.0
th
250.0
250.0
125.0
th
250.0
Nil
Nil
5 anniversary
from Issue Date
6 anniversary
from Issue Date
7 anniversary
from Issue Date
* Aggregate of outstanding IMTNs and ICPs
shall not exceed the total available limit.
9
(e)
Issue price
: ICPs
The ICPs without Periodic Distributions shall
be issued at a discount and the issue price is
calculated in accordance with the Rules on
Fully Automated System for Issuing/Tendering
("FAST") issued by BNM, as amended or
substituted from time to time (“FAST Rules”).
The formula to be used to calculate the
proceeds for the ICPs pursuant to FAST Rules
is illustrated as follows:
P
= FV X 1- [ r X t ]
36500
Where,
P = Proceeds/Purchase Price
FV = the Face Value/Nominal Value/Selling
prices
r
= the applicable yield/rate of return at
which
the
offer
was
accepted(expressed to the three
decimal places)
t
= the number of days in the tenor of the
papers (which shall include the Issue
Date but shall exclude the Maturity
Date)
IMTNs
The IMTNs are to be issued at par, at a
discount or at premium and the issue price is
calculated in accordance with the FAST Rules.
The formula to be used to calculate the
proceeds for the IMTNs pursuant to FAST
Rules is illustrated as follows:
RV
C/2
Price (P) =
+
1+r
200
N-1+T/E
N
∑
K=1
1+r
200
K-1+T/E
WHERE,
FV = Face value
RV = Redemption value (= FV, if redemption
is at par)
C = profit rate
r
= market yield for a similar maturity period
N = Number of semi-annual profit/profit
payments between the value date and
maturity date
t
= Number of days from the value date to
the next profit payment date
E = Number of days in the profit period in
which settlement takes place
10
(f)
Tenor of the facility/ issue
: The tenor of the ICP/IMTN Programme shall
be seven (7) years from the date of the first
issue under the ICP/IMTN Programme.
ICPs –One (1) to twelve (12) months as the
Issuer may select in consultation with the Joint
Lead Arrangers, provided that the ICPs
mature prior to the expiry of the ICP/IMTN
Programme.
IMTNs – More than one (1) year and up to
seven (7) years as the Issuer may select in
consultation with the Joint Lead Arrangers,
provided that the IMTNs mature prior to the
expiry of the ICP/IMTN Programme.
(g)
Coupon/Profit or equivalent rate : ICPs:
(%) (please specify)
The ICPs will be issued without Periodic
Distributions.
IMTNs:
The IMTNs will be issued with Periodic
Distributions, the expected rate will be
determined and agreed prior to each issuance
of the IMTNs.
(h)
Coupon
Payment
/
Profit : ICPs
Payment frequency and basis
Not applicable. There will be no profit payable
on the ICPs as the ICPs will be issued without
Periodic Distributions.
IMTNs
IMTNs without
applicable.
Periodic
Distribution:
Not
IMTNs with Periodic Distribution: In respect of
profit bearing IMTNs, the profits are payable
semi-annually, or such other period to be
determined and agreed prior to each issuance
of IMTNs in arrears from the date of issue of
the IMTNs with the last profit payment payable
on the maturity dates of the IMTNs.
The profit payment basis is Actual / 365 days.
(i)
Yield to Maturity (%)
: The Expected Return to the Sukukholders
under each Musyarakah Venture which shall
be determined at the point of issuance of the
respective Sukuk.
(j)
Security/Collateral (if any)
: Nil.
11
(k)
Details on utilisation of proceeds
: The proceeds raised from the issuance of the
Sukuk shall be utilized by the Issuer and/or its
subsidiaries (“Group”) for the following
purposes:
(i)
to finance current and/or future working
capital requirements;
(ii)
to finance current
investments and/or
expenditure; and/or
(iii)
to refinance any of the Issuer‟s existing
securities (including any securities
issued under
this
ICP/IMTN
Programme) and/or borrowings
(whether in whole or in part).
and/or
future
capital
In any case, all utilization of funds from the
issuance of the Sukuk shall be for Shariah
compliant purposes only.
(l)
Sinking Fund (if any)
: Not applicable.
(m)
Rating
:
(n)
*Credit rating assigned (Please
specify if this is an indicative
rating)
The initial rating for the ICPs and the IMTNs
are P1 for the ICPs and AA3 for the IMTNs
respectively.
*Name of rating agency
The Sukuk is rated by RAM Rating Services
Berhad.
Form and Denomination
: The Sukuk shall be issued in accordance with
the following:(i)
the “Code of Conduct and Market
Practices for the Malaysian Corporate
Bond Market” issued by the Institute
Peniaga Bon Malaysia and approved
by BNM (“IPBM Code”);
(ii)
the “Rules on the Scripless Securities”
under Rentas system issued by BNM
(“Rentas Rules”); and
(iii)
the FAST Rules,
or their replacement thereof (collectively the
“Codes of Conduct”) applicable from time to
time.
The Rentas Rules shall prevail to the extent of
any inconsistency between the Rentas Rules
12
and the IPBM Code.
Each tranche of the Sukuk shall be
represented by a global certificate to be
deposited with the authorised depository, and
is exchanged for definitive bearer form only in
certain
limited
circumstances.
The
denomination of the Sukuk shall be RM1,000
or in multiples of RM1,000 at the time of
issuance.
The Sukuk shall be deposited with the Central
Depository and are exchangeable for
definitive certificates only in certain limited
circumstances.
(o)
Mode of Issue
: Via competitive tender without prospectus by
the TPMs (defined below) or private
placement on a best effort basis or a bought
deal basis.
The Joint Lead Managers shall invite a
selection of financial institutions and investors
to participate as TPMs to bid for the ICPs
and/or IMTNs. The composition of the tender
panel may be varied from time to time by the
Joint Lead Managers in consultation with the
Issuer.
Allocation of the ICPs and/or IMTNs to the
bidders shall be based on ascending order of
yield or descending order of price, as the case
may be. The Issuer shall have the right to
reject any or all bids or accept additional bids
received from a TPM without assigning any
reasons thereof.
Alternatively, the ICPs and/or IMTNs could be
placed privately via the Joint Lead Managers
on a best effort basis to selected investors at a
yield to be agreed between the Issuer and the
investors. The IMTNs can also be placed out
on a book running basis by the Joint Lead
Managers on a best effort basis. Such private
placement and book running shall be subject
to terms and conditions to be agreed between
the Issuer and the Joint Lead Managers.
The ICPs or IMTNs may also be issued via a
bought deal basis based on terms and
conditions to be mutually agreed upon
between the Issuer and the primary
subscriber(s).
13
Issuance of the ICPs or IMTNs under the
programme shall be in accordance with the
FAST Rules, RENTAS and shall be prescribed
under the Scripless Securities Trading System
(“SSTS”) maintained by BNM, subject to such
exemptions (if any) granted from time to time.
(p)
Selling Restriction
: Selling Restrictions at Issuance
The Sukuk shall not be offered, sold or
delivered, directly or indirectly, nor may any
document or other material in connection
therewith be distributed in Malaysia, other than
to persons falling within any of the categories
of persons or in the circumstances specified
under:
(i) Schedule 6 (or Section 229(1)(b)); or
(ii) Schedule 7 (or Section 230(1)(b)); and
(iii) Schedule 9 (or Section 257(3));
of the CMSA, as amended from time to time.
Selling Restrictions Thereafter
The Sukuk shall not be offered, sold or
delivered, directly or indirectly, nor may any
document or other material in connection
therewith be distributed in Malaysia, other than
to persons falling within any of the categories
of persons or in the circumstances specified
under:
(i) Schedule 6 (or Section 229(1)(b)); and
(ii) Schedule 9 (or Section 257(3));
of the CMSA, as amended from time to time.
(q)
Listing Status
(r)
Minimum Level of Subscription : The minimum level of subscription for each
(RM or %)
issue that is not issued on a bought deal basis
(which shall be fully subscribed) or fully
underwritten under the ICP/IMTN Programme
shall be 5% of the size of a particular issue.
(s)
Other
regulatory
approvals : None.
required in relation to the issue,
offer or invitation and whether or
not obtained (please specify)
(t)
Identified Assets
: The Sukuk will not be listed on the Bursa
Malaysia Securities Berhad or any other stock
exchange.
: Not applicable.
14
(u)
Purchase
and
Selling : Not applicable.
Price/rental (where applicable)
(v)
Conditions Precedent
: To include but not limited to the following (all
have to be in form and substance acceptable
to the Joint Lead Arrangers):
A
Main Documentation
(i)
The Transaction Documents have been
executed, stamped or endorsed as
exempt from stamp duty, as applicable
and presented for registration (if
required).
(ii)
All
relevant
notices
and
acknowledgements (where applicable)
shall have been made or received as the
case may be.
B
Issuer
(i)
Certified true copies of the Certificate of
Incorporation, and the Memorandum and
Articles of Association, of the Issuer.
(ii)
Certified true copies of the latest Forms
24, 44 and 49 of the Issuer.
(iii)
A certified true copy of board resolutions
of the Issuer authorising, among others,
the execution of the Transaction
Documents.
(iv)
A list of the Issuer‟s authorised
signatories and their respective specimen
signatures.
(v)
A report of the relevant company search
of the Issuer.
(vi)
A report of the relevant winding up
search or the relevant statutory
declaration of the Issuer.
(vii)
Receipt of the comfort letter from the
External Auditor addressed to the Issuer
and to the Joint Lead Arrangers in
respect of financial information as set
out in the information memorandum.
C
General
(i)
The approval from the SC and, where
applicable,
all
other
regulatory
authorities and the compliance with all
15
conditions of such approval.
(ii)
The ICPs and the IMTNs have received
their respective requisite ratings as
stated in this PTC.
(iii)
Evidence that all transaction fees, costs
and expenses have been paid in full to
the extent that the same are due and
payable before the issuance.
(iv)
The Joint Lead Arrangers have received
from the Solicitors a favourable legal
opinion addressed to it advising with
respect to, among others, the legality,
validity and enforceability of the
Transaction
Documents
and
a
confirmation addressed to the Joint Lead
Arrangers that all the conditions
precedent have been fulfilled.
(v)
The ICP/IMTN Programme has received
the approval from the Shariah Adviser.
(vi)
Completion of the financial and legal due
diligence carried out on the Issuer and
its material subsidiaries to the
satisfaction of the Joint Lead Arrangers.
In respect of the legal due diligence, a
legal due diligence opinion addressed to
the Joint Lead Arrangers confirming that
the steps and procedures of the due
diligence review on the Issuer and its
material subsidiaries as set out in the
due diligence planning memorandum
and agreed to by the due diligence
working group comply with all relevant
rules and regulations.
(vii)
Confirmation from the Issuer that all
required consents from the Issuer‟s
existing lenders for the ICP/IMTN
Programme (if applicable) have been
obtained.
Such other conditions precedent as advised
by the Solicitors of the Joint Lead Arrangers
and mutually agreed between the Issuer and
the Joint Lead Arrangers.
(w)
Representations and Warranties
: Representation and warranties will be included
in the relevant Transaction Documents to the
ICP/IMTN Programme, and will include such
representations and warranties customary and
standard for a facility of this nature. Unless
16
otherwise stated to the contrary, such
representations and warranties shall be
repeated on the closing date and the issue
date. The representation and warranties shall
include, but not limited to the following:
(i)
the Issuer is a company with limited
liability duly incorporated and validly
existing under the laws of Malaysia,
has full power to carry on its business
and to own its property and assets,
and has full beneficial ownership of all
its property and assets;
(ii)
the memorandum and articles of
association of the Issuer incorporate
provisions which authorise, and all
necessary corporate and other relevant
actions have been taken to authorise,
and all relevant consents and
approvals of any administrative,
governmental or other authority or
body in Malaysia have been duly
obtained and are in full force and effect
which are required to authorise, the
Issuer to execute and deliver and
perform the transactions contemplated
in the Transaction Documents in
accordance with their terms;
(iii)
neither the execution and delivery of
any of the Transaction Documents nor
the performance of any of the
transactions contemplated by the
Transaction Documents did or does as
at the date this representation and
warranty is made or repeated (a)
contravene or constitute a default
under any provision contained in any
agreement, instrument, law, ordinance,
decree,
judgment,
order,
rule,
regulation, licence, permit or consent
by which the Issuer or any of its assets
is bound or which is applicable to the
Issuer or any of its assets, (b) cause
any limitation on the Issuer or the
powers of its directors, whether
imposed by or contained in its
memorandum
and
articles
of
association or in any agreement,
instrument, law, ordinance, decree,
order, rule, regulation, judgment or
otherwise, to be exceeded, or (c)
cause the creation or imposition of any
security interest or restriction of any
nature on any of the Issuer‟s assets;
17
(iv)
each of the Transaction Documents is
or will when executed and/or issued,
as the case may be, be in full force and
effect and constitutes, or will when
executed or issued, as the case may
be, constitute, valid and legally binding
obligations of
the Issuer
and
enforceable in accordance with its
terms;
(v)
no
litigation,
arbitration
or
administrative proceeding or claim
which might by itself or together with
any other such proceedings or claims
which would reasonably be expected
to have material adverse effect on the
business or condition (financial or
otherwise) or results of the operations
of the Issuer or the ability of the Issuer
to perform any of its obligations under
any of the Transaction Documents is
presently in progress or pending or,
threatened against the Issuer or its
subsidiaries or any of its or their
assets;
(vi)
the Issuer is unaware and has no
reason to believe that an event has
occurred which constitutes, or which
with the giving of notice and/or the
lapse of time and/or a relevant
determination would constitute, a
contravention of, or default under, any
agreement or instrument by which the
Issuer or any of its assets are bound or
affected, being a contravention or
default which would reasonably be
expected to have a material adverse
effect on the business or condition
(financial or otherwise) or results of the
operations of the Issuer or the ability of
the Issuer to perform any of its
obligations
under
any
of
the
Transaction Documents;
(vii)
the Issuer has disclosed in writing or
through such disclosures which have
been documented or minuted prior to
the date of the ICP/IMTN Programme
Agreement to the Joint Lead Arrangers
and/or the Facility Agent all facts
relating to the Issuer knows or should
reasonably know and which are
material for disclosure to the Trustee,
the Joint Lead Arrangers, Joint Lead
Managers and the Facility Agent in the
18
context of the Transaction Documents;
and
(viii)
(x)
Events
Events
of
any
other
representations
and
warranties as advised by the legal
counsel of the Joint Lead Arrangers
and mutually agreed between the
Issuer and the Joint Lead Arrangers.
Default/Dissolution : Events of Default/Dissolution Events to include
but not limited to the following:
(i)
the Issuer fails to pay any amount due
from it under any of the Transaction
Documents on the due date or, if so
payable, on demand;
(ii)
any representation or warranty made or
given by the Issuer under the
Transaction Documents or which is
contained in any certificate, document or
statement furnished at any time
pursuant to the terms of the Sukuk
and/or
any
of
the
Transaction
Documents proves to have been
incorrect or misleading in any material
respect on or as of the date made or
given or deemed made or given, and in
the case of a failure which in the opinion
of the Trustee is capable of being
remedied, the Issuer does not remedy
the failure within a period of thirty (30)
days after the Issuer became aware or
having been notified by the Trustee of
the failure;
(iii)
the Issuer fails to observe or perform its
obligations under any of the Transaction
Documents or the Sukuk or under any
undertaking or arrangement entered into
in connection therewith other than an
obligation of the type referred to in
paragraph (i) above, and in the case of a
failure which in the opinion of the
Trustee is capable of being remedied,
the Issuer does not remedy the failure
within a period of thirty (30) days after
the Issuer became aware or having
been notified by the Trustee of the
failure;
(iv)
there has been a breach by the Issuer of
any obligation under any of the Issuer‟s
existing contractual obligations which
19
would reasonably be expected to have a
material and adverse effect on the
Issuer‟s ability to perform its obligations
under the Transaction Documents and, if
in the opinion of the Trustee is capable
of being remedied, the Issuer does not
remedy the breach within a period of
thirty (30) days after the Issuer became
aware or having been notified by the
Trustee of the breach;
(v)
any indebtedness for borrowed moneys
of the Issuer becomes due or payable or
capable of being declared due or
payable prior to its stated maturity or any
guarantee or similar obligations of the
Issuer is not discharged at maturity or
when called and such declaration of
indebtedness being due or payable or
such call on the guarantee or similar
obligations is not discharged or disputed
in good faith by the Issuer in a court of
competent jurisdiction within thirty (30)
days from the date of such declaration
or call, or the Issuer goes into default
under, or commits a breach of, any
agreement or instrument relating to any
such indebtedness, guarantee or other
obligations, or any security created to
secure such indebtedness becomes
enforceable;
(vi)
an encumbrancer takes possession of,
or a trustee, receiver, receiver and
manager or similar officer is appointed in
respect of the whole or substantial part
of the business or assets of the Issuer,
or distress, legal process, sequestration
or any form of execution is levied or
enforced or sued out against the Issuer,
or any security interest which may for
the time being affect any of its assets
becomes enforceable;
(vii)
the Issuer fails to satisfy any judgement
passed against it by any court of
competent jurisdiction and no appeal
against
such
judgement
or
no
application for a stay of execution has
been made to any appropriate appellate
court within the time prescribed by law
or such appeal or application for a stay
of execution has been dismissed;
(viii) any step is taken for the winding up,
20
dissolution or liquidation of the Issuer or
a resolution is passed for the winding up
of the Issuer or a petition for winding up
is presented against the Issuer and the
Issuer has not taken any action in good
faith to set aside such petition within
thirty (30) days from the date of service
of such winding up petition or a winding
up order has been made against the
Issuer;
(ix)
the Issuer convenes a meeting of its
creditors or proposes or makes any
arrangement including any scheme of
arrangement or composition or begins
negotiations with its creditors, or takes
any proceedings or other steps, with a
view to a rescheduling or deferral of all
or any part of its indebtedness or a
moratorium is agreed or declared by a
court of competent jurisdiction in respect
of or affecting all or any part of its
indebtedness or any assignment for the
benefit of its creditors (other than for the
purposes of and followed by a
reconstruction previously approved in
writing by the Trustee, unless during or
following such reconstruction the Issuer
becomes or is declared to be insolvent)
or where a scheme of arrangement
under section 176 of the Companies Act
1965 has been instituted against the
Issuer;
(x)
where there is a revocation, withholding
or
modification of
any license,
authorisation, approval or consent which
would reasonably be expected to
materially and adversely impair or
prejudice the ability of the Issuer to
comply with the terms and conditions of
the
Sukuk
or
the
Transaction
Documents;
(xi)
save for such debts which are being
contested in good faith by the Issuer, the
Issuer is deemed unable to pay any of
its debts or becomes unable to pay any
of its debts as they fall due or suspend
or threaten to suspend making
payments with respect to all or any class
of its debts;
21
(xii)
any creditor of the Issuer exercises a
contractual right to take over the
financial management of the Issuer;
(xiii) the Issuer changes or threatens to
change the nature or scope of a
substantial part its business, or
suspends or threatens to suspend or
cease or threatens to cease the
operation of a substantial part of its
business which it now conducts directly
or indirectly and such change or
suspension
or
cessation
would
reasonably be expected to have a
material adverse effect on the financial
condition or the ability of the Issuer to
perform any of its obligations under any
of the Transaction Documents;
(xiv) at any time any of the provisions of the
Transaction Documents is or becomes
illegal, void, voidable or unenforceable;
(xv) the Issuer repudiates any of the
Transaction Documents or the Issuer
does or causes to be done any act or
thing evidencing an intention to
repudiate any of the Transaction
Documents;
(xvi) the whole or a substantial part of the
assets, undertakings, rights or revenue
of the Issuer are seized, nationalised,
expropriated or compulsorily acquired by
or under the authority of any
governmental body and “substantial” in
this context shall mean such value
equivalent to or more than ten per cent
(10%) of the Issuer‟s net assets as
reflected in its latest consolidated annual
audited financial statements, as the case
may be;
(xvii) any event or events has or have
occurred or a situation exists which in
the opinion of the Trustee would be
reasonably expected to have a material
adverse effect on the ability of the Issuer
to perform any of its obligations under
any of the Transaction Documents , and
in the case of the occurrence of such
event or situation which in the opinion of
the Trustee is capable of being
remedied, the Issuer does not remedy it
22
within a period of thirty (30) days after
the Issuer became aware or having
been notified by the Trustee of the event
or situation;
(xviii) it is or will become unlawful by the laws
of Malaysia or by the laws of any
applicable jurisdiction for the Issuer to
perform or comply with their obligations
under any Transaction Documents; and
(xix) such other event as may be advised by
the legal counsel of the Joint Lead
Arrangers and mutually agreed between
the Issuer and the Joint Lead Arrangers.
Upon the declaration of an Event of
Default/Dissolution Event, the Trustee may or
shall (if directed to do so by a special
resolution of the Sukukholders and subject to
it being indemnified to its satisfaction) declare
that: (i) the Sukuk together with all other sums
payable under the Sukuk shall become
immediately due and payable; and (ii) all sums
payable under the Purchase Undertaking are
immediately due and payable in full.
Thereafter, the Trustee may take proceedings
against the Issuer and/or Obligor as it may
think fit to enforce immediate payment of the
Sukuk and/or the Purchase Undertaking.
(y)
Principal terms and conditions : Not applicable.
for warrants (where applicable)
(z)
Other principal terms
conditions for the issue
(i)
Purchase
Undertaking
and :
Under a purchase undertaking (“Purchase
Undertaking”), BERNAS as Obligor shall grant
an undertaking to the Trustee (on behalf of the
Sukukholders) pursuant to which BERNAS
shall purchase the Sukukholder‟s interest in
the Musyarakah Venture at the Exercise Price
upon the declaration of any Dissolution Event.
Exercise Price
In the case of Sukuk with Periodic
Distributions, the Exercise Price payable for
the Sukuk is equivalent to the nominal value of
the Sukuk plus all Expected Periodic
Distributions less the aggregate Periodic
Distributions made and received and less the
Unearned Periodic Distribution and less the
sum of advance part payment.
23
In the case of Sukuk without Periodic
Distributions, the Exercise Price payable for
the Sukuk is equivalent to the nominal value of
the Sukuk less One-off Distribution made and
received and less the sum of advance part
payment. Where applicable, the Exercise
Price is to be adjusted based on the
dissolution date upon the declaration of a
Dissolution Event(s) and the adjusted Exercise
Price will be calculated based on a formula to
be determined.
Unearned Periodic Distribution
The aggregate amount of all Expected
Periodic Distributions falling due after the
declaration of a Dissolution Event(s) and shall
exclude the remaining Periodic Distributions
falling due immediately after the date of a
Dissolution Event.
(ii)
Sale Undertaking
Pursuant to a Sale Undertaking declared and
issued by the Trustee for and on behalf of the
Sukukholders, in favour of the Issuer, the
Trustee for and on behalf of the Sukukholders
undertakes to sell the Sukukholders‟ interest in
the Musyarakah Venture to the Issuer at an
Exercise Price on the Maturity Date of the
Sukuk.
Exercise Price
In the case of Sukuk with Periodic
Distributions, the Exercise Price payable for
the Sukuk is equivalent to the nominal value of
the Sukuk plus all Expected Periodic
Distributions less the aggregate Periodic
Distributions made and received and less the
sum of advance part payment.
In the case of Sukuk without Periodic
Distributions, the Exercise Price payable for
the Sukuk is equivalent to the nominal value of
the Sukuk less One-off Distribution made and
received and less the sum of advance part
payment.
(iii)
Ta’widh
In the event of any overdue payments of any
amounts due, including but not limited to,
under the Exercise Price pursuant to the
Purchase Undertaking or Sale Undertaking, as
the case may be, the Issuer shall pay
compensation (Ta‟widh) on such overdue
amounts at the rate and manner prescribed by
Shariah Advisory Council of the SC or such
24
other relevant regulatory authority from time to
time in accordance with the Shariah principles.
(iv)
Musyarakah Capital
The proceeds received from the Sukukholders
pursuant to their subscription for the Sukuk,
and the capital contribution of the Issuer (i.e.
the Business) for the purpose of participating
in the relevant Musyarakah Venture.
(v)
Musyarakah
Partners
Issuer and at least one investor forming a
Musyarakah.
(vi)
Manager
BERNAS is appointed by the Sukukholders to
manage the Musyarakah Venture on their
behalf for incentive fees and on other terms
and conditions to be documented under the
“Management Agreement”.
(vii)
Tender
Panel
Members
(“TPM”)
and Underwriters(if
required)
Financial institutions licensed under the
Banking and Financial Institutions Act, 1989
(“BAFIA”) and/or Islamic Banking Act, 1983,
insurance companies licensed under the
Insurance Act, 1996 and/or Takaful Act, 1984,
approved corporations and such other persons
falling within Schedule 6 (or Section
229(1)(b)), Schedule 7 (or Section 230(1)(b))
and Schedule 9 (or Section 257(3)) of the
Capital Markets and Services Act, 2007
(“CMSA”), as amended from time to time. The
composition of the tender panel members
(“TPM”) may be varied from time to time by the
Joint Lead Arrangers subject to agreement of
the Issuer.
(viii)
Status
The
Sukuk
shall
constitute
direct,
unconditional and unsecured obligations of the
Issuer and shall at all times rank pari passu,
without discrimination, preference or priority
amongst themselves and at least pari passu
with all other present and future unsecured
and unsubordinated obligations of the Issuer,
subject to those preferred by law.
(ix)
Tender and Issue
The Sukuk may be issued in multiples of
RM1,000,000 but subject to the FAST Rules
and other standard conditions including,
without limitation, the following:
(1) a minimum issue size of RM5 million for
each issue; and
(2) the issue notice shall be given to the
Facility Agent at least 8 business days (for
the first issue) or 6 business days (for
subsequent issues) prior to and excluding
the date of proposed issue; and
25
(3) in respect of the first issue of Sukuk, the
rating for the ICPs and the IMTNs are P1
for the ICPs or AA3 for the IMTNs and
thereafter an investment grade rating for
the subsequent issues for the ICPs and/or
IMTNs; and
(4) any amount redeemed may be re-issued.
(x)
Redemption
(xi)
Repurchase
Cancellation
(xii)
Covenants
Unless previously redeemed or purchased and
cancelled, the Sukuk will be redeemed by the
Issuer at 100% of their nominal value on their
respective maturity dates.
and
The Issuer or any of its related corporation may
at any time purchase the Sukuk at any price in
the open market or by private treaty, but these
repurchased Sukuk shall, if purchased by the
Issuer, be cancelled and cannot be reissued or,
if purchased by the Issuer‟s related
corporation, not entitle the holder(s) to vote at
any meeting of the holders of the Sukuk.
Information Covenants
To include but not limited to the following:
(i)
the Issuer shall provide to the Trustee at
least on an annual basis, a certificate
confirming that it has complied with all
its obligations under the Transaction
Documents and the terms and
conditions of the ICP/IMTN Programme
and that there does not exist or had not
existed, from the date the Sukuk were
issued, any Event of Default/Dissolution
Event, and if such is not the case, to
specify the same;
(ii)
the Issuer shall deliver to the Trustee the
following:
(a)
26
as soon as they become available
(and in any event within one
hundred and eighty (180) days
after the end of each of its
financial years) copies of its
consolidated financial statements
for that year which shall contain
the income statements and
balance sheets of the Issuer and
which are audited and certified
without qualification by a firm of
independent
certified
public
accountants acceptable to the
Trustee;
(b)
as soon as they become available
(and in any event within ninety
(90) days after the end of the first
half of its financial year) copies of
its
unaudited
half
yearly
consolidated financial statements
for that period which shall contain
the income statements and
balance sheets of the Issuer which
are duly certified by any one of its
directors;
(c)
promptly, such additional financial
or other information relating to the
Issuer‟s
business
and
its
operations as the Trustee may
from time to time reasonably
request; and
(d)
promptly, all notices or other
documents received by the Issuer
from any of its shareholders or its
creditors which contents may
materially and adversely affect the
interests of the Sukukholders, and
a
copy of
all
documents
dispatched by the Issuer to its
shareholders (or any class of
them) in their capacity as
shareholders or its creditors
generally at the same time as
these documents are dispatched
to these shareholders or creditors.
(iii)
the Issuer shall promptly notify the
Trustee of any change in its board of
directors
and/or
substantial
shareholders;
(iv)
the Issuer shall promptly notify the
Trustee of any change in the nature of
its business;
(v)
the Issuer shall promptly notify the
Trustee of any change in its withholding
tax position or taxing jurisdiction;
(vi)
the Issuer shall promptly notify the
Trustee of any circumstance that has
occurred that would materially prejudice
the Issuer;
27
(vii)
the Issuer shall promptly notify the
Trustee of any change in the utilisation
of proceeds from the Sukuk where the
information memorandum or any
agreement entered into in connection
with the issue, offer or invitation sets out
a specific purpose for which proceeds
are to be utilised;
(viii) the Issuer shall promptly notify the
Trustee of any change in its condition
(financial or otherwise) and of any
litigation or other proceedings of any
nature whatsoever being threatened or
initiated against the Issuer before any
court or tribunal or administrative agency
which would reasonably be expected to
have a material adverse effect on the
business or condition (financial or
otherwise) or results of the operations of
the Issuer or the ability of the Issuer to
perform any of its obligations under any
of the Transaction Documents;
(ix)
the Issuer shall promptly give notice to
the Trustee of the occurrence of any
Event of Default/Dissolution Event or
any event which, upon the giving of
notice and/or lapse of time and/or the
issue of a certificate and/or the fulfilment
of the relevant requirement as
contemplated
under
the
relevant
Transaction Document would constitute
an Event of Default/Dissolution Event
(“Potential Event of Default/Dissolution
Event”) forthwith upon becoming aware
thereof, and it shall take all reasonable
steps and/or such other steps as may
reasonably be requested by the Trustee
to remedy and/or mitigate the effect of
the Event of Default or the Potential
Event of Default/Dissolution Event;
(x)
the Issuer shall promptly notify the
Trustee of any other matter which may
materially prejudice the interests of the
Sukukholders; and
(xi)
any other covenants as advised by the
legal counsel of the Joint Lead
Arrangers and mutually agreed between
the Issuer and the Joint Lead Arrangers.
28
Positive Covenants
To include but not limited to the following:
(i)
the Issuer shall maintain in full force and
effect
all
relevant
authorisations,
consents, rights, licences, approvals and
permits (governmental and otherwise)
and will promptly obtain any further
authorisations,
consents,
rights,
licences,
approvals
and
permits
(governmental and otherwise) which is
or may become necessary to enable it to
own its assets, to carry on its business
or for the Issuer to enter into or perform
its obligations under the Transaction
Documents or to ensure the validity,
enforceability, admissibility in evidence
of the obligations of the Issuer or the
priority or rights of the financiers under
the Transaction Documents and the
Issuer shall comply with the same;
(ii)
the Issuer shall at all times on demand
execute all such further documents and
do all such further acts reasonably
necessary at any time or times to give
further effect to the terms and conditions
of the Transaction Documents;
(iii)
the Issuer shall exercise reasonable
diligence in carrying out its business and
affairs in a proper and efficient manner
and in accordance with sound financial
and
commercial
standards
and
practices;
(iv)
the Issuer shall promptly perform and
carry out all its obligations under all the
Transaction Documents (including but
not limited to redeeming the Sukuk on
the relevant Maturity Date(s) or any
other date on which the Sukuk are due
and payable) and ensure that it shall
immediately notify the Trustee in the
event that the Issuer is unable to fulfil or
comply with any of the provisions of the
Transaction Documents;
(v)
the Issuer shall prepare its financial
statements on a basis consistently
applied in accordance with approved
accounting standards in Malaysia and
those financial statements shall give a
true and fair view of the results of the
29
operations of the Issuer for the period to
which the financial statements are made
up and shall disclose or provide against
all liabilities (actual or contingent) of the
Issuer;
(vi)
the Issuer shall promptly comply with all
applicable laws including the provisions
of the Capital Markets and Services Act
2007 and/or the notes, circulars,
conditions or guidelines issued by SC
from time to time;
(vii)
the Issuer shall keep proper books and
accounts at all times and to provide the
Trustee and any person appointed by
the Trustee access to such books and
accounts;
(viii) the Issuer shall maintain a paying agent
in Malaysia at all times;
(ix)
the Issuer shall procure that the paying
agent shall notify the Trustee in the
event that the paying agent does not
receive payment from the Issuer on the
due dates as required under the Trust
Deed and the terms and conditions of
the Sukuk;
(x)
the Issuer shall cause and ensure that
all and any advances by its shareholders
and directors are subordinated to its
liabilities
under
the
ICP/IMTN
Programme;
(xi)
the Issuer shall maintain takaful/
conventional insurance necessary for
business of such nature);
(xii)
the Issuer shall use its best efforts to
pursue claims against the relevant third
parties; and
(xiii) such other undertakings as may be
advised by the legal counsel of the Joint
Lead Arrangers and mutually agreed
between the Issuer and the Joint Lead
Arrangers.
30
Negative Undertakings
To include but not limited to the following:
(a)
(b)
31
the Issuer shall not create or permit to
exist any encumbrance, mortgage,
charge (whether fixed or floating),
pledge, lien, hypothecation, assignment
by way of security, trust arrangement for
the purpose of providing security or
other security interest of any kind
including, without limitation, title transfer
and/or retention arrangements having a
similar effect or any agreement to create
any of the foregoing, save and except
for:
(i)
liens or right of set off arising in
the normal course of business
arising from the operation of law
and not by way of contract and
the aggregate amount of which is
not substantial;
(ii)
pledges, liens, hypothecation
and/or
trust
arrangements
created
in
relation
to
documentary credits opened in
the ordinary course of business
where (i) such pledges, liens,
hypothecation
and/or
trust
arrangements are not intended to
subsist beyond 180 days from the
date of its creation, and (ii) such
pledges, liens, hypothecation
and/or trust arrangements are
limited to the assets or goods
financed by the documentary
credit in question;
(iii)
security interest arising out of
liabilities which are preferred
solely by Malaysian law; and
the Issuer shall not sell, transfer or
dispose any assets not being in the
ordinary course of business whether by a
single transaction or a number of
transactions, related or not, which in
aggregate exceeds 10% of the Issuer‟s
net assets (as reflected in the latest
consolidated annual audited financial
statement) in any financial year;
(c)
the Issuer shall not add, delete, amend
or substitute its Memorandum or Articles
of Association in a manner inconsistent
with the provisions of the Transaction
Documents;
(d)
the Issuer shall not reduce its authorised
or paid-up share capital whether by
varying the amount, structure or value
thereof or the rights attached thereto or
by converting any of its share capital into
stock, or by consolidating, dividing or
sub-dividing all or any of its shares, or
by any other manner;
(e)
the Issuer shall not pay any dividends or
make any advances to any shareholder
or make any other form of distribution in
or in respect of the Issuer‟s share capital
if:
(i)
any money payable in respect of
the ICP/IMTN Programme is
overdue and unpaid, any Event of
Default/Dissolution Event had
occurred and is continuing or if
any of the material provisions of
the Transaction Documents is not
fully complied with; or
(ii)
upon payment of such, any Event
of Default/Dissolution Event shall
occur or any of the material
provisions of the Transaction
Documents becomes not fully
complied with;
(f)
the Issuer shall not obtain or permit to
exist any loans or advances from its
shareholders unless these loans and
advances are subordinated to the
ICP/IMTN Programme;
(g)
enter into a transaction, whether
directly or indirectly with interested
persons
(including
a
director,
substantial shareholder or persons
connected with them) (for the purpose
of this covenant, the term “transaction”
shall have the same meaning as
ascribed to “related party transaction”
in the Listing Rules of Bursa Malaysia
(“LR”)) unless:
(i)
32
such transaction shall be on terms
that are no less favourable to the
Issuer than those which could have
been obtained in a comparable
transaction from persons who are
not interested persons; and
(ii)
with
respect
to
transactions
involving an aggregate payment or
value equal to or exceeding the
applicable percentage ratios as set
out in the LR, the Issuer obtains
certification from an independent
adviser that the transaction is
carried out on fair and reasonable
terms;
AND PROVIDED that
(i)
the Issuer certifies to the trustee
that the transaction complies with
paragraph (i);
(ii)
the Issuer has received the
certification referred to in paragraph
(ii) (where applicable); and
(iii)
the transaction has been approved
by the majority of the board of
directors or shareholders in a
general meeting as the case may
be;
(h)
the Issuer shall not change the nature of
its present business;
(i)
the Issuer shall not use the proceeds of
the ICP/IMTN Programme except for the
purposes set out in this PTC;
(j)
save and except in the ordinary course
of its business, the Issuer shall not lend
any money to any party other than to the
Issuer's directors, officers or employees
as part of their terms of employment;
(k)
the Issuer shall not dissolve its affairs or
consolidate with or merge with any other
person or allow any other person to
consolidate or merge with it; and
(l)
such other undertakings as may be
advised by the legal counsel of the Joint
Lead Managers and mutually agreed
between the Issuer and the Joint Lead
Managers.
33
(xiii)
Taxation
All payments by the Issuer shall be made
without withholding or deductions for or on
account of any present or future tax, duty or
charge of whatsoever nature imposed or
levied by or on behalf of Malaysia or any other
applicable jurisdictions, or any authority
thereof or therein having power to tax, unless
such withholding or deduction is required by
law. In that event, the Issuer shall make such
payment after the deduction or withholding
has been made and shall account to the
relevant authorities for the amount required to
be deducted or withheld. The Issuer shall not
be obliged to make any additional amount to
the Sukukholders in respect of such
withholding or deductions.
(xiv)
Governing Law
The governing law for all legal documentation
is the Laws of Malaysia and the Issuer shall
unconditionally and irrevocably submit to the
non-exclusive jurisdiction of the courts of
Malaysia.
(xv)
Availability
Upon completion of documentation and,
unless waived by the Joint Lead Arrangers,
compliance of all conditions precedent and
other applicable conditions to the satisfaction
of the Joint Lead Arrangers.
(xvi)
Transferability
Transferable, but subject
restrictions stated above.
to
the
selling
(xvii) Transaction
Documents
(i) the ICP/IMTN Programme Agreement;
(ii) the Trust Deed;
(iii) Depository
and
Paying
Agency
Agreement;
(iv) Musyarakah Agreement;
(v) Management Agreement;
(vi) Purchase Undertaking;
(vii) Sale Undertaking; and
(viii) Any other documents or any such other
agreements that may be advised by the
Solicitor
(xviii) Other Conditions
The Sukuk shall at all times be governed by
the guidelines issued and to be issued from
time to time by the SC, BNM and/or any other
authority in Malaysia having jurisdiction over
matters pertaining to the Sukuk, and the FAST
Rules.
34
ANNEXURE A – TRANSACTION STRUCTURE
4. Sale Undertaking by Investors
4. Purchase Undertaking by Issuer
1.
Musyarakah Venture
2. Issuer issues Sukuk
Investors
Issuer
Sukuk
2. Declaration of Trust
1. Capital
contribution
2. Business
Musyarakah
Venture
4.
3c and 3d. Profit
Distribution (One off/
Periodic Distribution)
3.
3b. Appointment as
Manager
3a. Profit
5.
3c
and 3d.
Distribution
Profit
Profit
Manager
3b.
fee
Incentive
1. The investors with the Issuer will from time to time enter into a Musyarakah
Agreement as partners (each a “partner” and collectively the “Musyarakah Partners”)
for the purpose of undertaking a Musyarakah Venture to invest directly into the
Shariah-compliant business of the Issuer (“Business”).
2. The Issuer will from time to time, issue Sukuk to the investors (“Sukukholders”).
Proceeds raised from the Sukuk shall be used as capital contribution of the
Sukukholders in the Musyarakah Venture. Each Sukuk shall represent Sukukholders‟
undivided proportionate interest in the Musyarakah Venture. Simultaneously, the
Issuer shall make declaration that it holds on trust over all its interest in the Business
for the benefit of the Sukukholders. The participation by the Sukukholders in the
Musyarakah Venture is via the subscription of Sukuk issued by the Issuer.
Meanwhile, the Issuer, will, from time to time, contribute its Business as capital
contribution into the Musyarakah Venture. The capital contribution ratio of the
Musyarakah Partners in the Musyarakah Venture shall be based on their respective
capital contribution.
3. (a)
Any profit derived from the Musyarakah Venture will be distributed based on
a pre-agreed profit sharing ratio which will be determined prior to issuance
of the Sukuk from time to time.
35
(b)
The Issuer shall be appointed as the manager (“Manager”) to manage the
Musyarakah Venture. The Sukukholders shall agree that any profit in excess
of the Expected Return shall be retained by the Manager as an incentive fee.
(c)
In respect of Sukuk with periodic distribution, income from the Musyarakah
Venture of up to an amount equal to a certain percentage of the face value of
the Sukuk per annum, calculated on the basis of the actual number of days in
the relevant period (“Expected Periodic Distribution”) shall be distributed semi
annually or such other period to be agreed prior to the issuance in the form of
periodic distribution (“Periodic Distribution”). Any shortfall between the
Expected Periodic Distribution and the actual income generated for such
relevant period shall be paid by Issuer as an advance part payment of the
Exercise Price payable by the Issuer pursuant to the Purchase Undertaking or
Sale Undertaking, as the case may be.
(d)
In respect of Sukuk without Periodic Distribution, income from the
Musyarakah Venture of up to the Expected Return shall be distributed on a
one-off basis upon the maturity date or the Dissolution Date (“One-off
Distribution”), whichever is applicable. Any shortfall between the One-off
Distribution and the actual income generated for such relevant period shall
be paid by Issuer as an advance part payment of the Exercise Price
payable by the Issuer pursuant to the Purchase Undertaking or Sale
Undertaking, as the case may be.
4. The Issuer shall issue a Purchase Undertaking to Trustee for and on behalf of the
Sukukholders, wherein the Issuer undertakes to purchase the Sukukholders‟ interest
in the Musyarakah Venture at an Exercise Price upon declaration of Dissolution
Event(s). Pursuant to a Sale Undertaking issued by the Trustee for and on behalf of
the Sukukholders, in favour of the Issuer, the Trustee for and on behalf of the
Sukukholders undertakes to sell the Sukukholders‟ interest in the Musyarakah
Venture to the Issuer at an Exercise Price on the Maturity Date of the Sukuk.
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36
SECTION 3.0 INVESTMENT CONSIDERATIONS
The following is a summary of risk factors relating to the ICP/IMTN Programme and their
possible mitigating factors. This section does not purport to be comprehensive or exhaustive
and is not intended to substitute or replace an independent assessment of the risk factors
that may affect the ICP/IMTN Programme. Each investor should carefully conduct his or her
independent evaluation of the risks associated with investing in the Sukuks. Investors should
also note that each issue of the Sukuks will carry different risks and all potential investors
are strongly encouraged to evaluate each Sukuk on its own merit.
3.1
General Considerations
(a)
Regulatory Risk
Changes in law and regulations are unpredictable and beyond the Issuer‟s control
and may affect the way Bernas Group conduct its business. Such changes may be
more restrictive or result in higher costs than current requirements or otherwise
materially impact its business, results of operations or financial condition.
The Bernas Group‟s operations are subject to various rules and regulations
governing the domestic rice and paddy industry, and also extensively regulated by
governmental regulations. A failure to comply with any of these or all regulations
could result in regulatory investigations, fines and restrictions on some of the Bernas
Group‟s business activities or other sanctions.
In addition, as a listed entity, the Bernas Group is subject to the Bursa Securities
Listing Requirements and related securities guidelines, rules and regulations. These
requirements and regulations may limit the Bernas Group‟s activities or result in high
compliance costs.
No assurance can be given that any future changes to present law, regulation or any
introduction of new regulation by relevant authorities will not have a material adverse
impact on the Bernas Group‟s business.
(b)
Political and Economic Considerations
Any adverse developments in the political and economic conditions in Malaysia and
other countries in South East Asia may materially and adversely affect the prospects
and future performance of the Bernas Group and the market value of the Issuer‟s
Sukuk. Such uncertainties may include risk of war, expropriation, nationalisation or
nullification of existing contract(s), changes in interest rates, taxation, currency
exchange controls, inflation and/or other political, economic or social developments.
There is no assurance that such adverse political and economic factor(s) will not
materially affect Bernas Group.
(c)
Litigation Risks
The Bernas Group is exposed to legal risks in its businesses. Please refer to Section
9.0 below and the announcements made by Bernas on Bursa Malaysia in relation to
litigations involving Bernas Group.
37
(d)
Forward Looking Statement
This Information Memorandum contains forward looking statements. Such forwardlooking statements in the Information Memorandum involve known and unknown
risks, uncertainties and other factors which may affect actual outcomes, many of
which are outside the control of the Issuer. These factors include economic
conditions in the markets in which the Issuer operates and achievement of the
company's business forecasts. These factors will cause the actual results,
performance or achievements of the Issuer to differ, perhaps materially, from the
results, performance or achievements expressed or implied by those forward-looking
statements. These forward-looking statements do not constitute a representation that
future results will be achieved in the amounts or by the dates indicated.
3.2
Concession Risk
In consideration of the duties and obligations to be undertaken or performed by
Bernas pursuant to the Concession Agreement for the benefit of consumers, padi
farmers and rice millers, the Government has agreed that Bernas shall, subject to the
terms and conditions in the Concession Agreement, be granted the right to import
rice into Malaysia for a period of fifteen (15) years from the date of the Concession
Agreement. Prior to the expiry of the 15-year period, the Government may, upon an
application made by Bernas, extend the right to import rice for a further five (5) year
extension period subject to the terms and conditions to be mutually agreed.The right
to import rice will be expiring on 12 January 2011. Bernas has made an application to
the Government to extend the right to import rice for a further five (5) years. The
Economic Planning Unit, Prime Minister‟s Department in its letter to Bernas dated 3
October 2007 has agreed to extend Bernas‟s right to import rice to 11 January 2016.
As at the date of this Information Memorandum, the Government and Bernas are still
negotiating the terms of the extension and have not executed any agreement in
respect of the same. There is no assurance that the terms of the extension will not
materially affect Bernas Group.
There is also risk that (i) the Concession Agreement may be terminated by the
Government upon the occurrence of any termination event as stated in the
Concession Agreement and/or (ii) the Government may grant to such persons (other
than Bernas) the right or license to import rice into Malaysia for such period as the
Government may consider appropriate. In the event the Concession Agreement is
terminated or the right to import rice into Malaysia is also granted to persons other
than Bernas, there is no assurance that Bernas Group‟s business, results of
operations and/or financial condition will not be materially impacted.
In addition to the above, throughout the duration of the Concession Agreement,
Bernas is required to:
(a)
conserve, maintain and manage the National Padi/Rice Stockpile;
(b)
undertake to purchase padi from the padi farmers at the Guaranteed
Minimum Price as determined by the Government from time to time;
(c)
act as buyer of last resort for the padi farmers;
(d)
undertake to manage the disbursement of subsidies to padi farmers under the
Padi Price Subsidy Scheme; and
undertake to manage the Bumiputera Rice Millers Schemes.
(e)
38
In the event of increase in international rice prices, and in order to maintain the
National Padi/Rice Stockpile, Bernas may still be required to purchase rice at the
international rice prices and sell the same in the domestic market at lower prices in
order to maintain the stability of rice prices in Malaysia. In such circumstances,
Bernas may have to absorb the loss due to the discrepancy between the international
rice prices and the domestic rice prices. On the other hand, in the event of decrease
in international rice prices, Bernas may still be required to purchase padi from the
padi farmers at the Guaranteed Minimum Price. As the buyer of last resort, Bernas
will also buy all padi delivered by any padi farmers to any padi purchasing centres
established or managed by Bernas, even if Bernas is operating at full capacity.
These obligations may limit Bernas Group‟s activities or impact the results of
operations and/or financial condition of Bernas Group.
Please refer to Section 6.0 of this Information Memorandum for more detailed
description of the Concession Agreement.
3.3
Exposure to International Rice Prices
The domestic rice production in Malaysia can only cater for 60-70% of the nation‟s
rice requirement and the shortfall is supplemented by imported rice. Bernas being the
sole importer of rice for Malaysia is subject to volatility of the international traded rice
market. The price of rice is dependent on the fluctuating economics of supply and
demand of rice in the international markets. Profit generated by Bernas will fluctuate
depending on the international price for rice.
Aside from world-wide demand, supply and price of rice, there are a number of other
factors affecting the movement of rice prices (some of which are interrelated and
unpredictable), which could cause price volatility in the world rice market. These
include: (i) import and export tariff barriers; (ii) agricultural policies imposed by
importing and exporting countries; and (iii) weather and other agricultural influences.
Notwithstanding that the price for rice in the international market has stabilized, there
is no assurance that this stability will continue during the duration of the ICP/IMTN
Programme and there is no assurance that adverse movement in the international
prices of rice will not have an adverse effect on the financial condition and operating
performance of Bernas.
3.4
Weather Conditions
The cultivation of paddy is an agricultural endeavour and, as such, elements like the
general weather, soil conditions and terrain play an important role in determining the
health and productivity of paddy. Being a country within the equatorial region,
Malaysia experiences two (2) monsoon seasons, namely the North-East monsoon
from November to March and the South-West monsoon from May to September.
Weather conditions in Malaysia have, in the last decade, been affected by increased
deforestation and peat fires locally and in neighbouring countries. The El-Nino
phenomenon has further contributed to extreme weather changes bringing severe
drought and, at other times, severe rain. Such weather factors may cause significant
implications to plantation productivity and land use patterns.
No assurance can be given that any fluctuation in weather conditions would not have
any adverse effects to the production of paddy as the same is beyond the control of
39
Bernas. However, the adverse effects of weather condition can be minimised
through preventive measures such as proper water management and irrigation via
the building of water gates and proper maintenance of drains. Nevertheless, there is
no assurance that any long term adverse change in weather will not affect the
financial condition and operating performance of Bernas.
3.5
Pests and Diseases
Although paddy is less exposed to pests and diseases, occasional outbreaks of leafeating worms such as bagworms and nettle caterpillars are encounters which are, a
common problem affecting the crops that are grown on a large-scale basis. The
young paddy plants, in particular, are susceptible to attacks by beetles.
The occurrences of these risks are reduced through frequent exterminating of pests
with the use of pesticides, rat baiting, rearing of barn owls as a form of natural
control, regular inspections on estate grounds for active breeding grounds for pests
and destroying any breeding grounds found within close proximity of the paddy fields.
Despite active measures taken, no assurance can be given that large-scale attacks
by pests will not occur in the future.
3.6
Competition from Private Millers
A farmer may choose to sell its produce to Bernas or private millers. Accordingly,
depending on the supply and demand of paddy, Bernas may face competition from
private millers in respect of the acquisition of paddy from farmers.
3.7
The Government’s interest in Bernas
As the owner of the Special Share and as the owner, directly or indirectly, of Bernas,
the Government has the right to exercise effective control of the Bernas‟s Group.
Although Bernas believes the Government has no intention of significantly disposing
its ownership interest in Bernas in the near future, there can be no assurance that the
Government would not in fact decide to do so.
3.8
Risks Considerations Relating to the Issuer and the ICP/IMTN Programme
Issuer’s ability to meet its obligations under the Sukuk
The Sukuk represent the direct and unsecured and unconditional obligations of the
Issuer and shall be payable out of Bernas Group‟s operating cash flows. In this
regard, the redemption and profit payments obligations under the Sukuk shall depend
on the cash flow availability at Bernas Group‟s level. The Sukuk will not be the
obligations or responsibilities of any other person other than Bernas and shall not be
the obligations or responsibilities of, or guaranteed by any of the Joint Lead
Arrangers, the Facility Agent, the Trustee or any subsidiary or affiliate thereof, and
any other person involved or interested in the Sukuk. None of such persons will
accept any liability whatsoever to the Sukukholders in respect of any failure by the
Issuer to pay any amount due under the Sukuk.
No prior markets for the Sukuk
The Sukuk comprise a new issue of securities for which there is currently no
established secondary market. There can therefore be no assurance that a
40
secondary market will develop or, if a secondary market does develop, as to the
liquidity of that market for the Sukuk or that it will continue for the entire tenure of the
Sukuk. Furthermore, there can be no assurance as to the ability of investors to sell
their securities or the prices at which investors would be able to sell their Sukuk.
The rating on the ICPs/IMTNs may be changed at any time and this may
adversely affect the market value of the ICPs/IMTNs
The ICPs and IMTNs have been assigned an initial rating of “P1” and “AA3”
respectively by RAM Rating Services Berhad. The rating addresses the likelihood of
full and timely payment of profit and principal to the holders of the ICPs and IMTNs. A
rating is not a recommendation to purchase, hold or sell the ICPs and/or IMTNs as
such ratings do not comment on the market price or suitability for a particular
investor. There is no assurance that a rating will remain in effect for any given period
of time or that a rating will not be lowered, suspended or withdrawn entirely by an
assigning rating organisation in the future, if, in its judgment, circumstances in the
future so warrant.
The market value of the Sukuk may be subject to fluctuation
Trading prices of the Sukuk may be influenced by numerous factors, including the
operating results and/ or financial condition of Bernas, political, economic, financial
and any other factors that can affect capital markets in general. Any adverse
economic and financial developments in Malaysia and the Southeast Asian region
could have an effect on the market value of the Sukuk.
An investment in the Sukuk is subject to interest rate risk
Sukukholders may suffer unforeseen losses due to fluctuations in interest rates. The
Sukuk are fixed income securities and may therefore see their price fluctuate due to
fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in
Sukuk prices. The Sukuk may be similarly affected resulting in a capital loss for
Sukukholders. Conversely, when interest rates fall, Sukuk prices and the prices at
which the Sukuk trade may rise. Sukukholders may enjoy a capital gain but profit
received may be reinvested for lower returns.
An investment in the Sukuk is subject to inflation risk
Sukukholders may suffer erosion on the redemption of their investments due to
inflation. Sukukholders would have an anticipated rate of return based on expected
inflation rates on the purchase of the Sukuk. An unexpected increase in inflation
could reduce the actual return.
The Issuer may in certain circumstances purchase the Sukuk in the open
market
The Issuer or any of its related corporation may at any time purchase the Sukuk at
any price in the open market or by private treaty, but these purchased Sukuk shall, if
purchased by the Issuer, be cancelled and cannot be reissued or, if purchased by the
Issuer‟s related corporation, not entitle the holder(s) to vote at any meeting of the
holders of the Sukuk.
Risk specific to the Musyarakah Structure
The Musyarakah structure is based on the concept of a partnership. Therefore, the
partners in a Musyarakah structure including Sukukholders will be exposed to both
the risk of loss as well as the gain of profit. Any profit or loss derived from the
partnership will be distributed or borne by each Sukukholder in proportion to each
Sukukholder‟s contribution of capital in the partnership. The risk of loss is mitigated
through (1) an undertaking to purchase by Bernas given to the Trustee (on behalf of
the Sukukholders) pursuant to which Bernas shall purchase the Sukukholders‟
41
interests in the partnership upon the occurrence of any dissolution event under the
ICP/IMTN Programme; and (2) an undertaking to sell by the Trustee (on behalf of the
Sukukholders) given to Bernas pursuant to which the Trustee (on behalf of the
Sukukholders) shall sell the Sukukholders‟ interests in the partnership upon the
maturity date of each series of Sukuk.
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42
SECTION 4.0 INFORMATION ON THE ISSUER
4.1
Corporate information and principal activity
The Issuer was incorporated as a public company limited by shares in Malaysia
under the Companies Act, 1965 on 14 April 1994 under the name of Syarikat
Padiberas Nasional Berhad. Effective from 30 March 1995, the Issuer‟s name was
changed to Padiberas Nasional Berhad. The registered office of Bernas is located at
Level 31, Menara HLA, No. 3 Jalan Kia Peng, 50450 Kuala Lumpur.
The principal activity of the Issuer is to procure, collect, import, export, purchase of
rice, paddy and other grains, activities in relation to the distribution of rice and
investment holding.
4.2
Share capital
The authorised, issued and paid-up share capital of the Issuer as at 30 June
2010 are as follows:
Authorised
Share Capital
: RM1,000,000,001 consisting of 1,000,000,000 ordinary
shares of RM1.00 each and 1 special rights
redeemable preference share of RM1.00 each
(“Special Share”)
Issued
Paid-up
Capital
: RM470,401,501 consisting of 470,401,500 ordinary
shares of RM1.00 each and 1 special rights
redeemable preference share of RM1.00 each
(“Special Share”)
and
Note: The special rights redeemable preference share of RM1.00 is held by Minister
of Finance (Inc.)
For purposes of this Section 4.2, the main features of the Special Share are as
follows:
(i)
The Special Share may only be held by or transferred to the Minister of
Finance (Incorporated) or its successor or any Minister, representatives or
any person acting on behalf of the Government.
(ii)
The Special Shareholder has the right to receive notice of, and to attend and
speak at, all general meetings or any other meeting of any class of
shareholders of Bernas, but the Special Share shall carry no right to vote nor
any other rights at any such meeting.
(iii)
The Special Shareholder has the right to require Bernas to redeem the
Special Share at par at any time by serving written notice upon Bernas and
delivering the relevant share certificate.
(iv)
Certain matters which vary the rights attached to the Special Share can only
be effective with the consent in writing of the Special Shareholder, in
particular matters relating to the amendment or removal or alteration of the
effect of the Special Share, the creation and issue of additional shares which
43
carry different voting rights, the dissolution of Bernas, substantial disposal of
assets, amalgamation, merger and take over.
4.3
(v)
The Special Shareholder has the right to review all policies, programmes,
projects and commercial activities undertaken or proposed to be undertaken
by Bernas, the right to veto any resolution proposed to be passed by the
board of directors or the shareholders of Bernas if the Government considers
that it is necessary to do so in the national interest and security of Malaysia.
(vi)
The Special Shareholder has the right to veto any resolution proposed to be
passed by the board of directors and/or the shareholders of Bernas purporting
to amend the provisions of the memorandum and articles of association of
Bernas which affects the rights or any matter relating to the Special Share or
the rights attaching to the Special Share.
Shareholding structure
The shareholding structure of the Issuer as at 30 June 2010 is as follows:
Shareholders
No. of shares
held
341,375,471
Tradewinds (M)
Berhad
4.4
Percentage of
shareholding
72.57
Corporate Structure as at 30 June 2010
Please refer to Appendix II herein.
4.5
List of Subsidiaries and Associated Companies in Bernas Group as at 30 June
2010
The subsidiaries and associated companies in Bernas Group are as follows:
(a)
SUBSIDIARIES
NAME OF SUBSIDIARIES
SHAREHOLDINGS
(%)
PRINCIPAL ACTIVITIES
Incorporated in Malaysia
Subsidiaries of the Company
Bernas Production Sdn. Bhd.
100
Rice processing
Era Bayam Kota Sdn. Bhd.
60
Trader,
distributor
supplier of rice
and
Syarikat Faiza Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
United
100
Dormant
Jasmine Food Corporation Sdn. Bhd.
61
Trader,
distributor
supplier of rice
YHL Holding Sdn. Bhd.
51
Investment holding
Consolidated
Bernas
Distributors Sdn. Bhd.
44
and
NAME OF SUBSIDIARIES
SHAREHOLDINGS
(%)
PRINCIPAL ACTIVITIES
Bernas Seed Pro Sdn. Bhd.
100
Paddy seed production
Bernas Agrotech Sdn. Bhd.
100
Investment holding
Beras Corporation Sdn. Bhd.
100
Processing and trading of
rice
Bernas Dominals Sdn. Bhd.
100
Investment holding
Edaran Bernas Nasional Sdn. Bhd.
80
Trader,
distributor
supplier of rice
Bernas Overseas (L) Limited
100
Offshore investment holding
company
Bernas Engineering & Technology
Sdn. Bhd.
100
Dormant
P.B. Construction & Supplies Sdn.
Bhd.
100
Dormant
Bernas Realty & Development Sdn.
Bhd.#
100
Dormant
Bernas Utama Sdn. Bhd.
100
Dormant
Bernas Perdana Sdn. Bhd.
100
Dormant
Bernas (Sabah) Sdn. Bhd.
100
Dormant
Bernas (Sarawak) Sdn. Bhd.
100
Dormant
Bernas Fisheries Sdn. Bhd.#
100
Dormant
Bernas-KME Sdn. Bhd.#
100
Dormant
Bernas Project & Development Sdn.
Bhd.
100
Retails
Bernas Logistics Sdn. Bhd.
100
Provision of logistics services
and
Subsidiary of Consolidated Bernas United Distributors Sdn. Bhd.
Machind Realty Sdn. Bhd.
100
Dormant
Subsidiaries of Jasmine Food Corporation Sdn. Bhd.
Jasmine Food (Ipoh) Sdn. Bhd.
61
Trader,
distributor
supplier of rice
and
Jasmine Food (Alor Setar) Sdn.
Bhd.
61
Trader,
distributor
supplier of rice
and
Jasmine Food (Johor Bahru) Sdn.
Bhd.
61
Trader,
distributor
supplier of rice
and
JS Jasmine Sdn. Bhd.
31
Trader,
distributor
supplier of rice
and
Jasmine Food (Seremban) Sdn.
Bhd.
61
Trader,
distributor
supplier of rice
and
Jasmine Food (Prai) Sdn. Bhd.
61
Trader,
distributor
supplier of rice
and
Jasmine Rice Mill (Tunjang) Sdn.
Bhd.
61
Rice miller and rice trader
45
NAME OF SUBSIDIARIES
Jasmine
Bhd.
Food
(Kuantan)
SHAREHOLDINGS
(%)
Sdn.
PRINCIPAL ACTIVITIES
61
Trader,
distributor
supplier of rice
and
YHL Trading (KL) Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
YHL Trading (Johor) Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
YHL Trading (Segamat) Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
YHL Trading (Kedah) Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
YHL Trading (Melaka) Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
YHL Trading (Terengganu) Sdn.
Bhd.
51
Trader,
distributor
supplier of rice
and
YHL (Kuantan) Sdn. Bhd.
51
Dormant
Subsidiaries of YHL Holding Sdn. Bhd.
Subsidiary of Jasmine Food (Alor Setar) Sdn Bhd.
Jasmine Khidmat & Harta Sdn.
Bhd.
61
Letting of properties
Subsidiary of Jasmine Rice Mill (Tunjang) Sdn. Bhd.
Jasmine Rice Products Sdn. Bhd.
61
Manufacturing and sale of
vermicelli
Subsidiary of Bernas Agrotech Sdn. Bhd.
Padi Gedong Sdn. Bhd.
100
Dormant
Subsidiary of Beras Corporation Sdn. Bhd.
Sazarice Sdn. Bhd.
95
Trader,
distributor
supplier of rice
and
Dayabest Sdn. Bhd.
100
Investment holding
Sabarice Sdn. Bhd.
100
Trader,
distributor
supplier of rice
Belikmat Corporation Sdn. Bhd.
100
Dormant
Bernas Agrogreen Sdn. Bhd.
100
Dormant
Haskarice Food Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
Hock Chiong Foodstuff Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
and
Subsidiaries of Dayabest Sdn. Bhd.
46
NAME OF SUBSIDIARIES
SHAREHOLDINGS
(%)
PRINCIPAL ACTIVITIES
Ban Say Tong Sdn. Bhd.
51
Trader,
distributor
supplier of rice
and
Tong Seng Huat Rice Trading Sdn.
Bhd.
51
Trader,
distributor
supplier of rice
and
51
Dormant
95
Processing and trading of
rice and other related food
products
Subsidiary of Bernas Dominals Sdn. Bhd.
Bernas Chaff Products Sdn. Bhd.
Incorporated in Thailand
Subsidiary of the Company
Bernas International Trading Ltd. *
# Dissolved during the year under voluntary liquidation
* Audited by firms of chartered accountants other than Hanafiah Raslan & Mohamad
(b)
ASSOCIATES
NAME OF ASSOCIATES
SHAREHOLDINGS
(%)
PRINCIPAL ACTIVITIES
Incorporated in Malaysia
Associates of the Company
Gardenia Bakeries (KL) Sdn. Bhd.
30
Bread manufacturing
bakery
and
Kilang Beras Fajar Sdn. Bhd.
49
Dormant
Ban Heng Bee Holdings Sdn. Bhd.
20
Rice miller
Serba Wangi Sdn. Bhd. **
40
Trader,
distributor
supplier of rice
OEL Realty Holdings Sdn. Bhd.
30
Investment holding
United Malayan Flour (1996) Sdn.
Bhd.
45
Manufacturing and trading of
wheat flour
49
Trading in all kinds of rice
brand and broken rice
30
Wholesale and trading of rice
and rice related products
and
Associates of Bernas Dominals Sdn. Bhd.
Bernas Feedstuff Sdn. Bhd.
Associate of Beras Corporation Sdn. Bhd.
Liansin Trading Sdn. Bhd.
47
NAME OF ASSOCIATES
SHAREHOLDINGS
(%)
PRINCIPAL ACTIVITIES
Subsidiaries of Kilang Beras Fajar Sdn. Bhd.
Fajar Jerlun Sdn. Bhd.
49
Dormant
Fajar Jerlun (Negeri Sembilan)
Sdn. Bhd.
49
Dormant
52
Trader,
distributor
supplier of rice
and
Serba Wangi JH Sdn. Bhd.
26.5
Trader,
distributor
supplier of rice
and
Serba Wangi (PG) Sdn. Bhd.
46.8
Trader,
distributor
supplier of rice
and
52
Trader,
distributor
supplier of rice
and
Eng Chuan Chan Sdn. Bhd.
41.6
Trader,
distributor
supplier of rice
and
Serba Wangi ML Sdn. Bhd.
26.5
Trader,
distributor
supplier of rice
and
SW Transport Sdn. Bhd. **
52
Subsidiaries of Serba Wangi Sdn. Bhd.
Serba Wangi (KL) Sdn. Bhd. **
Serba Wangi (Perak) Sdn. Bhd. **
Provision
services
of
transport
Subsidiaries of OEL Realty Holdings Sdn. Bhd.
OEL Distribution (Kedah) Sdn.
Bhd.
30
Trader,
distributor
supplier of rice
and
OEL Distribution (Perak) Sdn. Bhd.
30
Trader,
distributor
supplier of rice
and
OEL Origin (Kedah) Sdn. Bhd.
30
Trader,
distributor
supplier of rice
and
OEL Distribution (Penang) Sdn.
Bhd.
30
Trader,
distributor
supplier of rice
and
OEL Distribution (Johor) Sdn. Bhd.
30
Trader,
distributor
supplier of rice
and
OEL Distribution (Selangor) Sdn.
Bhd.
18
Trader,
distributor
supplier of rice
and
OEL Distribution (KL) Sdn. Bhd.
18
Trader,
distributor
supplier of rice
and
OEL Food Manufacturing Sdn.
Bhd.
30
Manufacturing
drinks
30
General trading
wholesaler
of
health
Subsidiaries of Liansin Trading Sdn. Bhd.
Liantye Trading Sdn. Bhd.
48
and
rice
NAME OF ASSOCIATES
SHAREHOLDINGS
(%)
Liansin Trading (Miri) Sdn. Bhd.
30
PRINCIPAL ACTIVITIES
Dormant
Subsidiaries of Gardenia Bakeries (KL) Sdn. Bhd.
Gardenia Sale & Distribution Sdn.
Bhd.
30
Sales
bread
and
distribution
Everday Bakery & Confectionery
Sdn. Bhd.
30
Bread manufacturing
bakery
20
Rice trading
of
and
Incorporated in Pakistan
Associate of Bernas Overseas (L) Limited
Irfan Noman Bernas (Pvt) Limited
**
4.6
The Group regard these companies as associates by virtue of its partly indirect
shareholding through another associate company, Ban Heng Bee Holdings Sdn. Bhd.
Profile of directors
The directors of the Issuer and their respective profiles as at 30 June 2010 are as
follows:
Dato’ Wira Syed Abdul Jabbar Bin Syed Hassan
Dato' Wira Syed Abdul Jabbar bin Syed Hassan, 70, was appointed as Director of
Bernas on 10 July 2006 and was made Chairman of Bernas on 17 July 2006. Dato'
Wira Syed Abdul Jabbar chairs the Executive, Nomination and Remuneration
Committees of the Board of Bernas.
Currently, Dato' Wira Syed Abdul Jabbar is the Chairman of MMC Corporation
Berhad, Tradewinds (M) Berhad, Tradewinds Plantation Berhad, MARDEC Berhad
and Aliran Ihsan Resources Berhad. He also sits on the Board of Star Publications
(M) Berhad and KAF Discounts Berhad. Dato' Wira Syed Abdul Jabbar was the Chief
Executive Officer of Kuala Lumpur Commodity Exchange from 1980 to 1996, the
Executive Chairman of Malaysian Monetary Exchange from 1996 to 1998 and the
Executive Chairman of the Commodity and Monetary Exchange of Malaysia from
1998 to 2000.
Dato' Wira Syed Abdul Jabbar is a Malaysian citizen and holds a Bachelor of
Economics degree from University of Western, Australia and a Master of Science
degree in Marketing from University of Newcastle-Upon Tyne, United Kingdom.
Encik Bakry Bin Hamzah
Encik Bakry bin Hamzah, 52, was appointed as Director of Bernas on 14 September
2005. He was re-designated as Managing Director on 9 April 2007. He is a member
of the Executive and Tender Committees of the Board of Bernas.
49
Encik Bakry is a Malaysian citizen and holds a Bachelor of Arts (Hons) degree from
University Malaya. Currently, he is the Group Managing Director of Tradewinds (M)
Berhad and also sits on the Board of Tradewinds Plantation Berhad. He had held
prominent positions in various companies including as the Chief Executive Officer of
Tradewinds (M) Berhad, the Managing Director of Central Sugars Refinery Sdn Bhd,
the Director of MARDEC Berhad, the Director of Oriental Food Industries Berhad, the
Executive Director of Latitude Tree Holding Berhad, the Head of Business
Development in Aero Mutiara Sdn Bhd, the General Manager of KYD Brake Centre
Sdn Bhd, the Operation Manager in Bukhary Holdings Sdn Bhd and Assistant
Director of Marketing in Lembaga Padi dan Beras Negara.
Datuk Azizan Bin Ayob
Datuk Azizan Bin Ayob, 63, was appointed as Director of Bernas on 30 September
2003. He is currently the Executive Director/CEO of Commerce Dot.Com Sdn Bhd.
He is the Chairman of Tender Committee and a member of Audit, Executive,
Nomination and Remuneration Committees of the Board of Bernas. Datuk Azizan is a
Malaysian citizen and holds a Bachelor of Arts (Hons) degree in Economics from
University Malaya and a Master degree in Public Administration from University of
Southern California, USA. He was a former public servant and his last position in
public service was the Director General of the National Registration Department of
Malaysia.
Dato’ Mohd Mokhtar Bin Ismail
Dato' Mohd Mokhtar, 57, was appointed as Director of Bernas on 16 December 2008.
He is currently the Secretary General of the Ministry of Agriculture and Agro-based
Industry. Dato' Mohd Mokhtar is a Malaysian citizen and holds a Bachelor of
Economics (Hons) degree from University Malaya, and a Master of Arts degree in
Economics from Western Michigan University, Kalamazoo, USA. He started his
career as an Assistant Secretary of Finance and Treasury Division in 1976 and
subsequently served in various government agencies such as Economic Planning
Unit, Prime Minister's Department, Ministry of Human Resources and Ministry of
Entrepreneur Development.
Encik Azman Bin Umar
Encik Azman bin Umar, 55, was appointed as Director of Bernas on 20 June 2006.
He is currently the General Manager of Langkawi Development Authority. Encik
Azman is a Malaysian citizen and holds a Bachelor of Economics (Hons) degree in
Accounting from Universiti Kebangsaan Malaysia and Diploma in Management
Science from National Institute of Public Administration (INTAN). He also holds a
Master in Business Administration (Finance) from Oklahoma City University, USA.
He started his career as an Assistant Secretary of Cabinet Division in Prime
Minister's Department in 1981 and had served in various government agencies such
as Investment, MKD and Privatisation Division of Ministry of Finance, Economic
Planning Unit, Prime Minister's Department, Ministry of Plantation Industries and
Commodities and Ministry of Agriculture and Agro-based Industry.
Tuan Syed Abu Bakar Bin S Mohsin Almohdzar
Tuan Syed Abu Bakar, 58, was appointed as Director of Bernas on 22 November
2005. He is the Chairman of Audit Committee and a member of Tender and
Nomination Committees of the Board of Bernas. Tuan Syed Abu Bakar is a
Malaysian citizen and is a member of the Chartered Certified Accountant (FCCA, UK)
50
and Malaysian Institute of Accountants (Malaysia). He was the former Managing
Director of Tradewinds (M) Berhad from 1996 to 2004.
YB Dato’ Abdul Rahman Bin Dahlan
YB Dato' Abdul Rahman, 44, was appointed as Director of Bernas on 15 October
2002. Currently, he is the Member Parliament of Kota Belud, Sabah and the
Managing Director of H.R.P.M Consulting (M) Sdn Bhd. He is a member of Audit and
Remuneration Committees of the Board of Bernas. YB Dato' Abdul Rahman is a
Malaysian citizen and holds a Bachelor degree in Economics and Management from
Sonoma State University, California State University System, Rohnert Park,
California, USA.
Mr. Chuah Seong Tat
Mr Chuah Seong Tat, 59, was appointed as Director of Bernas on 11 February 2010.
Mr Chuah Seong Tat is a Malaysian citizen and holds a Bachelor degree in Applied
Science (Hons) from Universiti Sains Malaysia and a Master of Business
Administration, Australian Graduate School of Management from University of New
South Wales. He is currently a Director of Tradewinds (M) Berhad and Tradewinds
Plantation Berhad. He also had held prominent positions in various companies such
as a Director in Bukhary Sdn Bhd and KHSB Marketing Sdn Bhd, an Executive
Director in Botly Securities Sdn Bhd, Chief Dealer in UMBS Securities Sdn Bhd,
Senior General Manager in Alor Setar Securities Sdn Bhd, Corporate Finance Officer
in Asian International.
Dato’ Dr Baharom Bin Jani
(Alternate Director to Dato’ Mohd Mokhtar Bin Ismail)
Dato' Dr Baharom, 54, was appointed Alternate Director to Dato' Mohd Mokhtar bin
Ismail on 16 December 2008. He is currently the Deputy Secretary General
(Development) of the Ministry of Agriculture and Agro-based Industry. Dato‟ Dr
Baharom is a Malaysian citizen and holds a Bachelor of Economics (Hons) degree
from University Malaya, a Master of Economics from University of Shiga, Japan and
a PhD of Economics from University of Nagoya, Japan. He holds a Diploma in Public
Management from National Institute of Public Administration (INTAN). He also
participated in an Executive Education Program: Leadership Best Practices in
Harvard Business School, Boston, USA. He served in various government agencies
such as Economic Planning Unit, Prime Minister's Department, Ministry of Energy,
Water and Communications and as a Deputy State Secretary 1 (Development)
Negeri Sembilan.
Tuan Haji Osman Bin Makmor (Alternate Director to Azman Bin Umar)
Tuan Haji Osman Bin Makmor, 55, was appointed Alternate Director to Encik Azman
bin Umar on 20 June 2006. He is currently the Principal Assistant Secretary,
Investment, MKD and Privatisation Division, Ministry of Finance. He is a Malaysian
citizen and holds a Bachelor of Economics (Analysis) degree from University Malaya.
He was the Assistant District Officer of Ulu Selangor, Kuala Kubu Baru, Assistant
District Officer Gombak, Selangor and Confidential Secretary to YAB Menteri Besar
Selangor before joining the Federal Treasury in 1998 until now.
51
4.7
Bernas’s and Bernas Group’s Financial Highlights
Bernas‟s and Bernas Group‟s financial highlights for the previous three (3) financial years are
as set out in the table below:RM’000
Revenue
Operating
profit
Profit before
tax
Net profit
Net current
assets
Total assets
Long-term
borrowings
Total
liabilities
Total
shareholders
funds
2007
Group
Issuer
2,240,064 1,828,455
2008
Group
Issuer
2,501,954 2,365,475
2009
Group
Issuer
3,259,876 2,994,389
137,623
101,679
(119,231)
(111,800)
223,984
227,775
145,139
107,343
548,485
96,817
60,027
228,907
(94,329)
(57,472)
378,425
(127,801)
(92,075)
38,309
238,326
179,537
551,212
209,171
151,651
229,842
1,423,319
1,300,106
2,034,141
1,927,159-
2,175,043
1,971,640
13,390
-
12,785
-
12,791
-
410,715
464,934
1,109,231
1,212,038
1,086,770
1,115,453
967,495
835,172
861,255
715,121
1,018,254
856,187
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52
SECTION 5.0 INFORMATION ON THE MATERIAL SUBSIDIARIES
The material subsidiaries of Bernas and their respective information are as follows:A.
Beras Corporation Sdn Bhd
5.1
Corporate information and principal activity
Beras Corp was incorporated as a private company limited by shares in Malaysia
under the Companies Act, 1965 on 8 April 1999 under the name of Mergerich Sdn
Bhd. Effective from 4 August 1999, the name was changed to Beras Corporation Sdn
Bhd. The registered office of Beras Corp is located at Level 31, Menara HLA, No.3,
Jalan Kia Peng, 50450 Kuala Lumpur.
The principal activity of Beras Corp is to deal in paddy, rice and other grains, operate
rice mill and carry on business as dealers in rice.
5.2
Share capital
The authorised, issued and paid-up share capital of Beras Corp as at 30 June
2010 are as follows:
Authorised
Share Capital
: RM49,999,999 consisting of 49,999,999 ordinary
shares of RM1.00 each and 1 special rights
redeemable preference share of RM1.00 each
(“Special Share”)
Issued
Paid-up
Capital
: RM30,000,000 consisting of 30,000,000 ordinary
shares of RM1.00 each and 1 special rights
redeemable preference share of RM1.00 each
(“Special Share”)
and
Note: The special rights redeemable preference share of RM1.00 is held by Minister
of Finance (Inc.)
For purposes of this Section 5.2, the main features of the Special Share are as
follows:
(i)
The Special Share may only be held by or transferred to the Minister of
Finance (Incorporated) or its successor or any Minister, representatives or
any person acting on behalf of the Government.
(ii)
The Special Shareholder has the right to receive notice of, and to attend and
speak at, all general meetings or any other meeting of any class of
shareholders of Beras Corp, but the Special Share shall carry no right to vote
nor any other rights at any such meeting.
(iii)
The Special Shareholder has the right to require Beras Corp to redeem the
Special Share at par at any time by serving written notice upon Beras Corp
and delivering the relevant share certificate.
53
5.3
(iv)
Certain matters which vary the rights attached to the Special Share can only
be effective with the consent in writing of the Special Shareholder, in
particular matters relating to the amendment or removal or alteration of the
effect of the Special Share, the creation and issue of additional shares which
carry different voting rights, the dissolution of Beras Corp, substantial disposal
of assets, amalgamation, merger and take over.
(v)
The Special Shareholder has the right to review all policies, programmes,
projects and commercial activities undertaken or proposed to be undertaken
by Beras Corp, the right to veto any resolution proposed to be passed by the
board of directors or the shareholders of Beras Corp if the Government
considers that it is necessary to do so in the national interest and security of
Malaysia.
(vi)
The Special Shareholder has the right to veto any resolution proposed to be
passed by the board of directors and/or the shareholders of Beras Corp
purporting to amend the provisions of the memorandum and articles of
association of Beras Corp which affects the rights or any matter relating to the
Special Share or the rights attaching to the Special Share.
Shareholding structure
The shareholding structure of Beras Corp as at 30 June 2010 is as follows:
Shareholders
Bernas
5.4
No. of shares
held
30,000,000
Percentage of
shareholding
99.9%
Profile of directors
The directors of Beras Corp and their respective profiles as at 30 June 2010 are as
follows:
Encik Bakry Bin Hamzah
Encik Bakry bin Hamzah, 52, was appointed as Director of Beras Corp on 16 April
2007.
Encik Bakry is a Malaysian citizen and holds a Bachelor of Arts (Hons) degree from
University Malaya. Currently, he is the Managing Director of Bernas and Group
Managing Director of Tradewinds (M) Berhad. He also sits on the Board of
Tradewinds Plantation Berhad. He had held prominent positions in various
companies including as the Chief Executive Officer of Tradewinds (M) Berhad, the
Managing Director of Central Sugars Refinery Sdn Bhd, the Director of MARDEC
Berhad, the Director of Oriental Food Industries Berhad, the Executive Director of
Latitude Tree Holding Berhad, the Head of Business Development in Aero Mutiara
Sdn Bhd, the General Manager of KYD Brake Centre Sdn Bhd, the Operation
Manager in Bukhary Holdings Sdn Bhd and Assistant Director of Marketing in
Lembaga Padi dan Beras Negara.
54
Ahmad Tarmizi Bin Mohamed Hariri
Ahmad Tarmizi, 46, was appointed as Director of Beras Corp on 3 July 2006. He is a
Malaysian citizen and is a certified public accountant and a member of the Malaysian
Institute of Certified Public Accountants and the Malaysian Institute of Accountants.
He holds a B.A. (Hons) in Accounting, University of North London (UK).
Currently, he is the Chief Financial Officer of Bernas. He had served several public
companies including as the Corporate Finance Director in Ahmad Zaki Resources
Berhad and the Group General Manager Finance and Company Secretary in
Syarikat Perumahan Negara Berhad.
..
Azhar Bin Abdullah
Azhar, 46, was appointed as Director of Beras Corp on 4 May 2009. He is a
Malaysian citizen and holds a MBA from Preston University, USA.
Currently, he is the Head of East Malaysia Business Sector. He had served Bernas
for more than 10 years.
YB Dato’ Abdul Rahman Bin Dahlan
YB Dato' Abdul Rahman, 44, was appointed as Director of Beras Corp on 15 October
2002. Currently, he is the Member Parliament of Kota Belud, Sabah and the
Managing Director of H.R.P.M Consulting (M) Sdn Bhd. He is a member of Audit and
Remuneration Committees of the Board of Bernas. YB Dato' Abdul Rahman is a
Malaysian citizen and holds a Bachelor degree in Economics and Management from
Sonoma State University, California State University System, Rohnert Park,
California, USA.
YB Haji Mohd Naroden Bin Haji Majais
YB Haji Mohd Naroden, 56, was appointed as Director of Beras Corp on 26
September 2002. He is a Malaysian citizen and holds MBA from University Ohio,
USA and Bachelor of Arts, University of New England, Australia.
Currently, he is the Youth Minister, Chief Minister‟s Office (Bumiputera Entreprenuer
Development) & Youth Minister, Resource Planning & Management, He had served
in various private companies and government agencies including as Deputy State
Election Officer State Election Commission, Chairman/Managing Director of PPES
Bena Sdn Bhd, Senior Project Officer, Property Development Division, SEDC and
Chairman of Borneo Development Corporation Sdn Bhd.
[The rest of this page is intentionally left blank]
55
5.5
Key Financial Highlights
Beras Corp‟s financial highlights for the previous three (3) financial years are as set
out in the table below:RM’000
Revenue
Operating
profit
Profit before
tax
Net profit
Net current
assets
Total assets
Long-term
borrowings
Total
liabilities
Total
shareholders
funds
2007
576,712
2008
669,358
2009
702,244
13,224
13,303
25,041
25,993
7,090
7,324
9,321
20,411
9,320
39,991
159,323
52,165
301,896
54,903
450,144
262
487
2,748
72,166
195,287
334,512
80,001
95,186
102,353
B.
Edaran Bernas Nasional Sdn Bhd
5.6
Corporate information and principal activity
Edaran was incorporated as a private company limited by shares in Malaysia under
the Companies Act, 1965 on 14 June 1996 under the name of Bernas-Mart Sdn Bhd.
Effective from 1 March 2005, the name was changed to Edaran Bernas Nasional Sdn
Bhd. The registered office of Edaran is located at Level 31, Menara HLA, No.3, Jalan
Kia Peng, 50450 Kuala Lumpur.
The principal activity of Edaran is to trade, distribute and supply rice.
5.7
Share capital
The authorised, issued and paid-up share capital of Edaran as at 30 June 2010
are as follows:
Authorised
Share Capital
Issued
and
Paid-up
Capital
: RM50,000,000 consisting
shares of RM1.00 each
: RM41,484,196 consisting
shares of RM1.00 each
of
50,000,000
ordinary
of
41,484,196
ordinary
[The rest of this page is intentionally left blank]
56
5.8
Shareholding structure
The shareholding structure of Edaran as at 30 June 2010 is as follows:
Shareholders
Bernas
No. of shares
held
33,187,357
United Rice Wholesalers
Sdn Bhd
5.9
8,296,839
Percentage of
shareholding
80%
20%
Profile of directors
The directors of Edaran and their respective profiles as at 30 June 2010 are as
follows:
Encik Bakry bin Hamzah
Encik Bakry bin Hamzah, 52, was appointed as Director of Edaran on 16 April 2007.
Encik Bakry is a Malaysian citizen and holds a Bachelor of Arts (Hons) degree from
University Malaya. Currently, he is the Managing Director of Bernas and Group
Managing Director of Tradewinds (M) Berhad and also sits on the Board of
Tradewinds Plantation Berhad. He had held prominent positions in various
companies including as the Chief Executive Officer of Tradewinds (M) Berhad, the
Managing Director of Central Sugars Refinery Sdn Bhd, the Director of MARDEC
Berhad, the Director of Oriental Food Industries Berhad, the Executive Director of
Latitude Tree Holding Berhad, the Head of Business Development in Aero Mutiara
Sdn Bhd, the General Manager of KYD Brake Centre Sdn Bhd, the Operation
Manager in Bukhary Holdings Sdn Bhd and Assistant Director of Marketing in
Lembaga Padi dan Beras Negara.
Ahmad Tarmizi Bin Mohamed Hariri
Ahmad Tarmizi, 46, was appointed as Director of Edaran on 3 July 2006. He is a
Malaysian citizen and is a certified public accountant and a member of the Malaysian
Institute of Certified Public Accountants and the Malaysian Institute of Accountants.
He holds a B.A. (Hons) in Accounting, University of North London (UK).
Currently, he is the Chief Financial Officer of Bernas. He had served several public
companies including as the Corporate Finance Director in Ahmad Zaki Resources
Berhad and the Group General Manager Finance and Company Secretary in
Syarikat Perumahan Negara Berhad.
Wan Razif Bin Wan Musa
Wan Razif, 50, was appointed as Director of Edaran on 31 December 2005. He is a
Malaysian citizen and holds Degree in Mass Communication (Advertising).
Currently, he is the Senior General Manager of Domestic Business Sector. He was
the Senior Manager, Circulation in News Straits Times Press (M) Berhad before
joined Bernas in 2004.
57
Ng Chin @ Ng Chin Len
Ng Chin @ Ng Chin Len, 71, was appointed as Director of Edaran on 31 December
2005. He is a Malaysian citizen.
Currently, he is the Managing Director of Edaran. He has been the President of
Persatuan Pemborong-pemborong Beras Malaysia since 1993 till now. He also
holds the Chairmanship of United Rice Wholesalers Sdn Bhd (“URW”) and Exco
committee Agriculture & Primary Industries of Chinese Chamber of Commerce &
Industry Kuala Lumpur & Selangor.
Over 50 years of experience in Rice Industry since 1959, he was appointed as
Managing Director of Consolidated Bernas United Distributors Sdn Bhd in 2000, a
joint venture entity with Bernas and URW.
Chew Keng Kuang
Chew Keng Kuang, 62, was appointed as Director of Edaran on 31 December 2005.
He is the General Manager of Human Resource and Corporate Affair. He also held
the post of treasurer in United Rice Wholesalers Sdn Bhd and Persatuan
Pemborong-pemborong Beras Malaysia.
Yeo Sa Kaw
Yeo Sa Kaw, 53, was appointed as Director of Edaran on 31 December 2005.
Currently, he is the General Manager of Sales and Marketing. He is also the
Deputy President of Persatuan Pemborong-pemborong Beras Malaysia as well as
the Vice Chairman of United Rice Wholesalers Sdn Bhd.
5.10
Key Financial Highlights
Edaran‟s financial highlights for the previous three (3) financial years are as set out in
the table below:RM’000
Revenue
Operating
profit
Profit before
tax
Net profit
Net current
assets
Total assets
Long-term
borrowings
Total
liabilities
Total
shareholders
funds
2007
433,350
2008
412,943
2009
519,572
11,880
12,505
11,159
11,880
8,598
12,505
9,860
11,519
8,283
20,806
62,229
30,607
51,515
39,020
95,282
-
-
-
40,605
20,031
55,514
21,623
31,484
39,767
58
SECTION 6.0 THE CONCESSION AGREEMENT
Bernas was initially incorporated by the Government for the purpose of taking over all
property, rights and liabilities of the Lembaga Padi Dan Beras Negara (a statutory body
established under the Lembaga Padi dan Beras Negara Act 1971). Pursuant to a
Concession Agreement signed with the Government on 12 January 1996, Bernas was
entrusted with, inter alia, maintaining the nation‟s rice stockpile, acting as the buyer of last
resort for paddy farmers, managing the Bumiputera Rice Millers Scheme and the distribution
of Paddy Price Subsidies to farmers on behalf of the Government.
6.1
Right to import rice and its exceptions
In consideration of the duties and obligations to be undertaken or performed by Bernas
pursuant to the Concession Agreement for the benefit of consumers, padi farmers and rice
millers, Government has granted Bernas the right to import rice into Malaysia for a period of
fifteen (15) years from 12 January 1996. However, the Government may, upon consultation
with Bernas if necessary, grant to such other persons the right or license to import rice into
Malaysia for such period as the Government may consider appropriate if:
(i)
there exists a state of Emergency (the right to decide what constitutes “Emergency”
shall be vested exclusively with the Government);
(ii)
there exists a serious shortage or instability of supply of rice in Malaysia;
(iii)
there exists a serious instability in the price of rice in Malaysia;
(iv)
it is in the public interest or the national interest; or
(v)
Bernas fails to perform its social obligations as provided in the Concession
Agreement.
6.2
Extension of right to import rice
Before the expiry of the 15-year period, the Government may, upon an application made by
Bernas, extend the right to import rice for a further five (5) year extension period subject to
the terms and conditions to be mutually agreed.
Note: The right to import rice will be expiring on 12 January 2011. Bernas has made an
application to the Government to extend the right to import rice for a further five (5) years.
The Economic Planning Unit, Prime Minister’s Department in its letter to Bernas dated 3
October 2007 has agreed to extend Bernas’s right to import rice to 11 January 2016. As at
the date of this Information Memorandum, the Government and Bernas are still negotiating
on the terms in connection with the said extension and have not executed any agreement in
respect of the same.
6.3
Social Obligations
Pursuant to the Concession Agreement, Bernas shall, throughout the duration of the
Concession Agreement:
(i)
conserve, maintain and manage the National Padi/Rice Stockpile;
59
(ii)
undertake to purchase padi from the padi farmers at the Guaranteed Minimum Price
as determined by the Government from time to time;
(iii)
act as buyer of last resort for the padi farmers;
(iv)
undertake to manage the disbursement of subsidies to padi farmers under the Padi
Price Subsidy Scheme; and
(v)
undertake to manage the Bumiputera Rice Millers Scheme.
The Government may at any time require any of the Schemes to be dissolved or abolished.
In such event Bernas shall, upon receipt of notice from the Government, take all necessary
steps to dissolve or abolish such Schemes.
6.4
Leases
Under the Concession Agreement, the Government has also agreed to procure the Federal
Lands Commissioner to grant the Leases for a period of sixty (60) years commencing from 7
July 1994 at a nominal annual lease rental of Ringgit Malaysia (RM1.00) for each of the
properties identified in the Concession Agreement. If the Federal Lands Commissioner at
any time during the term of this lease requires the said land or any part of them for the use of
the Government or statutory body or other authority or body approved by the Govermnent,
then the Federal Lands Commissioner may (without affecting the leases), terminate the
lease hereunder in respect of the said land by giving not less than six (6) months notice in
writing to Bernas and upon expiration of such notice the said land shall revert to the
Government; and the Federal Lands Commissioner shall compensate Bernas with respect to
any improvements that may have been made by Bernas after 7 July 1994 upon the said
land.
6.5
Management of Stockpile
As part of its social obligations, Bernas shall at all times throughout the duration of the
Concession Agreement conserve, maintain and manage such level in its stockpile of padi
and/or rice at any one time as shall be determined by the Government (“Level”) from time to
time as the National Padi/ Rice Stockpile (“Stockpile”). Bernas shall increase or reduce the
Level of Stockpile as the Government may direct from time to time. In the event that there is
an increase in the Level of Stockpile, the Government may either bear the cost of the
additional padi or rice; or supply to Bernas the additional padi or rice. However if that there is
a reduction in the Level of Stockpile, Bernas would be required to refund to the Government
the cost of the excess rice provided by the Government.
Note: Following the rice crisis of 2008, the Government has increased the national
stockpile level from 92,000 metric tonnes to 292,000 metric tonnes at any one time.
6.6
Guaranteed Minimum Price
As part of its social obligations, Bernas is required to purchase from padi farmers padi at a
price not less than the Guaranteed Minimum Price as determined by the Director General
from time to time.
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6.7
Buyer of Last Resort
Bernas shall, at all times throughout the duration of the Concession Agreement, act as the
buyer of last resort in relation to the sale of padi by padi farmers and in carrying out such
function, shall not refuse to purchase any padi which are:(i)
offered for sale to Bernas by any padi farmer; and
(ii)
brought by such farmers to any padi purchasing centres established or managed by
Bernas pursuant to the Concession Agreement.
6.8
Padi Price Subsidy Scheme
Bernas shall manage and carry out the disbursements of the subsidies under the Padi Price
Subsidy Scheme, at such rate as determined by the Government from time to time, to all
Registered Padi Farmers. The Government shall deposit the Subsidy Fund into the bank
accounts of licensed banks or financial institutions to be approved by the Government and
operated by Bernas for the sole purpose of disbursements of subsidies to the Registered
Padi Farmers and all payments of subsidies under the Padi Price Subsidy Scheme shall be
made out of the monies from the Subsidy Account.
6.9
Bumiputera Rice Millers Scheme
Bernas is entrusted by the Government to manage the Bumiputra Rice Millers Scheme for
Registered Bumiputra Millers comprising:(i)
“Sekim Upah Kisar”;
The SUK involves Bernas sending dry paddy to SUK participating factories for grinding and
the subsequent repurchase by Bernas of the end product. Under this scheme, the
Bumiputera miller will be responsible for grinding and producing rice according to the
specifications set by Bernas.
(ii)
“Sekim Upah Mengering dan Kisar” and
The SUMK involves Bernas sending wet paddy to SUMK participating factories for drying
and grinding. Bernas would subsequently repurchase the end product based on a
predetermined price and specifications.
(iii)
“Sekim Pusat Belian”
Under this scheme, Bernas will purchase wet paddy from certain premises for onward
transmission to pariticipating factories for processing. The miller will then be responsible for
drying, storing and maintaining the grade of the paddy untill the paddy is purchased from
Bernas.
The above schemes are only applicable to Bumiputra millers.
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61
6.10
Termination of Concession
A termination event shall occur if:(i)
Bernas commits a material breach of any provision, obligation, covenant, warranty or
undertaking on its part under the Concession Agreement, or persistently commits a
breach of any other provision under the Concession Agreement which if remediable,
is not remedied by Bernas within thirty (30) days from the service of written notice
from the Government; or
(ii)
Bernas resolves or proposes to go into voluntary liquidation; or
(iii)
a petition is presented for the winding-up of Bernas and Bernas fails to defend such
petition; or
(iv)
any execution or distress shall be levied or made against the assets and property of
Bernas which adversely affects the ability of Bernas to perform its duties and
obligations; or
(v)
a compulsory winding-up order shall be made against Bernas;
then and in any such event, the Government may by notice in writing to Bernas terminate the
Concession Agreement and such termination shall become effective from the date as
specified in the notice.
6.11
Consequences of Termination
Upon the termination of the Concession Agreement:
(i)
all permits and licenses granted by the Government pursuant to and under the
Concession Agreement shall be deemed to have been revoked by the Government
without any compensation whatsoever;
(ii)
Bernas shall immediately surrender the National Padi/Rice Stockpile to the
Government;
(iii)
any part of the Subsidy Fund (including any accruals thereto), remaining in the
Subsidy Account shall be refunded to the Government;
(iv)
within two (2) months from the date of such termination, Bernas shall, at its own cost
and expenses,
(v)
(a)
submit or cause to be submitted to the Government its financial statements
made up from the date of the last financial statement up to the date of the
termination;
(b)
surrender to the Government all records kept and maintained by it pursuant to
or in connection with the administration and management of the Schemes;
and
all monies payable by any party to the other party under the Concession Agreement
shall be paid within two (2) month from the date of such termination.
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62
SECTION 7.0 BUSINESS OVERVIEW OF BERNAS GROUP
Bernas is a company listed on the Main Board of Bursa Malaysia. As the nation's partner in
the domestic paddy and rice industry, Bernas Group is involved in the procurement and
processing of paddy; as well as the importation, warehousing, distribution and marketing of
rice in Malaysia. Bernas currently controls about 25% of the paddy market and 45% of the
local rice demand.
To increase Bernas Group‟s presence along the entire industry supply chain, the Bernas
Group has been involved in seed and farming activities, international rice joint venture, as
well as rice complementary businesses.
With staff strength of approximately 1962 people, Bernas continues to fulfill its obligations
under the Concession Agreement signed with the Government in 1996. These obligations
include maintenance of the nation's rice stockpile, acting as the buyer of last resort for paddy
farmers, managing the Bumiputera Rice Millers Scheme and the distribution of Paddy Price
Subsidies to farmers on behalf of the Government.
Bernas has been committed to the continued growth in the local rice industry and
continuously strives to improve its involvement in every aspect of rice processing and
distribution method from sourcing, processing, formulating, packaging, marketing to delivery,
in order to ensure a convenient and reliable supply of quality rice for the nation.
Paddy procurement
Bernas purchases paddy from farmers at 31 Kilang Beras Bernas nationwide and 49
purchasing centers (Skim Pusat Belian) located at the premises of participating Bumiputra
rice mills nationwide. The wide distribution of these procurement centers provides better
services to farmers enabling them to sell their paddy without having to travel far.
Together with the millers of the Bumiputra Rice Millers Scheme (refer to Sec 6.9), Bernas
Group purchases about 800,000 tonnes paddy annually from local farmers.
Rice processing
There are more than 200 commercial rice mills in the country, out of which 31 are owned
and operated by Bernas. Bernas rice mills are equipped with the latest technology and
located mainly in the major granary areas of Kedah, Perlis, Kelantan, Seberang Perak and
Selangor.
Bernas mills approximately 400,000 metric tonnes paddy annually which gives a total rice
output of 270,000 metric tonnes of the total rice produced by all mills in the country. This
makes Bernas the largest rice miller in Malaysia and a major marketing outlet for the
farmers‟ produce.
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63
INDUSTRY BACKGROUND
GOVERNMENT AGENCIES
SEED
PRODUCERS
LOCAL
FARMERS
IMPORTING
COUNTRIES
INTERMEDIARIES
[“PELESEN”, BROKER,
HARVESTER, ETC]
MILLS/ WAREHOUSES
BERNAS
Involvement
BERNAS 24%
local paddy
market share
Port
“Pilihan BERNAS”
brand
WHOLESALERS
Port
RETAILERS
Port
Port
CONSUMERS
LEGEND :
BERNAS MILLS: 31 MILLS
BERNAS WAREHOUSES:
BERNAS DISTRIBUTORS
MAJOR PLANTING AREAS
BERNAS DISTRIBUTION
COVERAGE
Port
Port
Port
Port
Port
1
Rice importation
Malaysia is around 70% self sufficient in rice production and has to import rice to meet the
shortfall.
The current rice import policy supports the self-sufficiency policy in that the import volume
depends on the production of local rice. To fully meet the rice requirement of the country,
Bernas imports the remaining 30% to 35% annually. To protect the local rice farmers,
Bernas‟s import volume merely covers the shortfalls of demand after ensuring the local rice
production finds its way to the market. Bernas also imports special rice varieties that cannot
be produced locally like basmati and fragrant rice to cater to the various types of culinary
tastes of Malaysia‟s multi-racial society.
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64
Imported Rice Supply Composition (%) by Bernas for the financial year ended 2009
BASMATI, 1%
FRAGRANT, 9%
OTHERS, 2%
GLUTINOUS, 2%
WHITE RICE, 86%
Rice distribution
To effectively perform its role of main rice distributor in the country, Bernas has a wide
network of rice mills and warehouses in strategic locations. Both local and imported rice
procured by Bernas are distributed to licensed wholesalers. Rice is also distributed to
consumers and other end users through Bernas‟s “Save More Community” stores and
subsidiary companies.
The “Save More Community” stores are Bernas‟s retail initiative to provide consumers with a
reliable supply of affordable, quality rice and essential goods at all times. It exemplifies
Bernas‟s commitment to playing its part in stabilising rice prices and supply while
maintaining closer ties with the community.
In the effort to improve rice market share and consumer loyalty, Bernas has opened a total
of 27 outlets in 2009 with plans in the pipeline to add another 21 outlets by the end of
2010.The retail platform has allowed Bernas to gain market entry and brand visibility in the
retail industry and at the same time provides an opportunity to promote closer ties with the
community.
Seeding and farming
As at the date of this Information Memorandum, there are approximately 145,000 Registered
Padi Farmers. As part of its social obligations, Bernas attempts to provide the best possible
aid to them towards the production of good quality paddy, which would ultimately end up as
rice for local consumption.
Through Program Rakan Ladang, Bernas has ventured into farm management to provide
expertise and latest technology on paddy farming in line with the Government‟s aim to
develop the industry. Program Rakan Ladang is a strategic pact between Bernas,
government agencies and farmers in enhancing cooperation in order to increase earnings,
market share and paddy production through the use and exposure to the latest technology
as well as cooperation between communities in the selected areas.
Initiated in 2004, “Program Rakan Kilang Bernas” is a smart partnership between Bernas
and Bumiputera rice millers with the objective of helping both Skim Pusat Belian (SPB) and
65
Bumiputera (non-SPB) rice mills. Under this programme, Bernas funds the entire paddy
purchased by participating millers and simultaneously guarantees the market of their rice at
predetermined volume, quality and prices.
One of Bernas‟s expanded responsibilities is to produce quality certified seeds. Bernas has
been collaborating with Pertubuhan Peladang Kebangsaan (PPK) and other seed producers
to produce certified seeds using the foundation seeds produced by Malaysian Agricultural
Research and Development Institute (“MARDI”). Together with 12 other private producers,
Bernas aims to exceed more than 50 percent of the national certified seeds requirement in
2010.
Management of national rice stockpile
Rice as a strategic commodity is to be safeguarded at all times. As required under the
Concession Agreement, Bernas is also responsible to manage and maintain the National
Rice Stockpile to ensure that the country has sufficient supply of rice at all times. Bernas
regards this role as more than an emergency or food security function. It is also a
mechanism to stabilize supplies and prices of rice in the country.
Following the rice crisis of 2008, the Government has increased the national stockpile level
from 92,000 metric tonnes to 292,000 metric tonnes at any one time. The move was
intended to increase public confidence on food security and improve stability of rice supplies
and prices of rice in the domestic market.
Management paddy price subsidy
Bernas is responsible for distributing paddy price subsidies to the farmers on behalf of the
Government. This scheme is twofold in its objective. It is to enable the paddy to be priced
accordingly as to ensure that the farmers enjoy a consistently good price for their produce
while at the same time shielding the consumers from any abrupt price increases.
Bernas as buyer of last resort of paddy at Guaranteed Minimum Price
As part of its social obligations to the nation, Bernas is to ensure that the paddy Guaranteed
Minimum Price set by the Government is always enforced. As the buyer of last resort,
Bernas buys all paddy delivered, even if it is operating at full capacity.
Management Bumiputera Rice Millers Scheme
Bernas is constantly reviewing the effectiveness of its Bumiputera programs, to not only
assist but transform them into competitive rice millers with greater vision and perspective.
The Bumiputera program has never deviated from its traditional role of forging smart
partnerships between the Bernas Group and Bumiputera millers and as such, continued
support is paramount. To meet this objective, Bernas funds the entire purchase of paddy
stock sourced by these Bumiputera millers whilst simultaneously guaranteeing market
shares of their produce at predetermined volumes, quality and price.
Sufficient supply at fair and stable prices
As required under the Concession Agreement, Bernas must also ensure the maintenance of
the sufficient supply of rice at reasonably fair and stable prices. Bernas does this by
maintaining rice stockpile and acting as a buyer of last resort of paddy at the Guaranteed
Minimum Price.
66
Bernas also ensures an equitable market. For example, when world prices of rice soar, local
prices of rice are still stable. Also, to protect farmers, Bernas only imports rice to make up
for deficits in local supply.
Maintenance of quality and standard of rice
Bernas has long been a strong proponent of research and development in meeting its
medium and long term goals for superior paddy and rice quality, yield improvement and
technological advancements in processing and distribution.
Bernas current and future initiatives (developmental role) include, among others:
research & development Initiatives with University Putra Malaysia and MARDI;
social economic with University Utara Malaysia – survey on livelihood of the farmers;
establishing a rice food laboratory; and
playing a leading role in certified paddy seed production.
Market Stabilisation Strategies
In the recent announcement of the 10th Malaysia Plan (“MP”), the agriculture sector is
projected to experience a stronger growth of 3.3% a year compared to 3.0% a year
estimated for the 9th MP, implying that the sector would continue to be promoted by the
Government as one of the main engines of growth.
Valuable lessons learned from the handling of the “perceived” domestic rice crisis in 2008
led to the development of new measures to pre-empt a repeat of the crisis. In 2009, Bernas
introduced the SUMK - a scheme for Bumiputra rice millers to capture a larger volume of
paddy and rice to stabilize the market by exerting more control in the domestic rice market.
Under this scheme, Bumiputra millers are paid a certain amount of processing fee which will
amount to at least what they will receive if they were to process and market the rice
themselves. The scheme serves as a financial risk mitigation strategy by replacing Bernas‟
past practice of financing paddy purchase for millers and not getting fully paid in return when
the rice is sold to another party instead. With this scheme, Bernas is able to deduct the
debts progressively and at the same time ensure a market for their rice as well. This
innovative scheme also caps excessive capital expenditure by incurring heavy investments
on capacity expansion and machineries to procure and process more paddy. Under the
Bumiputra Rice Millers Scheme, Bernas manages 48 Bumiputra rice millers nationwide with
a potential production capacity of approximately 177,000 metric tonne of rice. The SUMK
scheme has as at 30 June 2010 attracted 31 Bumiputra millers.
Bernas presently commands a share of 25% of local rice production, which is an insufficient
level to stabilize the market, in the event of a shortage of rice crisis. By owning a larger
share of paddy and rice in the market, Bernas is able to increase control of the rice market,
and at the same time ensure stability of the domestic rice industry and food security in
Malaysia.
In its main effort to increase its control of the domestic rice market, Bernas has launched
Program Rakan Ladang. Program Rakan Ladang is a strategic pact between Bernas,
government agencies and farmers with a view to amongst others, increase the paddy
production of the farmers. Bernas vide Program Rakan Ladang is able to introduce to
farmers registered under the said programme necessary agriculture practices and
67
techniques from its researches to increase the production and quality of paddy. The paddy
produced by farmers registered with Program Rakan Ladang was generally higher in
quantity and quality compared to the paddy produced by farmers who are not registered with
Program Rakan Ladang. Bernas is of the opinion that with the increase of the production of
paddy through its Program Rakan Ladang, it would be able to increase its control (whether
directly or indirectly) of the domestic rice market and further assist Bernas to stabilize the
domestic rice market.
Effective Pricing Strategy
As Bernas is not at liberty to increase its prices despite domestic price fluctuations,
implementation of effective pricing strategies is crucial in ensuring profitability. The strategies
employed by Bernas includes managing the demand and supply well and to curb smuggling
of rice into the country.
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68
SECTION 8.0 INDUSTRY OVERVIEW
Information in this section includes statistical data and economic information obtained from
various sources believed to be reliable but which have not been independently verified by
the Issuer, the JLAs/JLMs or any other party involved in preparing this IM. The Issuer, the
JLAs/JLMs and such other party/parties make no guarantee, representation or warranty and
accept no responsibility or liability as to such information‟s accuracy or completeness. Prior
to making an investment decision, prospective investors should make their own judgment on
the accuracy and completeness of such information and that it is current. No consent has
been sought from any of the organizations in respect of the reproduction of an excerpts or
extracts of data or information from the sources referred to herein.
8.1
Global Economy
The global economy continued to expand in the first quarter of 2010. Most
economies registered stronger growth, with the emerging economies in Asia leading
the global recovery. The improvement in economic activity in these economies was
attributed to better consumer and business sentiments, leading to increases in
consumption and investment. Conditions in the international financial markets
continued to improve following massive policy support by the authorities and higher
investor tolerance of risk. Inflationary pressures across most economies had begun
to emerge, albeit moderately, due primarily to higher energy and food prices.
In the US, real GDP grew by a slower annualised rate of 3.2% in the first quarter (4Q
09: 5.6%), marking the third consecutive quarter of positive growth. The expansion in
economic activity was mainly contributed by stronger private consumption growth
following the improvement in job prospects. Employment registered a gain of 283,000
jobs in the first quarter (4Q 09: -269,000). In addition, households have shown more
willingness to consume by drawing down their personal savings. Growth was also
supported by inventory restocking in response to growing demand. Fixed investment
grew moderately, due to strong increases in business investment in equipment and
software that offset the declines in residential and non-residential investment.
Government spending contracted by 1.8% (4Q 09:-1.3%), reflecting the larger
decline in state and local government spending despite the increase in federal
spending. On the inflation front, headline CPI rose by 2.3% during the quarter (4Q
09: 1.4%), driven by higher energy and food prices.
The economic recovery in the euro area continued to be gradual, sustained by the
pick-up in external demand. Major euro area economies such as Germany and
France recorded strong improvements in exports. The rebound in exports, driven by
both intraregional demand and demand from China, has also supported the
improvement in industrial production. On the other hand, private consumption growth
remained moderate as the effect of fiscal stimulus began to wane. On the inflation
front, consumer prices increased by 1.1% during the first quarter (4Q 09: 0.4%) due
mainly to higher energy prices. Meanwhile, the UK economy recorded its second
consecutive positive quarter-on-quarter growth of 0.2% in the first quarter (4Q 09:
0.4%). On an annual basis, the economy recorded a smaller contraction of 0.3% (4Q
09: -3.1%). The improvement in growth was broad-based across all sectors following
firmer consumer spending as well as higher exports. Meanwhile, inflation rose to
3.3% in the first quarter (4Q 09: 2.1%), due to the reversal of the reduction in value
added tax and higher energy prices.
69
In the Asian region, all economies continued their robust expansion in the first
quarter, driven by sustained domestic demand and strong export growth. Private
consumption and investment activity in the region remained strong, supported by
favourable labour market conditions and lending activities. The acceleration in export
growth was due to continued expansion in intra-regional trade, a gradual
improvement in demand from the advanced economies, the upturn in the global
electronics cycle and the low base effect. PR China‟s economy expanded at a robust
annual pace of 11.9% in the first quarter (4Q 09: 10.7%), supported by strong
expansion in fixed asset investment, driven by both infrastructure spending related to
the fiscal stimulus and real estate investment. Similarly, Singapore‟s economy grew
by 13.1% in the first quarter (4Q 09: 4.0%), due mainly to the sharp rebound in the
manufacturing sector, particularly in the electrical and electronics and pharmaceutical
sub-sectors, as well as the services sector. Korea‟s economy expanded by 7.8% in
the first quarter (4Q 09: 6.0%) supported by improvement in the manufacturing
sector, especially in the production of electrical and electronic equipment. In
Indonesia, the economy grew by 5.7% in the first quarter (4Q 09: 5.4%) boosted by
private consumption, exports and investment activity while government spending
declined for the first time since the third quarter of 2005.
(BNM’s Economic and Financial Developments in the Malaysian Economy in the First Quarter
of 2010)
8.2
Overview of the Economy of Malaysia
The Malaysian economy registered a strong growth of 10.1% in the first quarter of
2010, led by continued expansion in domestic demand and stronger external
demand. The expansion in domestic demand was supported by higher private
consumption and sustained public sector spending. The robust external demand
provided further impetus to domestic growth through its spill-over effects on
production, employment and overall sentiments. On the supply side, all economic
sectors recorded positive growth during the quarter, led by strong growth in the
manufacturing and services sectors.
The headline inflation rate, as measured by the change in the Consumer Price Index
(CPI), increased by 1.3% on an annual basis in the first quarter (4Q 09: -0.2%). The
increase in consumer prices was attributed mainly to the price increase in food and
non-alcoholic beverages (1Q 10: 1.4%, 4Q 09: 0.9%).
The strong and broad-based expansion of the domestic economy in the first quarter
affirms that the recovery of the Malaysian economy is firmly established. Going
forward, growth is expected to be sustained, supported by the continued expansion in
domestic and external demand. Expansion in domestic demand is expected to be
supported by the favourable employment conditions, improving consumer and
business confidence and an accommodative policy environment, while external
demand will be supported by stronger regional trade and the global upturn in the E&E
cycle.
(BNM’s Economic and Financial Developments in the Malaysian Economy in the First Quarter
of 2010)
8.3
Malaysian Economy Outlook in 2010
The Malaysian economy is projected to grow by 4.5% to 5.5% in 2010, underpinned
by strengthening domestic demand and an improving external environment. While
70
the public sector will remain supportive, growth is expected to be driven by greater
private sector activity and robust external demand from the regional countries. The
underlying strong macroeconomic fundamentals, the healthy private sector financial
position and the strong financial system will provide support to a private sector-led
recovery. A supportive monetary environment, including continued access to
competitive financing will remain in place to foster recovery in the private sector
activity.
The main contribution to growth in 2010 would come from the expected
strengthening in domestic demand, driven mainly by the private sector. Favourable
domestic conditions, including the improvements in the labour market, rising
disposable incomes and sustained consumer confidence, will support the further
expansion in private consumption. In line with strengthening external demand and
increasing domestic activity, private investment is expected to gradually recover in
2010. In addition, higher capital spending by the NFPEs and the accelerated
implementation of the remaining projects under the second stimulus package, will
further reinforce domestic demand. The recovery in the global economy will provide a
further impetus to growth in 2010, particularly from the more robust expansion in the
regional economies. Given the relatively large external sector in the economy, the
strengthening of external demand will have positive spill-over effects on the broader
economy, in terms of employment, production and overall sentiments, thus
supporting greater private consumption and investment.
Headline inflation is expected to remain modest at an average of 2% to 2.5% in 2010.
The price increase reflects the improving economic conditions and the possible
adjustments to the administered prices following the Government‟s plan to revise the
subsidies for petroleum products as well as to review the existing subsidies on other
essential items.
(Source: BNM’s Annual Report 2009, page 84 & 85)
8.4
Overview of Paddy and Rice Industry in 2010
The expansion in world rice trade in 2010 is forecast to be met by larger exports from
China, Myanmar, Thailand, the United States and Pakistan. On the other hand, a
reduction of domestic supplies and, in the case of India, the maintenance of export
restrictions, is expected to depress shipments from this country, but also from Brazil
and Uruguay.
Global rice consumption in 2010 is forecast to increase by 2.1 percent to 454 million
tonnes, milled basis. Of these, 388 million tonnes are expected to be consumed as
food, 6 million tonnes more than in 2009. Supplies utilized for other ends are also
projected to rise to 53 million tonnes, while the small proportion of rice used as
animal feed may decline to 12.1 million tonnes. Based on current estimates, global
per capita rice consumption is targetted to increase from 56.5 kilos per person in
2009 to 56.8 kilos in 2010, reflecting an increase in average rice consumption in
developing countries as well as in developed countries.
World rice inventories at the close of the 2009/2010 marketing years are now
forecast to fall by 1 percent or close to 600 000 tonnes, to 123.5 million tonnes,
milled basis. The decline is likely to stem from stock draw-downs in major rice
exporting countries, principally India, but also Pakistan, Vietnam and Thailand. On
the other hand, higher level of crop production are forecast to boost rice reserves in
mainland China, mainland and the United States. Likewise, inventories held by rice
71
importing countries, such as Bangladesh, the Republic of Korea the Islamic Republic
of Iran, Brazil, and the European Union are projected to rise for the third consecutive
year.
The rebounding of international rice prices observed at the end of 2009 came to an
end by January 2010, when they resumed the slide that had characterised the
market for most of 2009. This was reflected in the Food and Agricultural Organization
of the United Nations All Rice Price Index, which moved from 251 points in January
2010 to 206 points in April 2010. The weakening has been widespread, with sluggish
world import demand negatively affecting all the rice market segments. The
completion of the 2009 secondary crop harvests in northern hemisphere countries
and of the 2010 main crops in southern hemisphere countries are likely to keep
prices under downward pressure in the coming months, especially as rice remains
particularly expensive compared to other cereals, wheat, in particular.
(Source: Rice Market Monitor, April 2010, Volume XIII - Issue No. 1, at
http://www.fao.org/economic/est/publications/rice-publications/rice-market-monitor-rmm/en/)
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72
SECTION 9.0 OTHER INFORMATION
9.1
Material litigation
Save as disclosed below, as at 30 June 2010, there are no claims, demands,
lawsuits or litigation (including those pending or threatened) by or against Bernas,
Beras Corp or Edaran where such individual claim (including counter-claim),
demand, lawsuit or litigation exceeds the sum of Ringgit Malaysia Five Million
(RM5,000,000.00) or any proceedings pending or threatened which might materially
and adversely affect the position or business of Bernas, Beras Corp or Edaran, and
in particular, any injunctions, winding up orders, any orders relating to the
enforcement of judgments or other remedies which may if granted by the court,
effectively cause Bernas, Beras Corp or Edaran to have to cease all or parts of
Bernas‟s, Beras Corp‟s or Edaran‟s business:
(a)
Bernas was served with a writ and statement of claim dated 14 October 2005
by Konsortium Pemborong Beras (Melayu) Kelantan Sdn Bhd (“KBK”) and
was named as the first defendant. KBK is seeking, the following:
(i)
a declaration that Bernas violated the terms of a joint venture
agreement (“JVA”) by not complying with its duties and obligations as
a member/partner of Formula Timur Sdn Bhd (“the Joint Venture
Company”);
(ii)
a declaration that Bernas‟s action in stopping the supply of rice to the
Joint Venture Company is contrary to the provisions of the JVA, was
wrong and invalid;
(iii)
a declaration that Bernas by commission or omission committed a
fraud upon the minority shareholders of the Joint Venture Company
and/or abuse of power;
(iv)
general damages of RM112 million to be paid by Bernas to the Joint
Venture Company;
(v)
rebate of RM760,000;
(vi)
interest under Section 11 of the Civil Law Act, 1965 and in equity on
the damages at 8% per annum from August 2003 till payment; and
(vii)
injunction and costs and other reliefs as the court deems just.
Bernas filed the application to strike out the said statement of claim against
Bernas on the ground that there is no valid cause of action. The deputy
registrar had dismissed Bernas application to strike out the statement of
claim.
Bernas filed a notice of appeal to the judge in chambers against the deputy
registrar‟s decision on 7 May 2007. On 20 May 2009, the judge in chambers
dismissed Bernas‟s appeal with costs in relation to the deputy registrar‟s
decision on 7 May 2007 in dismissing Bernas‟s striking out application.
Bernas has upon advice by its counsel, filed a notice of appeal at the Court of
Appeal against the decision of the judge in chambers. Bernas is currently
waiting for the Court of Appeal to fix the hearing date for the said appeal.
73
(b)
On 27 March 2006, Bernas was served with a sealed copy of summons in
chambers dated 3 March 2006 by KBK in relation to an interlocutory
injunction, which involves inter alia, the followings:
(i)
to restrain Bernas from selling, hiring and supplying rice to any third
party or allowing any activities which may compete with the business
of KBK; and
(ii)
to instruct Bernas to resume selling, hiring and supplying rice to KBK.
KBK‟s application for injunctive relief and discovery which has been fixed for
22 June 2009 has been adjourned to 2 September 2009 and 26 October 2009
respectively for further mention. Bernas had given instruction to its counsel to
set aside the said injunction application. The Court has yet to fix the date for
the KBK‟s application for injunctive relief and discovery.
(c)
Bernas was served with a writ of summons and statement of claim dated 5
May 2006 initiated by A Halim Bin Hamzah & 291 others (the “Plaintiffs”). The
civil suit is brought against Bernas & 24 others (the “Defendants”) for, inter
alia, the following claims:
(i)
a declaration that the voluntary separation scheme in 2000 initiated by
Bernas is void and of no effect;
(ii)
a declaration that the Defendants had by unlawful means conspired
and combined together to defraud or injure the Plaintiffs;
(iii)
alternatively, a declaration that the Defendants had acted in
furtherance of a wrongful conspiracy to injure the Plaintiffs;
(iv)
damages to be assessed; and
(v)
interest and costs.
In relation to the suit filed by the Plaintiffs against the Defendants, Bernas had
filed summons in chambers pursuant to Order 12 Rule 7 and/or Order 18
Rule 19 of the Rules of the High Court 1980 (“Bernas Application”) for the
following:
(i)
that the writ and statement of claim as against the said Defendants be
struck out as it discloses no reasonable course of actions, scandalous,
frivolous, vexatious and/or is an abuse of process of the Court;
(ii)
that the cost of the said order to be borne by the Plaintiffs; and
(iii)
such further or other orders as the Court deemed fit.
The Court has granted order in terms for Bernas application to strike out the
21st Defendant with cost payable to Bernas but dismissed Bernas application
to strike out the 2nd to 12th Defendants on 3 September 2007. On 3 March
2008, the Court dismissed Bernas application to strike out the 2nd to 12th
Defendants from being the party to the suit. Bernas‟s counsel had on 17 April
2008, filed statements of defence against the 2nd to 12th Defendants. The
Court has fixed for mention of case management on 7 May 2009. On 14 May
2010 the matter has been fixed for further case management on 26 July 2010
74
pending the transfer of the matter to another solicitor and to allow the
Plaintiff‟s solicitors to amend the Writ of Summons and Statement of Claim as
some of the Plaintiffs have since deceased.
(d)
On 6 June 2006, Bernas was served with a sealed copy of originating
summons and affidavit in support (“the Plaintiffs Application”) affirmed by
Zainon Bt Ahmad for and on behalf of the 690 others (“the Plaintiffs”) for the
following claims:
(i)
a declaration that the Plaintiffs as employees of Bernas whose service
of employment has been terminated before attaining the age of 55 due
to reasons other than that of compulsory retirement, optional
retirement, death or a disability are entitled to the
retirement/termination benefits provided for in clause 6.3 of the „Terma
dan Syarat Perkhidmatan Kumpulan Eksekutif dan Kumpulan Bukan
Eksekutif‟ and in clause 5.5 of the „Buku Panduan Kumpulan Eksekutif
dan Bukan Eksekutif‟;
(ii)
an order that Bernas pays the retirement/termination benefits due to
the Plaintiffs as follows:
(a)
for those Plaintiffs who have attained the age of retirement of
55 years as at the date of the order, the retirement/termination
benefits be paid directly to them; and
(b)
for those Plaintiffs who have not attained the age of retirement
of 55 years as at the date of the order, the
retirement/termination benefits be paid into their accounts at
the Employee Provident Fund;
(iii)
interest at the rate of 8% per annum from 1 January 2004 to the date
of payment as ordered by the Court;
(iv)
such further orders, directions or relief that the Court deems fit and
appropriate; and
(v)
costs to be paid by Bernas to the Plaintiffs.
The Court had on 13 March 2008 allowed the Plaintiff‟s application with cost
and Bernas had instructed its counsel to file grounds of appeal to the Court of
Appeal. Bernas is still waiting for the Court of Appeal to fix the hearing date
for the appeal.
(e)
On 4 January 2010, Bernas was served with a sealed copy of originating
summons and affidavit in support (“the Plaintiffs Application”) affirmed by
Rahman Bin Samud for and on behalf of the 242 others (“the Plaintiffs”) for
the following claims:
(i)
a declaration that the Plaintiffs as employees of Bernas whose service
of employment has been terminated before attaining the age of 55 due
to reasons other than that of compulsory retirement, optional
retirement, death or a disability are entitled to the
retirement/termination Benefits provided for in clause 6.3 of the
„Terma dan Syarat Perkhidmatan Kumpulan Eksekutif dan Kumpulan
75
Bukan Eksekutif‟ and in clause 5.5 of the „Buku Panduan Kumpulan
Eksekutif dan Bukan Eksekutif‟;
(ii)
an order that Bernas pays the retirement/termination benefits due to
the Plaintiffs as follows:
(a)
for those Plaintiffs who have attained the age of retirement of
55 years as at the date of the order, the retirement/termination
benefits be paid directly to them; and
(b)
for those Plaintiffs who have not attained the age of retirement
of 55 years as at the date of the order, the
retirement/termination benefits be paid into their accounts at
the Employee Provident Fund;
(iii)
interest at the rate of 8% per annum from 1 January 2004 to the date
of payment as ordered by the Court;
(iv)
such further orders, directions or relief that the Court deems fit and
appropriate; and
(v)
costs to be paid by Bernas to the Plaintiffs.
Plaintiffs‟ application was fixed for first hearing on 22 February 2010 wherein
the Court in that first hearing fixed 14 June 2010 to allow Bernas to file reply
to the Plaintiffs‟ affidavit. Bernas had given instructions to its counsel to
defend Bernas in the said application. The Court has subsequently fixed 3
August 2010 for case management to enable the parties to exchange
affidavits.
In addition to the above, please also refer to the announcements made by Bernas on
Bursa Malaysia in relation to litigations involving Bernas Group.
9.2
Material Contracts Outside the Ordinary Course of Business
As at 30 June 2010, there are no material contracts entered into outside the ordinary
course of business by Bernas, Beras Corp or Edaran within the last 2 years save and
except the following:
i.
Sale and purchase agreement dated 20 November 2008 entered into
between Bernas and the existing shareholders of Keongco Holdings Sdn Bhd
(“KHSB”) to dispose of Bernas‟s entire shareholding of 2,856,000 ordinary
shares of RM1.00 each in KHSB, representing 20% of the issued and paidup capital of KHSB for a total cash consideration of RM1,428,000 to the
existing shareholders of KHSB. The said sale and purchase agreement has
been completed on 2 November 2009;
ii.
Share acquisition agreement dated 5 January 2009 entered into between
Bernas and Dato' Ismail bin Kasim to acquire 903,730 ordinary shares of
RM1.00 each representing 10% equity interest in Jasmine Food Corporation
Sdn. Bhd. ("JFC") from Dato' Ismail bin Kasim for a total cash consideration
of RM4,250,000 or approximately RM4.70 per share. Subsequent to the
completion of the said share acquisition agreement, the Bernas Group's
76
equity interest in JFC has increased to 61%. The said share sale and
purchase agreement has been completed on 17 March 2009;
iii.
Share sale and purchase agreement between Bernas and Johor Port Berhad
dated 2 December 2009 for Bernas to re-acquire 12,000,000 ordinary shares
in Bernas Logistics Sdn Bhd (“BLSB”) at a consideration of RM11.76 million.
The said share sale and purchase agreement has been completed on 31 May
2010;
iv.
Termination agreement between Bernas and Johor Port Berhad (“JPB”) dated
2 December 2009 to terminate the sublease agreement entered into between
Bernas and JPB on 6 October 2005. Pursuant to the said termination
agreement an amount of RM20,724,632 representing the full and final
settlement for the termination of the sublease agreement is to be refunded by
JPB to Bernas within 6 months from the date of the Termination Agreement.
The said amount has been refunded by JPB to Bernas on 11 June 2010;
v.
Share sale agreement dated 21 May 2010 enterred into between Beras Corp
and Tan Kien Chong Sdn Bhd (“TKCSB”) for the acquisition of 697,500
ordinary shares equivalent to 45% equity interest in Sabarice Sdn Bhd for a
cash consideration of RM4,730,000. The said acquisition has been completed
on 16 June 2010; and
vi.
A second subscription agreement dated 30 June 2010 (“Second SA”) entered
into between Beras Corp and Lian Sin Trading Sdn Bhd (“Liansin Trading”)
and the other shareholders of Liansin Trading (“Remaining Shareholders of
Liansin Trading”) in relation to the proposed subscription of 401,068 ordinary
shares in Liansin Trading for a subscription price of RM12,633,642.
Simultaneous with the execution of the Second SA, a supplemental
shareholder agreement and supplemental performance guarantee reward
scheme agreement had also been entered into between Beras Corp and the
Remaining Shareholders of Liansin Trading to amend the terms of the
shareholder agreement and the performance guarantee reward scheme
agreement dated 30 June 2005 to reflect, among others, the increase of
shareholding by Beras Corp in Liansin Trading from thirty per cent (30%) to
sixty per cent (60%) and the allotment and issuance of 35,805 ordinary
shares of RM1.00 each to the Remaining Shareholders of Liansin Trading
proportionate to their shareholdings in Liansin Trading.
In addition to the above, please also refer to the announcements made by Bernas on
Bursa Malaysia in relation to the contracts involving Bernas Group.
9.3
Related party transactions
In respect of the significant related party transactions, please refer to Note 34 of the
audited financial statement of the Issuer for the financial year ended 31 December
2009 attached herein and the following:
i.
Share Sale and Purchase Agreement between Bernas and Johor Port Berhad
dated 2 December 2009 for Bernas to re-acquire 12,000,000 ordinary shares
in Bernas Logistics Sdn Bhd at a consideration of RM11.76 million which was
completed on 31 May 2010;
ii.
Termination agreement between Bernas and Johor Port Berhad (“JPB”) dated
2 December 2009 to terminate the sublease agreement entered into between
77
Bernas and JPB on 6 October 2005. Pursuant to the said termination
agreement an amount of RM20,724,632 representing the full and final
settlement for the termination of the sublease agreement is to be refunded by
JPB to Bernas within 6 months from the date of the Termination Agreement.
The said amount has been refunded by JPB to Bernas on 11 June 2010.
9.4
Material contingent liabilities and capital commitments
The directors of Bernas, Beras Corp and Edaran are not aware of any material
contingent liabilities, which upon becoming enforceable, may have a substantial
impact on the financial position and/or the business of Bernas, Beras Corp and
Edaran as at 30 June 2010.
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78
SECTION 10 CONFLICT OF INTEREST
10.1
Conflict Of Interest Situations and Appropriate Mitigating Measures
A.
Bank Muamalat Malaysia Berhad (“BMMB”)
Save as disclosed below, after making enquiries as were reasonable in the
circumstances, BMMB is not aware of any circumstance that would give rise
to a conflict of interest in its capacity as, amongst others, the Joint Principal
Advisers/Joint Lead Arrangers/Joint Lead Managers in relation to the
ICP/IMTN Programme:
(a)
BMMB had earlier granted the following existing loan facilities to
Bernas and/or its subsidiaries (collectively "Existing BMMB Facilities"):
Details of loan
facilities
Limit of loan
facilities
Outstanding amount as at 30
June 2010 of loan facilities
(RM)
(RM)
Multi
Islamic 204,500,000.00
Trade Facilities
74,000,851.96
Islamic Bilateral
Financing
Facilities
6,029,271.58
13,420,449.51
The proceeds from the ICP/IMTN Programme may be utilised by the Issuer to
refinance the Existing BMMB Facilities. However, none of the Existing BMMB
Facilities have at present been identified by the Issuer for refinancing. The
utilisation of proceeds from the ICP/IMTN Programme will be determined at a
point closer to each draw-down under the ICP/IMTN Programme and the
Issuer will notify the SC accordingly at such time of draw-down.
B.
Standard Chartered Saadiq Berhad (“SCSB”)
Save as disclosed below, after making enquiries as were reasonable in the
circumstances, SCSB is not aware of any circumstance that would give rise to
a conflict of interest in its capacity as, amongst others, the Joint Principal
Advisers/Joint Lead Arrangers/Joint Lead Managers in relation to the
ICP/IMTN Programme:
(a)
SCSB had earlier granted the following existing loan facilities to
Bernas and/or its subsidiaries (collectively "Existing SCSB Facilities"):
Details of loan
facilities
Islamic
Facilities
Limit of loan
facilities
Outstanding amount as at 30
June 2010 of loan facilities
(actual)
(actual)
Trade RM100,000,000
RM80,771,462.78
(USD1 = RM3.2321850)
79
Details of loan
facilities
Limit of loan
facilities
Outstanding amount as at 30
June 2010 of loan facilities
(actual)
(actual)
Ad-hoc
Islamic USD90,000,000
Trade Facilities
USD45,935,000
The proceeds from the ICP/IMTN Programme may be utilised by the Issuer to
refinance the Existing SCSB Facilities. However, none of the Existing SCSB
Facilities have at present been identified by the Issuer for refinancing. The
utilisation of the proceeds from the ICP/IMTN Programme will be determined
at a point closer to each draw-down under the ICP/IMTN Programme and the
Issuer will notify the SC accordingly at such time of draw-down.
C.
Mayban Trustees Berhad
Mayban Trustees Berhad (“MTB”), the appointed Trustee, is a related
corporation of Malayan Banking Berhad. Malayan Banking Berhad has, within
its ordinary course of business, extended to Bernas, several credit facilities.
However, the SC grants a blanket approval to the Trustee to act or be
appointed as trustee under subsection 69(2) of the Securities Commission
Act 1993 (now known as subsection 260(2) of the Capital Markets and
Services Act 2007) provided that it satisfies the following requirements:
1. At least 1/3 of the board of the trustee must comprise of independent
directors;
2. The trustee and related corporation Malayan Banking Berhad are
separate legal entities and are structurally separated; and
3. The trustee‟s non-financial resources must be sufficiently independent of
Malayan Banking Berhad or companies in their group.
MTB has complied with the abovementioned requirements and has also
submit to the Securities Commission, a declaration in the prescribed form as
set out in Appendix 1 of the Guidelines on Allowing a Person to Be Appointed
or to Act as a Trustee under Subsection 69(2) of the Securities Commission
Act 1993 (now Subsection 260(2) of the Capital Markets and Services Act,
2007).
D.
Messrs. Adnan Sundra & Low
Messrs. Adnan Sundra & Low has confirmed that there are no existing or
potential conflicts of interest from the role assumed by the firm in relation to
the ICP/IMTN Programme.
E.
Messrs. Hanafiah Raslan & Mohamad
Messrs Hanafiah Raslan & Mohamad has confirmed that there are no
existing or potential conflicts of interest from the role assumed by the firm in
relation to the ICP/IMTN Programme.
80
Mitigating Measures
As a mitigating measure and to address the potential conflicts of interest set out
above, the following measures have been taken:
(i)
the potential conflicts of interest situations have been brought to the attention
of the board of directors of the Issuer and hence they are fully aware of the
same. Despite such potential conflict of interest situations, the board of
directors of the Issuer is prepared to proceed with the implementation of the
ICP/IMTN Programme based on the present arrangement and terms;
(ii)
BMMB and SCSB are respectively committed to upholding its/their
professional integrity and responsibilities in relation to the ICP/IMTN
Programme.
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81
APPENDIX I
Audited Financial Statements of the Issuer for
the Financial Year Ended 31 December 2009
82
APPENDIX II
Corporate Group Structure of Bernas as at 30 June 2010
83
52%
100%
20%
40%
Serba Wangi Sdn Bhd
Ban Heng Bee Holdings
Sdn Bhd
51%
2%
Bernas Logistics Sdn Bhd
[ Company No. 386337-M ]
100%
Syarikat Faiza Sdn Bhd
[ Company No. 247191-D ]
51%
51%
51%
51%
Gardenia Bakeries (KL) Sdn Bhd
- 30%
30%
49%
Bernas International Trading
Company Limited
( Incorporated in Thailand )
[ Company No. 0165551000141 ]
95%
# Kilang Beras Fajar Sdn Bhd
Bernas Production Sdn Bhd
[ Company No. 428934-K ]
100%
# Liansin Trading Sdn Bhd
100%
Bernas Seed Pro Sdn Bhd
[ Company No. 378559-M ]
Dayabest Sdn Bhd
100%
Haskarice Food Sdn Bhd
Hock Chiong Foodstuff Sdn Bhd
Ban Say Tong Sdn Bhd
Tong Seng Huat Rice Trading Sdn Bhd
Sazarice Sdn Bhd
95%
Sabarice Sdn Bhd
100%
Belikmat Corporation Sdn Bhd 100%
Bernas Agrogreen Sdn Bhd
100%
Beras Corporation Sdn Bhd
[ Company No. 480493-H ]
OEL Realty Holdings Sdn Bhd
- 30%
Padi Gedong Sdn Bhd 100%
Bernas Agrotech Sdn Bhd
[ Company No. 405264-W ]
100%
100%
100%
Bernas Feedstuff Sdn Bhd
Dormant Companies
Consolidated Bernas United Distributors Sdn Bhd
Machind Realty Sdn Bhd
Bernas Engineering & Technology Sdn Bhd
P.B. Construction & Supplies Sdn Bhd
80%
60%
100%
Bernas
Bernas
Bernas
Bernas
Perdana Sdn Bhd
Utama Sdn Bhd
(Sabah) Sdn Bhd
(Sarawak) Sdn Bhd
Era Bayam Kota Sdn Bhd
[ Company No. 472357-P ]
49%
51%
Edaran Bernas Nasional
Sdn Bhd
[ Company No. 390534-M ]
# Irfan Noman Bernas (Pvt) Limited 20%
(Incorporated in Pakistan)
Bernas Overseas (L) Limited
[ Company No. LL01053 ]
#
Bernas Chaff Products Sdn Bhd
Bernas Dominals Sdn Bhd
[ Company No. 378561-P ]
United Malayan Flour
(1996) Sdn Bhd - 45%
Jasmine Food (Ipoh) Sdn Bhd
Jasmine Food (Alor Setar) Sdn Bhd
Jasmine Khidmat & Harta Sdn Bhd
Jasmine Food (Johor Bahru) Sdn Bhd
Jasmine Food (Seremban) Sdn Bhd
Jasmine Food (Prai) Sdn Bhd
Jasmine Food (Kuantan) Sdn Bhd
Jasmine Rice Mill (Tunjang) Sdn Bhd
Jasmine Rice Products Sdn Bhd
JS Jasmine Sdn Bhd
51%
100%
Jasmine Food Corporation
Sdn Bhd
[ Company No. 162356-H ]
61%
PADIBERAS NASIONAL BERHAD
[ Company No. 295514-U ]
BERNAS ORGANISATION STRUCTURE AS AT 30 JUNE 2010
51%
Bernas Project &
Development Sdn Bhd
[ Company No. 428934-K]
100%
YHL Trading (Kedah) Sdn Bhd
YHL Trading (KL) Sdn Bhd
YHL Trading (Melaka) Sdn Bhd
YHL Trading (Segamat) Sdn Bhd
YHL Trading (Johor) Sdn Bhd
YHL Trading (Terengganu) Sdn Bhd
YHL (Kuantan) Sdn Bhd
100%
YHL Holding Sdn Bhd
[ Company No. 452413-V ]
APPENDIX III
Shariah Adviser’s Opinion and Review on the Musyarakah structure
dated 15 July 2010
84
SHARIAH PRONOUNCEMENT
In the name of Allah, the Most Gracious, the Most Merciful
All praise is due to Allah, the Cherisher of the world, and peace and blessing upon
The Prophet of Allah, on his family and all his companions
PADIBERAS NASIONAL BERHAD (“BERNAS”)
Proposed Issuance of Up To RM750 Million of Islamic Commercial Papers/Islamic Medium Term
Notes (“ICP/IMTN”) under an ICP/IMTN Programme
The Standard Chartered Saadiq Berhad (“SCSB”) Syariah Advisory Committee (the “Shariah Committee”)
has reviewed the structure, mechanism and the documentation for the proposed issuance of the Islamic
Commercial Paper Programme and/or Islamic Medium Term Note Programme by Padiberas Nasional
Berhad (the “Issuer” or “Bernas”).
We have reviewed the proposed structure and the transactions entered into in respect of the Islamic
Commercial Paper Programme and Islamic Medium Term Note Programme which is structured based on the
Musyarakah structure with a Purchase Undertaking granted by the Issuer and a Sale Undertaking granted by
the Trustee, acting on behalf of the Sukukholders. The investors (“Sukukholders”) together with the Issuer
from time to time, will enter into a Musyarakah Agreement as partners (each a “partner” and collectively the
“Musyarakah Partners”) for the purpose of undertaking a venture (“Musyarakah Venture”) to invest directly
into the Shariah-compliant business of the Issuer (“Business”). In this structure, the Issuer is appointed by
the Sukukholders as manager of the Musyarakah Venture, and the Manager shall receive an incentive fee as
consideration of its effort.
In approving the structure for this issuance, the Shariah Committee would like to highlight the following
matters that were considered in deriving our opinion:
1. Important Highlights
The Sukuk Musyarakah employs an established Islamic securities structure in Malaysia which follows
accepted Shariah principles provided under the Securities Commission’s Guidelines on the Offering of
Islamic Securities dated 26 July 2004, as amended from time to time. Sukuk Musyarakah is also in line with
Shari’a Standards No. 17 related to Investment Sukuk set by the Accounting and Auditing Organisation for
Islamic Financial Institutions (AAOIFI).
Notwithstanding the above, the following matters were given due attention:
1.1
Purchase Undertaking and Sale Undertaking:
The practice of incorporating a Purchase Undertaking and Sale Undertaking within a
Musyarakah Agreement is accepted by the Shariah Advisory Council (SAC) of the Securities
Commission of Malaysia (SC) and has been approved for several Sukuk issuances in
Malaysia. This is despite the issues surrounding such practice as highlighted by Shariah
scholars in the industry.
1.2
Determination of Purchase Price
In order to evaluate the value of the ownership interest of the Sukukholders at the point of
purchase, Sukukholders as the seller and Bernas as the purchaser have agreed to a certain
formula to determine the future value which serves to avoid any future dispute or uncertainty
in the calculation of the purchase price;
1.3
Advance Payment
The income from the Musyarakah Venture will be shared between the Musyarakah Partners
according to a pre-agreed profit sharing ratio. The Sukukholders will be given an expected
distribution or return, nevertheless. Any shortfall in that expected return or distribution for
such relevant period shall be paid by the Issuer as an advance part payment to the
Sukukholders. This advance part payment will later on be set off against the final price
payable by the Issuer pursuant to the Purchase Undertaking.
1.4
Customary Practice (‘Urf)
The Shariah Committee also considered the principle of 'Urf or common practice in the
industry, particularly in Malaysia in our decision making process. This is in order to respect
and be in harmony with the Shariah jurisprudence and approval of the regulatory authorities
in Malaysia, provided that the major prohibitions of riba’, gharar and other prohibitions are
adhered to in general.
2. Documentation
The Shariah Committee has reviewed the Shariah aspects of the following documentation for the Islamic
Commercial Paper Programme and Islamic Medium Term Note Programme:
a)
b)
c)
d)
e)
Programme Agreement;
Musyarakah Agreement;
Management Agreement;
Trust Deed (in respect of Islamic Commercial Papers and Islamic Medium Term Notes); and
Purchase Undertaking and Sale Undertaking.
3. Approval
3.1
The Shariah Committee is of the view that, given the prevailing circumstances, the structure
and mechanism as set out above is acceptable within the principles of Shariah, the
jurisdiction under which the Issuer operates and the market where the Islamic Commercial
Paper Programme and Islamic Medium Term Note Programme are issued, and that the
above documentation reflects the above structure and mechanism and the Shariah
Committee hereby approves the legal documentation for the proposed issue of the Islamic
Commercial Paper Programme and Islamic Medium Term Note Programme, subject to
proper execution of the legal documents.
3.2
In arriving at the decision, the Shariah Committee also took into consideration the following
issues:
i.
ii.
The legal constraints under which this product is being developed;
The need to develop the Islamic finance industry, particularly in respect of the issuance of
the Islamic Securities;
iii. The need to facilitate the increasing need of corporate and financiers to mobilise funds
according to Shariah principles; and
iv. The prevailing conditions and affairs of the Ummah and the need to remove them from
the shackles of riba’.
v. Respecting the local Shariah jurisprudence.
And He Knows best.
Dated: July 15, 2010/Syaban 3, 1431