General Announcement   Reference No TC-061005-60857

Company Name	:	TALAM CORPORATION BERHAD
Stock Name	:	TALAM
Date Announced	:	06/10/2006

Type	:	Announcement
Subject	:	TALAM CORPORATION BERHAD ("TCB" or "the Company") PROPOSED SETTLEMENT BETWEEN AMBANG SENTOSA SDN BHD (ASSB), MAXISEGAR SDN BHD (MSB), TALAM CORPORATION BERHAD AND PB TRUSTEE SERVICES SDN BHD ("PROPOSED SETTLEMENT")

Contents :

1. INTRODUCTION

The Company wishes to inform that on 5 October, 2006 a Settlement Agreement (Settlement Agreement) has been signed between Ambang Sentosa Sdn Bhd (ASSB) (Company No. 582089-U), Maxisegar Sdn Bhd (MSB) (Company No. 105096-V), TCB and PB Trustee Services Berhad (Trustee) (Company No. 7968-T).

2. BACKGROUND

2.1 ASSB purchased assets from MSB under an Asset Sale Agreement and has undertaken an issuance of Al-Bai Bithaman Ajil Islamic Debt Securities of RM986 Million (Varied BaIDs) constituted by a Trust Deed both dated 26 June 2003 (as supplemented and amended by an Amendment and Restatement Agreement dated 28 July 2005) (ASSB BaIDs Trust Deed).
2.2 As at 28 July 2006, RM498 Million of Primary Notes and RM30.875 Million of Secondary Notes in respect of Varied BaIDs remain outstanding comprising the Varied BaIDs of Class B and Class C.

2.3 ASSB, MSB and TCB have requested the Trustee to agree to the settlement of ASSB's and MSB's respective obligations to the Trustee in respect to item 2.2 above in the manner set out in TCB's Proposal through the Settlement Agreement.

3. TCB'S PROPOSAL

The Settlement Agreement encompasses the TCB Proposal which incorporates the following salient terms:-
3.1 to settle RM503.8 million as full and final settlement towards item 2.2 as follows:-
3.1.a Cash Portion of RM67.8 million and all profits accruing thereon in the Escrow Accounts and the BaIDs Redemption Account as at the Cash Portion Payment Date.

3.1.b Secured Al-Bai Bithaman Ajil Islamic Debt Securities of up to an aggregate nominal value of RM150 million Settlement BaIDs to be issued in one series by TCB with a tenure of 8 years and at issuer's option to extend for another 2 years.

3.1.c RM286 million of Redeemable Convertible Preference Shares (RCPS) of par value of RM0.20 per RCPS with a maturity period of 5 years with a further extension of up to a maximum of 2 years.

4. CONDITION PRECEDENT TO ACCEPTANCE

The condition precedents set by the Trustees are, inter alia:

i. in respect of ASSB, board resolution authorizing the Settlement Agreement and corporate documents.
ii. in respect of MSB, board resolution and corporate documents, and the relevant documents pertaining to the creation of a valid Charge.

iii. in respect of TCB, the relevant Securities Commission approvals pertaining to the Settlement BaIDs, RCPS and the new shares, the relevant resolutions pertaining to the novation, issuance of the Settlement BaIDs and RCPS to the Trustee, issuance of new shares at the Conversion Price and the execution of the Settlement Agreement.

iv. that the contractor that have been accepted by the bondholders to be appointed as the main or principal contractor of the project within 7 days of the Settlement Agreement.

5. BRIEF INFORMATION ON ASSB

ASSB is a special purpose vehicle established to implement an asset securitisation programme to raise money for acquiring and investing in a pool of assets and other permitted investments.

6. EFFECTS OF THE PROPOSED SETTLEMENT

TCB will derive goodwill from assisting ASSB and MSB to settle both their indebtedness by performing their obligations under the Settlement Agreement.

7. RATIONALE

TCB has a social obligation to ensure that TCB and its subsidiaries will make good their promise to complete and deliver homes to its purchasers. Upon completion, TCB hopes to regain the public confidence.

8. APPROVALS REQUIRED

The Settlement Agreement is subject inter alia, to the relevant approvals from the Securities Commission, Bursa Malaysia Securities Berhad, the shareholders of TCB and any other regulatory body being obtained.

9. FINANCIAL IMPACT

i) Share Capital

Upon completion of the Proposed Settlement, TCB's issued and paid up share capital will increase by RM286.0 million Redeemable Convertible Preference Shares.

ii) Net Assets

Upon completion of the Proposed Settlement, TCB Group's Net Assets will increase by RM286.0 million.

iii) Earnings

The proposed settlement will not have material effect on the earnings per share of TCB Group for the financial year ending 31 January 2007. However, upon completion of the Proposed Settlement, there will be positive impact on the future earnings of the Group.

10. DIRECTORS' AND MAJOR SHAREHOLDERS' INTEREST

None of the Directors, major shareholders and/or persons connected with them has any interest, direct or indirect, in the Settlement Agreement.

11. DIRECTORS' STATEMENT

After considering all aspects of the Settlement Agreement, the Board of Directors is of the opinion that the Settlement Agreement is in the best interest of the Company.

12. DOCUMENTS AVAILABLE FOR INSPECTION

The Settlement Agreement is available for inspection at the registered office of the Company at Suite 2.05, Level 2, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur between 9.00 a.m. and 5.00 p.m. from Mondays to Fridays (except public holidays) for a period of one (1) month from the date of this announcement.

 

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