Serial No - Astraminaastramina.com/news/11-senari-im.pdf · Senari Synergy, AmInvestment Bank or any other party to the recipient to subscribe for or purchase the Sukuk. This Information

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RESPONSIBILITY STATEMENT This Information Memorandum has been approved by the directors of Senari Synergy Sdn Bhd (“Senari Synergy ” or “Issuer ”) and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that, after having made all reasonable enquiries, and to the best of their knowledge, information and belief, there are no false or misleading statements or other material facts the omission of which would make any statement in this Information Memorandum false or misleading and that there are no material omissions in this Information Memorandum.

IMPORTANT NOTICE AND GENERAL STATEMENTS OF DISCLAIMER

Senari Synergy has authorised AmInvestment Bank Berhad (“AmInvestment Bank ”) to distribute this Information Memorandum, which is now being provided by AmInvestment Bank on a confidential basis to potential investors falling within any one or more of the categories of persons specified in Section 4(6) of the Companies Act 1965 as amended from time to time, 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 & Services Act, 2007 as amended from time to time (“CMSA”) for the sole purpose of assisting them to decide whether to subscribe for or purchase up to RM380.0 million Islamic securities (“Sukuk ”) under a 20-year Sukuk Mudharabah Programme. This Information Memorandum may not be, in whole or in part, reproduced or used for any other purpose, or shown, given, copied to or filed with any other person including, without limitation, any government or regulatory authority except with the prior consent of Senari Synergy or as required under Malaysian laws, regulations or guidelines. 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 Senari Synergy, AmInvestment Bank or any other person. This Information Memorandum has not been and will not be made to comply with the laws of any 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 in) any foreign jurisdiction and it does not constitute an issue or offer of, or an invitation to subscribe for 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 by Senari Synergy and AmInvestment Bank to seek appropriate professional advice regarding, and to observe, any such restriction or prohibition. Neither Senari Synergy nor AmInvestment Bank accepts any responsibility or liability to any person in relation to the distribution or possession of this Information Memorandum in or from any such jurisdiction.

Information Memorandum Dated 28 June 2011 Senari Synergy Sdn Bhd RM380 million Sukuk Mudharabah Programme

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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) Senari Synergy, AmInvestment Bank 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 for or purchasing the Sukuk, and is able and is prepared to bear the economic and financial risks of investing in or holding the Sukuk; and (g) it is a person falling within any one or more of the categories of persons specified in Section 4(6) of the Companies Act 1965 as amended from time to time. Each recipient is solely responsible for seeking all appropriate expert advice as to the laws of all jurisdictions to which it is subject. This Information Memorandum is not, and should not be construed as, a recommendation by Senari Synergy, AmInvestment Bank or any other party to the recipient to subscribe for 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 Senari Synergy, the Sukuk and all other relevant matters, and each recipient should consult its own professional advisers. 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 Senari Synergy is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Sukuk is correct as of any time subsequent to the date indicated in the document containing the same. AmInvestment Bank expressly does not undertake to review the financial condition or affairs of Senari Synergy during the life of the Sukuk or to advise any investor in the Sukuk of any information coming to their attention. 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 Senari Synergy 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, estimate and or report thereon derived from such and other third party sources. This Information Memorandum includes “forward looking statements”. These statements include, among other things, discussions of each of Senari Synergy’s business strategy and expectation concerning its position in the Malaysian economy, future operations, profitability, liquidity, capital resources and financial position. All these statements are based on estimates and assumptions made by Senari Synergy and third party consultants that, although believed to be reasonable, are subject to risks and uncertainties that may cause actual events and the future results of Senari Synergy to be materially different from that expected or indicated by such statements and estimates and no assurance can be given that any of such statements or estimates will be realised. In light of these and other uncertainties,


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the inclusion of a forward-looking statement in this Information Memorandum should not be regarded as a representation or warranty by Senari Synergy or any other person that the plans and objectives of Senari Synergy will be achieved. All discrepancies (if any) in the tables included in this Information Memorandum between the listed amounts and totals thereof are due to, and certain numbers appearing in this Information Memorandum are shown after, rounding.


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STATEMENTS OF DISCLAIMER – SECURITIES COMMISSION

In accordance with the CMSA as amended from time to time, a copy of this Information Memorandum will be deposited with the Securities Commission, who takes no responsibility for its contents. The approval of the Securities Commission for the Programme was granted on 28 June 2011. The issue, offer or invitation in relation to the Sukuk are also subject to the fulfillment of various other conditions precedent and shall not be binding until all regulatory approvals have been obtained and these conditions have been fulfilled. Each recipient of this Information Memorandum acknowledges and agrees that the approval of the Securities Commission shall not be taken to indicate that the Securities Commission recommends the subscription for or purchase of the Sukuk. The Securities Commission shall not be liable for any non-disclosure on the part of Senari Synergy and assumes no responsibility for the correctness of any statements made or opinions or reports expressed in 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 this confidentiality undertaking or there is reasonable likelihood that this confidentiality undertaking may be contravened, Senari Synergy may, at its discretion, apply for any remedy available to Senari Synergy whether at law or equity, including without limitation, injunctions. Senari Synergy is entitled to fully recover from the contravening party all cost, 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 advisors, directors, employees and any other persons concerned with the Sukuk. 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 AmInvestment Bank promptly upon AmInvestment Bank’s request, unless that recipient provides proof of a written undertaking satisfactory to AmInvestment Bank with respect to destroying these documents as soon as reasonably practicable after the said request from AmInvestment Bank.


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CONTENTS

GLOSSARY ............................................................................................................ viii

Section 1.0 Executive Summary ........................................................................ 1

1.1 Brief Background of The Issuer ................................................................................1

1.2 Brief Summary of the Structure of the Sukuk Mudharabah Programme ............1

1.3 Utilisation of Proceeds ................................................................................................3

1.4 Principal Terms and Conditions ................................................................................4

1.5 Rating by MARC ..........................................................................................................4

1.6 Al-Kafalah Guarantee .................................................................................................4

Section 2.0 Corporate Information .................................................................... 5

2.1 History and Background .............................................................................................5

2.2 Principal Activities .......................................................................................................5

2.3 Summary of Share Capital .........................................................................................5

2.4 Shareholding Structure ...............................................................................................6

2.5 Board of Directors .......................................................................................................7

2.6 Senior Management Team ........................................................................................9

Section 3.0 Business ........................................................................................ 11

3.1 Business Overview....................................................................................................11

3.2 ASIC 1 .........................................................................................................................11

3.3 ASIC 2 .........................................................................................................................16

Section 4.0 Financial Highlights ...................................................................... 19

4.1 Balance Sheet ...........................................................................................................19

4.2 Income Statement .....................................................................................................19

Section 5.0 Danajamin Nasional Berhad ......................................................... 20

5.1 Background Information ...........................................................................................20

5.2 Danajamin’s Financial Guarantee ..........................................................................20

5.3 Al-Kafalah Guarantee by Danajamin .....................................................................21

Section 6.0 Economy and Industry Overview ................................................. 23

6.1 Overview of the Economic and Financial Developments in Malaysia in the First Quarter of 2011 .................................................................................................23

6.2 Monetary Policy Statement ......................................................................................25

6.3 SCORE Project – Tanjung Manis Halal Park .......................................................26

6.4 Tanjung Manis Halal Hub – Potential Growth and Trends .................................27

6.5 Market Assessment – Oil & Gas Production .........................................................27

Section 7.0 Key Investment Considerations ................................................... 30

7.1 General Industry and Business Considerations ...................................................30

7.1.1 Source of Payment ...........................................................................................30

7.1.2 Competition ......................................................................................................30

7.1.3 Demand Risk ....................................................................................................31


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7.1.4 Supply Risk .......................................................................................................31

7.1.5 Dependencies on Directors and Senior Management Personnel ....................31

7.1.6 Adequacy of Insurance Coverage ....................................................................31

7.1.7 Political and Economic Considerations ..........................................................32

7.1.8 Business Continuity Plan .................................................................................32

7.2 Risks Relating to Proposed Financing ...................................................................32

7.2.1 Rating of the Sukuk ..........................................................................................32

7.2.2 Liquidity of the Sukuk.......................................................................................32

7.2.3 Issuer’s Ability to Meet its Obligations Under the Sukuk ................................33

7.2.4 Market Value of the Sukuk may be subject to fluctuations ..............................33

7.2.5 Investment in Sukuk is subject to interest rate risk ..........................................33

7.2.6 Suitability of investments .................................................................................33

7.3 Forward Looking Statements – Disclaimer .............................................................34

Section 8.0 Other Material Information ........................ ................................... 35

8.1 Material Litigation .......................................................................................................35

8.2 Conflict of Interest ......................................................................................................35

8.3 Material Contracts outside the Ordinary Course of Business ..............................36

Appendix I Principal Terms and Conditions for the S ukuk Mudharabah Programme

Appendix II Senari Synergy’s Audited Financial Stat ements for the Financial Period from 29 July 2010 (Date of Incorporation) to 31 December 2010


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GLOSSARY Unless where the context otherwise requires, the following definitions shall apply throughout this Information Memorandum:

Al-Kafalah Facility : Islamic financial guarantee facility in accordance with the Shariah principle of Al-Kafalah to be granted by Danajamin to the Issuer

Al-Kafalah Guarantee : Guarantee issued or to be issued by Danajamin pursuant to the Al-Kafalah Facility

AmBank : AmBank (M) Berhad (Company No. 8515-D)

AmInvestment Bank : AmInvestment Bank Berhad (Company No. 23742-V)

Assar Chemicals : Assar Chemicals Sdn Bhd (Company No. 417498-D)

Assar Chemicals Dua : Assar Chemicals Dua Sdn Bhd (Company No. 778891-V)

Assar Hartanah : Assar Hartanah Sdn Bhd (Company No. 454213-D)

Assar Industri : Assar Industri Sdn Bhd (Company No. 394503-P)

Assar Refinery Services : Assar Refinery Services Sdn Bhd (Company No. 381216-A)

Assar Senari Group : Assar Senari Holdings Sdn Bhd (Company No. 413671-X) and its group of companies

Assar Senari Port : Assar Senari Port Sdn Bhd (Company No. 596146-H)

ASIC 1 : Assar Senari Industrial Complex 1

ASIC 2 : Assar Senari Industrial Complex 2

BAFIA : Banking and Financial Institutions Act 1989

BCP : Business Continuity Plan

Call Date : Periodic Payment Date falling on or after twenty four (24) months from the date of first (1st) issuance of the Sukuk

Call Option : Redemption at the option of the Issuer

CMSA : Capital Markets and Services Act 2007

CODT : Centralised Oil Distribution Terminal

CPI : Consumer Price Index

Danajamin or Guarantor : Danajamin Nasional Berhad (Company No. 854686-K)

DIA : Direct investment abroad


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Dissolution Event : An event which dissolves the Mudharabah Venture

Expected Return : Return expected by the Sukukholders from the Mudharabah Venture

Facility Agent : AmInvestment Bank

FAST : Fully Automated System for Issuing / Tendering maintained by BNM

FDI : Foreign direct investments

FGI : Financial Guarantee Insurer

Financial Adviser : Astramina Advisory Sdn. Bhd. (Company No. 810705-K)

GNI : Gross National Income

Group : Collectively, the Issuer and its subsidiaries

IOT : Independent Oil Terminal

IOTM : IOT Management Sdn Bhd (Company No. 542234-T)

LAKMNS : Lembaga Amanah Kebajikan Masjid Negeri Sarawak

LIPPOR : Light Industrial Parks for Petrochemicals, Oleo-chemicals and Related industries

LPG : Liquefied Petroleum Gas

MARC or Rating Agency : Malaysian Rating Corporation Berhad (Company No. 364803-V)

MPC : Monetary Policy Committee

Mudarib : Issuer or Senari Synergy

Mudharabah Capital : Sukukholders’ capital contribution

Mudharabah Venture : Shariah compliant business of the Group

Muhibbah Engineering : Muhibbah Engineering (M) Berhad (Company No. 12737-K)

Naim Engineering : Naim Engineering Sdn Bhd (Company No. 420203-W)

Obligor : Senari Synergy

OFSE : Oil Field Services

OGC : Oil, Gas and Chemicals

One-off Distribution : Payment of profits based on the income generated from the Mudharabah Venture distributed to the Sukukholders on a one-off basis in respect of Sukuk Mudharabah without


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Periodic Payments

OPR : Overnight Policy Rate

Periodic Distribution(s) : Distributable income generated from the relevant Mudharabah Venture

Periodic Payment(s) : Payment of profits based on the income generated from the Mudharabah Venture

Periodic Payment Date : Distribution of Periodic Payment(s) semi-annually

PDB : PETRONAS Dagangan Berhad (Company No: 88222-D)

PPI : Producer Price Index

Principal Adviser, Lead Arranger and Lead Manager

: AmInvestment Bank

Proposed Refinancing Exercise

: Refinancing of existing group debts and inter-company debts

PSR : Profit-sharing ratio

Rabbulmal or Sukukholders

: Investors

RECODA : Regional Economic Development Authority

Re-Engineering Exercise

: Streamlining and rationalisation of core and non-core assets within the Assar Senari Group

RM :

Ringgit Malaysia

SALCRA : Sarawak Land Consolidation & Rehabilitation Authority

SC : Securities Commission of Malaysia

SCORE : Sarawak Corridor of Renewable Energy

Senari Synergy or Issuer

: Senari Synergy Sdn Bhd (Company No. 909900-K)

STIDC : Sarawak Timber Industry Development Corporation

STSB : Shell Timur Sdn Bhd (Company No. 113304-H)

Sukuk : Islamic securities to be issued under the Sukuk Mudharabah Programme

Sukuk Mudharabah Programme

: Islamic financing exercise vide the issuance of Islamic securities to raise a total of RM380.0 million


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Tanjung Manis OGC Port

: Tanjung Manis OGC Port Sdn Bhd (Company No. 872298-V)

TMHP : Tanjung Manis Halal Park

Trustee : AmanahRaya Trustees Berhad (Company No. 766894-T)

Trust Assets : Trust over the rights and entitlements under the Mudharabah Venture

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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 its appendices. 1.1 Brief Background of The Issuer

The Issuer was incorporated in Malaysia under the Companies Act 1965 on 29 July 2010 as a private limited company limited by shares. The Issuer was a special purpose company incorporated by the shareholders / promoters for Assar Senari Holdings Sdn. Bhd. and its group of companies (“Assar Senari Group ”) to undertake the re-engineering exercise, which among others, involved the streamlining and rationalisation of core and non-core assets within the Assar Senari Group (“Re-Engineering Exercise ”). An integral part of the assets rationalisation exercise involves the refinancing of existing group debts and inter-company debts (“Proposed Refinancing Exercise ”). The Re-Engineering Exercise has been completed in end November 2010 and the Proposed Refinancing Exercise is targeted to be completed in end June/July 2011. The Issuer and its subsidiaries (“Group ”) aim to be a focused oil and gas and palm oil refinery flagship for the State Government of Sarawak. The Group is indirectly owned by the State Government of Sarawak, of which their shareholdings are more particularly set out under Section 2.4 (Shareholding Structure). The subsidiaries of the Issuer are as follows:-

Subsidiaries Issuer’s shareholdings

Assar Chemicals Sdn. Bhd. (Company No. 417498-D) 100%

Assar Senari Port Sdn. Bhd. (Company No. 596146-H) 100%

IOT Management Sdn. Bhd. (Company No. 542234-T) 70%

Assar Chemicals Dua Sdn. Bhd. (Company No. 778891-V) 60%

Tanjung Manis OGC Port Sdn. Bhd. (Company No. 872298-V) 100%

Assar Hartanah Sdn. Bhd. (Company No. 454213-D) 100%

Assar Refinery Services Sdn. Bhd. (Company No. 381216-A) 60%

Assar Refinery Services Dua Sdn. Bhd. (Company No. 756453-U) 100%

1.2 Brief Summary of the Structure of the Sukuk Mudharabah Programme AmInvestment Bank has been appointed by the Issuer to act as the Principal Adviser, Lead Arranger and Lead Manager to arrange on its behalf the Sukuk Mudharabah Programme.


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The Sukuk Mudharabah Programme shall have a tenor of twenty (20) years from the date of the first issuance. During the tenor of the Sukuk Mudharabah Programme, the Issuer may issue Sukuk with a tenor of more than one (1) year and up to twenty (20) years, provided that the Sukuk matures prior to the expiry of the Sukuk Mudharabah Programme. The Sukuk Mudharabah Programme is based on the Shariah principles of Mudharabah. Under the Mudharabah transaction, the Issuer (as “Mudarib ”) shall enter into a Mudharabah contract with the Trustee, acting on behalf of the investors (as “Rabbulmal ” or “Sukukholders ”). Pursuant to the Mudharabah contract, the Sukukholders shall from time to time participate in the Shariah compliant businesses of the Group (“Mudharabah Venture ”). The business activities of the Group involve the provisioning of centralised storage and distribution facilities to the oil and gas industry, the palm oil refinery business and property development. The Sukukholders shall participate in the Mudharabah Venture by subscribing to the Sukuk, to be issued in series pursuant to the Sukuk Mudharabah Programme. Each issuance represents a Mudharabah Venture on its own. Proceeds from the Sukuk represent 100% of the Sukukholders’ capital contribution (“Mudharabah Capital ”) in the said Mudharabah Venture. The Issuer, on the other hand, as the Mudarib shall have the absolute entrepreneurial authority to manage the Mudharabah Venture and administer the collection of income from the Mudharabah Venture. The Issuer shall make a declaration of trust over the rights and entitlements under the Mudharabah Venture (“Trust Assets ”) for the benefit of the Sukukholders and itself. The Sukuk hence represent each of the Sukukholders’ undivided proportionate beneficial interests in the Mudharabah Venture. Profits generated from the Mudharabah Venture will be shared between the Rabbulmal and the Mudarib according to the pre-agreed profit-sharing ratio (“PSR”) of 99:1 while losses will be borne solely by the Rabbulmal. In respect of Sukuk with Periodic Distributions, the payment of profits shall be based on the income generated from the Mudharabah Venture (“Periodic Payment(s) ”) which shall be distributed semi-annually (“Periodic Payment Date ”) to the Sukukholders. In respect of Sukuk without Periodic Payments, the payment of profits shall be based on the income generated from the Mudharabah Venture which shall be distributed to the Sukukholders on a one-off basis (“One-off Distribution ”) on the respective maturity dates of such Sukuk. For the avoidance of doubt, whenever a Periodic Payment is paid out on a particular scheduled Periodic Payment Date, such payment shall comprise distributable income generated from the relevant Mudharabah Venture (“Periodic Distribution ”) and Advance Profit Payment (as defined below), if any. The Rabbulmal’s share of profits shall be the return expected (“Expected Return ”) by the Sukukholders from the Mudharabah Venture which shall be the yield of the Sukuk up to the respective maturity dates, upon the date of declaration of a Dissolution Event or upon the exercise of the Call Option on the Call Date which dissolves the Mudharabah Venture (the maturity dates, the date of declaration of a


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Dissolution Event or the Call Date shall hereinafter be referred to as “Dissolution Date”). Under each Mudharabah Venture, the Sukukholders have agreed upfront that they shall receive profits up to the Expected Return. If, on any Periodic Payment Date, the income generated from the relevant Mudharabah Venture is insufficient and the amounts in the finance service account (which is created pursuant to the Al-Kafalah Facility) are utilized to meet the expected Periodic Payment(s) on any Periodic Payment Date in full, such amounts shall be deemed to be advance profit payments by the Issuer during the tenor of the Sukuk (“Advance Profit Payment ”). For the avoidance of doubt, the Advance Profit Payment is sourced from funds other than the Mudharabah Venture and such Advance Profit Payment made by the Issuer shall be off-set against the Exercise Price (as defined in Appendix I - Principal Terms and Conditions). Any amounts in excess of the Expected Return shall be given to the Mudarib as an incentive fee for successfully managing the Mudharabah Venture. Upon the exercise of the Purchase Undertaking (as defined in Appendix I – Principal Terms and Conditions) and the payment of the Exercise Price, the relevant Mudharabah Venture and declaration of trust shall be dissolved and the Sukuk shall be cancelled. Pursuant to the Al-Kafalah Facility, all payment obligations of the Obligor (except payment obligation on compensation (Ta’widh)) under the Purchase Undertaking are guaranteed by Danajamin. For the avoidance of doubt, the Al-Kafalah Facility is a separate arrangement from the Sukuk Mudharabah Programme and entered into separately between the Issuer and Danajamin.

1.3 Utilisation of Proceeds

The proceeds from the Sukuk Mudharabah Programme shall be utilised as follows:-

Purpose RM’million

i) To redeem the bridging loan and part finance Shariah-

compliant capital expenditure in relation to the CODT; Oil, gas and chemical jetty; Bitumen plant, LIPPOR.

Up to RM194.0

ii) To redeem outstanding securities issued by Assar

Chemicals, a wholly-owned subsidiary of the Issuer; and the existing financing facilities of the Group*.

Up to RM139.0

iii) To pre-fund finance service account under the Al-Kafalah Facility up to the required balance.

Up to RM20.0

iv) To finance Shariah-compliant future capex investments of the Group**.

Up to RM27.0

RM380.0


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The aforementioned purposes are for the initial issuance under the Sukuk Mudharabah Programme and subsequent issuances shall be utilised to finance and/or to refinance the Shariah-compliant capital expenditure of the Group in relation to the developmental activities of the Group and for the purposes of refinancing maturing Sukuk issued under the Sukuk Mudharabah Programme. Note * Settlement of the existing term loan by Assar Senari Port Sdn. Bhd. and Assar

Hartanah Sdn. Bhd., the wholly-owned subsidiaries of the Issuer. ** Subject to meeting terms and conditions as mutually agreed for disbursement.

1.4 Principal Terms and Conditions The Principal Terms and Conditions for the Sukuk Mudharabah Programme are appended as Appendix I.

1.5 Rating by MARC The Sukuk Mudharabah Programme, guaranteed by Danajamin, is accorded a long-term rating of AAAIS(fg) by the Malaysian Rating Corporation Berhad (“MARC”).

1.6 Al-Kafalah Guarantee Pursuant to the facility agreement governing the terms of the Al-Kafalah Facility entered into between the Issuer and Danajamin (“Al-Kafalah Facility Agreement ”), Danajamin shall issue an irrevocable and unconditional Al-Kafalah Guarantee in respect of each series of the Sukuk in favour of the Trustee to guarantee all payment obligations of the Issuer (except payment obligation on compensation (Ta’widh)) under each of the Purchase Undertakings relating to and corresponding with the Sukuk belonging to the same series. Each Al-Kafalah Guarantee shall only allow one (1) demand to be made against Danajamin. For the avoidance of doubt the Al-Kafalah Facility is a separate arrangement from the Sukuk Mudharabah Programme and entered into separately between the Issuer and Danajamin.



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Section 2.0 Corporate Information 2.1 History and Background

The Issuer was incorporated in Malaysia on 29 July 2010 as a private limited company under the Companies Act 1965. The Issuer was a special purpose company incorporated by the shareholders / promoters for Assar Senari Group to undertake the Re-Engineering Exercise. An integral part of the assets rationalisation exercise involves the Proposed Refinancing Exercise. The Re-Engineering Exercise has been completed in end November 2010 and the Proposed Refinancing Exercise is targeted to be completed in end June/July 2011. The Group aims to be a focused oil and gas and palm oil refinery flagship for the State Government of Sarawak.

2.2 Principal Activities The business activity of the Issuer is investment holding. Its subsidiaries are involved in the provisioning of centralised storage and distribution facilities to the oil and gas industry, the palm oil refinery business and property development.

Name of companies % owned by the Issuer

Business Activity

Assar Chemicals Sdn. Bhd. 100% Construction of the IOT

Assar Chemicals Dua Sdn. Bhd. 60% Construct, operate and manage the

CODT

IOT Management Sdn. Bhd. 70% Operating and managing the IOT

Assar Senari Port Sdn. Bhd. 100%

Construction of the port facilities and operation of the port Tanjung Manis OGC Port

Sdn. Bhd. 100%

Assar Hartanah Sdn. Bhd. 100% Developing LIPPOR

Assar Refinery Services Sdn. Bhd. 60%

Operate the integrated palm oil refinery complex Assar Refinery Services

Dua Sdn. Bhd. 100%

2.3 Summary of Share Capital The authorised, issued and paid-up capital of the Issuer as at 1 June 2011 is as follows:-


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No. of Shares Par Value (RM) Total (RM)

Authorised share capital

Ordinary Shares 500,000,000 1.00 500,000,000

Issued and fully paid-up

Ordinary Shares 64,388,821 1.00 64,388,821

2.4 Shareholding Structure

As at 1 June 2011, the shareholders of the Issuer are as follows:- Name of Shareholder No. of RM1.00 ordinary

shares directly held % of shareholdings in

the Issuer

LAKMNS 22,421,801 34.82%

Assar Industri 21,542,515 33.46%

Yayasan Sarawak 11,572,929 17.97%

STIDC 8,851,576 13.75%

The profiles of the shareholders of the Issuer are as follows:- (i) LAKMNS

LAKMNS is a Welfare Trustee Board established under the Ordinance, The Charitable Trust (Sarawak) Cap. 102 since 1965 and until now under the Laws of Sarawak Chapter 7 of Charitable Trust Ordinance 1994. (Source: Official website of LAKMNS, http://masja-sa.org.my)

(ii) Assar Industri Assar Industri is a wholly-owned subsidiary of Permodalan Assar Sdn Bhd. It is an investment holding company with an associate company involved in transportation services.

(iii) Yayasan Sarawak Yayasan Sarawak was established under the Sarawak Foundation Ordinance as a statutory body on 27 May 1971. It is a government agency vital to the efforts of developing education in Sarawak. In particular, it provides education programmes and government sponsored schemes for local students. (Source: Official website of Yayasan Sarawak, http://yayasansarawak.org.my)

(iv) STIDC STIDC was established in June 1973 under the Perbadanan Perusahaan Kemajuan Kayu Sarawak Ordinance 1973. Its incorporation was initiated following the recommendation of the Food and Agriculture Organization of the United Nations, which conducted a comprehensive forest inventory in the


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state from 1968 to 1972. The function would be to stimulate by all possible means the planned expansion of wood-based industries throughout Sarawak at a role consistent with the overall interest of the economy, the availability of capital and the technical expertise and effective management of the forest resources. (Source: Official website of STIDC, http://www.sarawaktimber.org.my)

2.5 Board of Directors As at 1 June 2011, the Directors of the Issuer are as follows:-

Name Designation

Dato Sri Ahmad Tarmizi Bin Haji Sulaiman Chairman

Tan Sri Datuk Amar Hj Bujang Bin Mohammed Bujang Mohammed Nor

Director

Datu Haji Sarudu Bin Haji Hoklai Director

Datu Haji Misnu Bin Haji Taha Director

Mohamad Abu Bakar Bin Marzuki Director

Haji Hashim Bin Bojet (Alternate Director to Datu Haji Sarudu Bin Haji Hoklai)

Alternate Director

The profiles of the Directors of the Issuer are as follows:-

YBhg Dato Sri Ahmad Tarmizi Bin Haji Sulaiman

YBhg Dato Sri Ahmad Tarmizi Bin Haji Sulaiman , aged 49, is the State Financial Secretary of Sarawak. Prior to his appointment he was the Deputy State Financial Secretary of Sarawak since October 2002. He has a Degree in Business Administration from Syracuse University, New York, USA and a Master in Business Administration from the University of Wisconsin, USA. He has extensive experience in the areas of investment and fund management as well as corporate finance. He was a Fund Manager at Arab Malaysian Merchant Bank Berhad and following that American International Assurance. He also sits on the Board of various companies and statutory bodies. YBhg Tan Sri Datuk Amar Hj Bujang Bin Mohammed Bujang Mohammed Nor

YBhg Tan Sri Datuk Amar Hj Bujang Bin Mohammed Buja ng Mohammed Nor , aged 76, is the Chairman of Permodalan ASSAR Sdn Bhd and the corporate representative of Lembaga Amanah Kebajikan Masjid Negeri Sarawak. He is also the chairman, director and member of several companies and corporations. Amongst these, he is a Board Member of Bank Negara Malaysia and a Board Director of Permodalan Nasional Berhad. He has an Honours Degree in Art from University of Malaya, Singapore. He has served in various senior positions in the Sarawak Civil Service and was a former State Secretary of Sarawak from 1984 to 1992.


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Datu Haji Sarudu Bin Haji Hoklai Datu Haji Sarudu Bin Haji Hoklai , aged 56, is the General Manager for Sarawak Timber Industry Development Corporation. He graduated from Ohio University, USA with Corporate Master of Business Administration after obtaining Bachelor of Arts from Universiti Kebangsaan Malaysia in year 1979. He served under various capacities statewide since he first joined the civil service in 1980. Among the key posts held by him were the Director of Human Resource Management in the Chief Minister’s Department, Permanent Secretary of the Ministry of Tourism and Urban Development, Resident of Mukah and Kota Samarahan Divisions, and District Officer of Mukah, Bintulu and Belaga. In recognition of his outstanding contributions he was conferred with several awards such as Darjah Jasa Bakti Sarawak (DJBS) which carries the title “Datu”, Kesatria Mangku Negara (KMN), Johan Bintang Kenyalang (JBK), Pingat Pegawai Bintang Kenyalang (PBK), and Pingat Perkhidmatan Bakti (Perak). Datu Haji Misnu Bin Haji Taha

Datu Haji Misnu Bin Haji Taha , aged 51, is the Director of Human Resource Management in the Chief Minister’s Department since Jan 2010. He graduated from Universiti Kebangsaan Malaysia with Bachelor of Arts in 1984. He served under various capacities statewide since he first joined the civil service in 1986 which among others include Director of Administration, Assistant Private Secretary to the Chief Minister of Sarawak, District Officer of Meradong and Sibu.

Mohamad Abu Bakar Bin Marzuki

Mohamad Abu Bakar Bin Marzuki , aged 47 is the Director of Yayasan Sarawak, Secretary of the Board of Trustees Yayasan Sarawak and the Treasurer for Bakun Charitable Trust Fund. He also serves as the director of several companies such as Permodalan Assar Sdn Bhd, Hornbill Skyways Sdn Bhd, Pelita YS Property Sdn Bhd etc. He joined Yayasan Sarawak since year 1999 as the Assistant Director of Yayasan Sarawak who was responsible for the lower education division after he graduated from Universiti Putra Malaysia with Master of Science in Human Resource Development. Haji Hashim Bin Bojet

Haji Hashim Bin Bojet , aged 50, is the Deputy General Manager of Sarawak Timber Industry Development Corporation, a Director of Tanjung Manis Integrated Port Sdn Bhd and also the Executive Director of Tanjung Manis Development Sdn Bhd. He obtained his Bachelor of Business Administration in 1986 from Universiti Kebangsaan Malaysia, Bangi, Selangor and later pursued his Master in Corporate Business Administration in 2001 from Ohio University, USA. He is also an Alternate Director of Kuching Hotels Sdn Bhd and Alternate Exco member in Pometia Sdn Bhd and Swinburne University of Technology. He is also actively involved in Persatuan Alumni UKM Sarawak as the secretary besides holding the management post for Pusat Pembangunan Kemahiran Sarawak.


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2.6 Senior Management Team As at 1 June 2011, the senior management team of the Issuer and their respective profiles are as follows: (i) Encik Mohammad Aris Yusop

Encik Mohammad Aris Yusop, aged 43, is the Chief Executive Office of the Group. He had fifteen (15) years’ of cumulative experience in the oil and gas related industry. He is responsible for managing and overseeing the overall operations of the Group, particularly the overall development and implementation of projects undertaken by the Group apart from being accountable on the performance of those that are already in full operations. Prior to joining the Group, he started his career with Malaysia Liquefied Natural Gas Sdn Bhd (“MLNG”), a subsidiary of PETRONAS, from 1992 until 2001. During his working period in MLNG, Aris has been involved with the Maintenance, Operations and Turnaround Planning Department. He later pursued his carrier as a consultant with Det Norske Veritas (“DNV”) Sdn Bhd specifically doing consultancy in the petrochemicals, oil and gas industry. He continued his career with Assar Senari Group as the Engineering and Operations Manager which he was responsible in managing the development of the prime projects for the Group included but not limited to the ASIC I located at Senari, Kuching. Apart from shouldering the above responsibility, in year 2006, he was assigned an additional task by becoming the General Manager for the IOT Management Sdn. Bhd. (“IOTM”). In year 2008, he has been summoned to contribute his expertise with Kuching Water Board until year 2010.

(ii) Encik Muhammad Hakim See Encik Muhammad Hakim See, aged 48 is the appointed Chief Executive Officer of Assar Refinery Services Sdn Bhd, a subsidiary of the Issuer. He graduated from Henley Management College with a Master in Business Administration after obtained his bachelor of degree from Universiti Kebangsaan Malaysia. He joined Cargill’s group of companies since 1990 and gain extensive experiences in trading and managing palm oil refineries, marketing of palm oil packed products such as cooking oils, shortening and margarine.

(iii) Encik Mohamad Nor Topek Bin Julaihi Encik Mohamad Nor Topek Bin Julaihi joined the Group on 1 September 2010. He holds a Bachelor’s Degree (Honours) in Accountancy from Universiti Utara Malaysia. He was admitted as a member of the Malaysian Institute of Accountants in 2001. He began his career in 1999 when he joined Arthur Andersen & Co. Kuching as an Audit Assistant. During his tenure in Arthur Andersen, he acquired extensive experience in performing statutory audit work for investment holding, financial services, manufacturing, port operation etc. He subsequently joined Amanah Saham Sarawak Berhad and primarily involved in financial accounting, corporate finance, compliance and company secretarial. He then joined SGOS Capital Holdings Sdn Bhd (a wholly owned subsidiary of Sarawak State Financial Secretary) in 2006 and later seconded to Corporate Services & Investment Division, Sarawak State Financial Secretary’s Office from 2008 to 2010.


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(iv) Puan Rojini Binti Bawi

Puan Rojini Bin Bawi, 39 years old, holds a Bachelor of Law from the International Islamic University and is also a licensed Company Secretary. She is currently holding a position as a Senior Executive, Company Secretary for the Group since the establishment of the Group. She has extensive experiences as the legal counsel as well as the secretariat. Prior to joining the Group and Assar Senari Group, she was a Senior Legal Officer with Eastbourne Corporation Berhad for eight (8) years.

(v) Encik Mohamad Jeffery Bin Hussaini Encik Mohamad Jeffery Bin Hussaini, 43 years old, joined Assar Senari Port Sdn. Bhd. (“Assar Senari Port ”) as an Executive, Marine & Jetty Operations since 2006. Currently, he is the Acting Senior Executive, Marine & Jetty Operations in Assar Senari Port. He is responsible in managing the daily operations of Assar Senari Port in monitoring and scheduling the berthing of the vessels utilising the port located at Senari, Kuching. He started his career in logistic industry as an Operations Supervisor with Oricon Shell Service Station for two (2) years and thereafter continued his career path as a Warehouse / Logistic Supervisor with Hexzachem Sarawak Sdn Bhd.

(vi) Encik Azrie Bin Mohamad Awal Encik Azrie Bin Mohamad Awal, 29 years old, holds a Bachelor of Science in Mechanical Engineering from Multimedia University, Cyberjaya, Kuala Lumpur. He has been employed by Shell Malaysia since 2005. During his employment with Shell, he has been exposed in various fields and roles before being seconded to IOTM as its Terminal Manager in February 2011. As a Terminal Manager, Encik Azrie is responsible to ensure the daily operations of the terminal as well as the safely and compliance to the relevant statutory operating requirement.



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Section 3.0 Business 3.1 Business Overview

The Group is focusing in oil and gas sectors and refinery of palm oil related products. The current projects of the Group are ASIC 1 and ASIC 2.

3.2 ASIC 1 Through strategic partnerships with PDB, STSB and Cargill Holdings (Malaysia) Sdn Bhd, the Group has successfully developed the ASIC 1 in Senari, Kuching, Sarawak. On 4 December 2006, ASIC 1 was officially declared open in a grand ceremony attended by guest-of-honour, YAB Pehin Sri Haji Abdul Taib Mahmud, the Chief Minister of Sarawak. The ASIC 1 is sited on a 174-acre land adjacent to the Senari Deepsea Port, which has deepwater draft capable of accommodating large tanker vessels. It comprises an IOT, port facilities, palm oil refinery and a LIPPOR. This fast track integrated project took nearly three and a half years to complete. It is in line with the State’s Industrial development master plan and in tandem with the government’s vision for the development and promotion of value added industries in oil and gas and palm oil sectors in Sarawak. The project companies involved in ASIC 1 are Assar Chemicals, IOTM, Assar Senari Port, Assar Hartanah and Assar Refinery Services.


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(i) Assar Chemicals – Senari IOT Assets Owner Background Assar Chemicals was incorporated in 1997 to undertake the construction of the IOT in Senari, Kuching, Sarawak. As at 1 June 2011, the authorized share capital of Assar Chemicals was RM50,000,000 consisting of 50,000,000 ordinary shares. Its issued and paid-up share capital was RM37,500,000 represented by 37,500,000 ordinary shares of RM1.00 each. Details on the IOT facility The IOT facility provides a centralised or common-user facility for storage and distribution of bulk petroleum and its related products to users within Kuching area and southern Sarawak. In 2002, Assar Chemicals had signed a 30-year User Agreement with PDB and STSB for the utilisation of the IOT. Construction of the IOT (including the jetty) was completed and handed over to IOTM, the operator of the IOT, on December 28, 2006. Subsequently, operation began on 1 January 2007 and it reached full commercial operations on 1 April 2007. This centralised facility or "common-user" facility comprises, amongst others, a bulk oil terminal and a liquefied petroleum gas (“LPG”) terminal. The IOT is designed to handle a throughput of up to 1,100,000 kilolitres of petroleum and related products annually. For bulk petroleum products, the facilities include receiving, storing and distributing bulk petroleum products. Meanwhile, the LPG facilities include facilities for receipt, storage, bottling and reconditioning of valves and cylinders and refilling of bottled and bulk LPG. The bulk terminal consists of seven dedicated fuel storage tanks to receive petroleum products from vessels harbouring at the Oil, Gas and Chemicals (“OGC”) jetty. The LPG terminal has two dedicated storage tanks to store LPG transferred from LPG vessels. The OGC jetty consists of two berths which are able to handle vessels of up to 20,000 deadweight tonnage. Marine hoses at Berth 1 are dedicated for unloading diesel, unleaded gasoline and Dual Purpose Kerosene (“DPK”) products, whilst Berth 2 is solely dedicated for LPG products. IOT is the first automated terminal facility in Sarawak. The present configurations of its tank farm are as follows:- (a) 2x DPK tanks with capacity volume 9,114 m3 (b) 2x Diesel tanks with capacity volume 30,643 m3 (c) 1x ULG 92 tanks with capacity volume 4,630 m3 (d) 2x ULG 97 tanks with capacity volume 14,369 m3 (e) 2x LPG spherical tanks with volume capacity 4,558 m3


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(ii) IOTM – Senari IOT Operator Background IOTM was incorporated on 19 March 2001 under the name of Elyo (Sarawak) Sdn Bhd. Subsequently on 21 August 2002, Elyo (Sarawak) Sdn Bhd changed its name to IOT Management Sdn Bhd. As at 1 June 2011, the authorized share capital of IOTM was RM1,000,000 consisting of 1,000,000 ordinary shares and its issued and paid-up share capital was RM1,000,000 represented by 1,000,000 ordinary shares of RM1.00 each. Details on the IOT Operator The principal activity of IOTM is to manage Bulk Terminal and LPG Terminal which is wholly-owned by Assar Chemicals. The terminal is located at ASIC 1 in an area of approximately 11 hectares located at Senari, Kuching, Sarawak. On 29 January 2004, IOTM entered into an agreement with PDB, STSB and Assar Chemicals to provide operating service in respect of IOT in Senari, Kuching, Sarawak. At present, PDB and STSB are the main customers utilising the IOT services from IOTM. IOTM is responsible to fully manage the IOT to handle storage and distribution. For bulk petroleum products, the facilities include receiving, storing and distribution of bulk petroleum and its related products within the southern region of Sarawak. For LPG, the facilities include facilities for receipt, storage, bottling and reconditioning of valves and cylinders and refilling of bottled and bulk LPG. The oil terminal is designed to handle a throughput of up to 1,100,000 kilolitres of petroleum and related products annually.

(iii) Assar Senari Port Background Assar Senari Port was incorporated on 17 October 2002 under the name of Assar Chemicals Jetty Sdn Bhd. On November 2006, Assar Chemicals Jetty Sdn Bhd has changed its name to Assar Senari Port Sdn Bhd. As at 1 June 2011, the authorized share capital of Assar Senari Port was RM1,000,000 consisting of 1,000,000 ordinary shares and its issued and paid-up share capital was RM300,000 represented by 300,000 ordinary shares of RM1.00 each. Details on the Assar Senari OGC Port (“Port ”) The principal activity of the company is to operate and manage the Port. The Port is located within the ASIC 1 and adjacent to the IOT and the palm oil refinery complex. It provides berthing facilities to the relevant users especially


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for the IOT, palm oil refinery and future upcoming projects within the nearby LIPPOR. The Port has 2 berths with a draft of approximately 10-11 metres deep capable of berthing two vessels simultaneously. Berth 1 can accommodate vessels of 20,000DWT while Berth 2 up to 8,000DWT vessels. Located approximately 11 kilometres northeast of Kuching City Centre, the Port is well served by an excellent network and other infrastructures to facilitate transport and services. The Port handled oil, gas and chemicals related products namely MOGAS (ULG92 and ULG97), Automotive Diesel Oil (“ADO”), DPK (Jet A1 and Kerosene) and LPG for southern Sarawak. The Port also handles Oleo Chemicals products such as Crude Palm Oil (“CPO”), Crude Palm Oil Kernel (“CPKO”), Refined Bleached Deodorized Palm Oil (“RBDPO”), Palm Fatty Acid Distillate (“PFAD”), Refined Bleached Deodorized Palm Olein (“RBDPL ”) and Refined Bleached Deodorized Palm Stearin (“RBDPS”). Provisions are also made to handle future expansions should the need arises. The location of the Port:-

(iv) Assar Hartanah Background Assar Hartanah was incorporated on 1 December 1997 under the Companies Act 1965 as a private limited company under the name of Assar Samarahan Hartanah Sdn Bhd and subsequently changed its name to Assar Hartanah Sdn Bhd on 6 May 2002. Assar Hartanah is the main property arm established to focus primarily on property development, property management and establishment of land banks for the Group's future projects.


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As at 1 June 2011, the authorized share capital of Assar Hartanah was RM100,000 consisting of 100,000 ordinary shares and its issued and paid-up share capital was RM100,000 represented by 100,000 ordinary shares of RM1.00 each. Details on LIPPOR Assar Hartanah is responsible to create, develop and manage the LIPPOR project and to capitalize on the vast downstream potentials generated from the IOT and palm oil refinery complexes. The LIPPOR project is located at Senari, Kuching, Sarawak in the Free Industrial Zone park with 130 acres land adjacent to Senari Deep Water Port. The purpose of LIPPOR Project is to provide facilities and services at its integrated industrial and commercial hubs, and to develop and operate related businesses domestically and internationally. LIPPOR is subdivided into petrochemicals and oleo-chemicals downstream industries with flexible industrial plots ranging from approximately 2 to 7 acres. The potential buyer can choose either to purchase or lease the lots up to 30 years with additional option to renew for another 30 years. The LIPPOR area is equipped with power supply, water supply, telecommunications, drainage and road for the LIPPOR’s users.

(v) Assar Refinery Services Assar Refinery Services was incorporated in Malaysia on 25 March 1996 as a private limited liability company under the name of PASB Refinery Services Sdn Bhd. It changed its name to Assar Refinery Services Sdn Bhd on 26 December 1996 and since then assumed its present name. Assar Refinery Services was a joint venture with Cargill Holdings (Malaysia) Sdn Bhd and Sarawak Land Consolidation & Rehabilitation Authority (“SALCRA ”) to operate an integrated palm oil refinery complex. SALCRA is the source of feedstock for the refinery and kernel crushing plant and Cargill International Trading Pte Ltd, a related company of Cargill Holdings (Malaysia) Sdn Bhd is the principal offtaker for the processed palm oil produced by the refinery and kernel crushing plant.



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3.3 ASIC 2 ASIC 2 is sited on a 135-acres land located at Tanjung Manis, Mukah, Sarawak. It comprises a planned palm oil refinery complex, CODT and OGC port. Pursuant thereof, the following subsidiaries were established to undertake the construction and operation of the ASIC 2:- • Assar Chemicals Dua

- To undertake the construction and the management of the CODT.

• Tanjung Manis OGC Port - To undertake the construction and the management of the integrated port.

• Assar Refinery Services Dua Sdn. Bhd. - Intended to undertake the construction and management of the integrated

palm oil refinery complex. (i) Assar Chemicals Dua

Background Assar Chemicals Dua is a private limited company incorporated on 28 June 2007. It was a joint venture with PDB and Shell. As at 1 June 2011, the authorized share capital of Assar Chemicals Dua was RM10,000,000 consisting of 10,000,000 ordinary shares and its issued and paid-up share capital was RM7,000,000 represented by 1,400,000 ordinary shares of RM1.00 each and 5,600,000 redeemable preferences shares of RM1.00 each. Assar Chemicals Dua is the owner and operator of the CODT located at ASIC 2, Tanjung Manis, Mukah, Sarawak. The intended principal activities of the company are the management, operation and maintenance of the CODT and any associated facilities in relation to the ASIC 2. Details on CODT The CODT is one of the projects being developed within the proposed integrated development of ASIC 2 in Tanjung Manis, Mukah, Sarawak, just beside Batang Rajang. In tandem with Sarawak’s development plan, Tanjung Manis was identified as one of the new sources of economic growth in the central region of Sarawak under Sarawak Corridor of Renewable Energy (“SCORE”). The CODT project involves the construction and/or development of the CODT which comprises, amongst others, a bulk terminal that accommodates six (6) dedicated fuel storage tanks. The CODT functions to receive petroleum products from vessels vide neighbouring jetty into storage tanks for distribution within the central region of Sarawak. The auxiliary facilities are electrical sub-station, standby generator, fire-fighting facilities including water tanks and hydrant, infrastructures, emergency system and maintenance workshop. The facilities and assets


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associated with the CODT include the general office, control room (for bulk petroleum products), tanker loading bays, dispatch office, security office, working buildings, truck parking bays, buffer zones, access roads and all associated infrastructure. The six (6) fuel storage tanks, which will have a total capacity to store of approximately 40 million litres of petroleum products, are meant to handle the following petroleum products:- (a) Unleaded Motor Gasoline (MOGAS); (b) ADO; and (c) DPK/ Jet A1. The bulk petroleum products will be transported via oil tankers (vessels) and will be transferred by pipelines from the OGC Jetty, to the respective storage tanks. From the storage tanks, product pumps will transfer the products to tank trucks loading racks which comprise bays and equipment for loading into tanker trucks (vehicles). At the tank truck loading racks, respective oil companies such as PDB and STSB will add their own special additives to the raw petroleum products, which will then be delivered to their respective retail stations in the central region of Sarawak for commercial use and industrial use and also to nearby airports such as the Sibu Airport via the proposed link road from Tanjung Manis to Sibu, Sarawak. The CODT will be operated on the basis of a common-user facility concept which is similar to other oil terminals such as the IOT situated in Senari, Kuching. CODT Users PDB and STSB will be the users of the CODT. Pursuant to the Users Agreement, PDB and STSB shall use the CODT for storage of their respective petroleum products for a period of 30 years commencing from the commercial operation date. In return, Assar Chemicals Dua, as owner and operator, will derive revenues from PDB and STSB in the form of CODT Tariff and Operating Fees.

(ii) Tanjung Manis OGC Port Background Tanjung Manis OGC is a private limited company incorporated on 15 September 2009. As at 1 June 2011, the authorized share capital of Tanjung Manis OGC was RM100,000 consisting of 100,000 ordinary shares and its issued and paid-up share capital was RM100,000 represented by 100,000 ordinary shares of RM1.00 each.


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(iii) Assar Refinery Services Dua Sdn Bhd (“Assar R efinery Services Dua”) Assar Refinery Services Dua is a private limited company incorporated on 14 December 2006. As at 1 June 2011, the authorized share capital of Assar Refinery Services Dua was RM100,000 consisting of 100,000 ordinary shares and its issued and paid-up share capital was RM2 represented by 2 ordinary shares of RM1.00 each. The intended principal activities of the company are trading and manufacturing of palm oil products at the planned refinery plant located at ASIC 2, Tanjung Manis, Mukah, Sarawak. The company has not commenced operation as at to-date.



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Section 4.0 Financial Highlights The following is an extract from the Issuer’s consolidated audited financial statements for the financial period from 29 July 2010 (Date of Incorporation) to 31 December 2010. 4.1 Balance Sheet

Assets RM Non Current Assets 484,601,078 Current Assets 218,301,121 Total Assets 702,902,199 Equity and Liabilities Share Capital 62,126,001 Reserves 62,126,001 Profit/(Loss) for the period 27,419,063 Total equity attributable to owners of the company 151,671,065 Minority Interests 12,220,547 Total Equity 163,891,612 Non Current Liabilities 159,026,674 Current Liabilities 379,983,913 Total Liabilities 539,010,587 Total Equity and Liabilities 702,902,199

4.2 Income Statement RM Revenue 334,565,966 Gross Profit 9,551,296 Profit/(Loss) before taxation 30,765,386 Profit/(Loss) after taxation 27,419,063

Please refer to Appendix II for more details on the Issuer’s audited financial statements for the financial period from 29 July 2010 (Date of Incorporation) to 31 December 2010.



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Section 5.0 Danajamin Nasional Berhad 5.1 Background Information

Danajamin is Malaysia’s first Financial Guarantee Insurer (“FGI”), established in May 2009, to be a catalyst to stimulate and further develop the Malaysian bond/sukuk market. Danajamin provides financial guarantee insurance, a credit enhancement for bonds/sukuk issuances, to facilitate non-AAA rated companies to access the Private Debt Securities (“PDS”) market. Danajamin’s key objectives are: • to provide financial guarantee to enable financially viable companies to access

the PDS market to obtain financing;

• to catalyse the further development of the domestic private debt securities market as an alternative source of financing to complement the banking industry; and

• to stimulate economic growth by improving access to capital for companies that are investing in the country.

Danajamin aims to:

• facilitate a wider range of companies to raise capital via the bond/sukuk market

• encourage smaller/non-traditional issuers to raise capital via the bond/sukuk

market

• provide availability of long-term capital for a wider range of companies Jointly owned by the Ministry of Finance Incorporated (50%) and Credit Guarantee Corporation Malaysia Berhad (50%), Danajamin is rated AAA by both RAM Rating Services Bhd and MARC. Danajamin has an issued and paid-up capital of RM1.0 billion and another RM1.0 billion callable capital. Danajamin’s underwriting capacity is up to RM15.0 billion, at 7.5 times gearing. Danajamin is licensed under the Insurance Act 1996 and is regulated and supervised by Bank Negara Malaysia. (Source: Official website of Danajamin, http://www.danajamin.com as at 1 June 2011)

5.2 Danajamin’s Financial Guarantee

Danajamin provides financial guarantee, a form of credit enhancement, to bonds/sukuk. With Danajamin’s guarantee, the bonds/sukuk will be automatically upgraded to AAA(fg), the highest rating accorded to bonds/sukuk. With the improved rating, issuers will be more assured of a successful bonds/sukuk issuance. Investors, on the other hand, will have an opportunity to invest in AAA-rated papers that are guaranteed by Danajamin.


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(Source: Official website of Danajamin, http://www.danajamin.com as at 1 June 2011)

5.3 Al-Kafalah Guarantee by Danajamin Each series/tranche of the Sukuk will be guaranteed by an individual and distinct Al-Kafalah Guarantee but otherwise on identical terms (apart from the quantum). Each Al-Kafalah Guarantee guarantees all payment obligations of the Issuer under each Purchase Undertaking under the Sukuk Mudharabah Programme (other than ta’widh and other charges in respect of the Sukuk). It will be a term under each Al-Kafalah Guarantee that Danajamin has the right at its sole and absolute discretion to accelerate Danajamin’s payment under the Al-Kafalah Guarantee upon a declaration by Danajamin of an event of default under the guarantee facility agreement made between Danajamin and the Issuer, by issuing a notice to the Trustee requesting the Trustee to make a claim under the Al-Kafalah Guarantee. The Trustee shall, within five (5) business days from the date the Trustee receives the said accelerated payment notice from Danajamin, make a claim to Danajamin under the relevant Al-Kafalah Guarantee. Failure by the Trustee to make a claim to Danajamin within the said time period would discharge the liabilities and obligations of Danajamin under the relevant Al-Kafalah Guarantee without any further notice to or consent of the Trustee. Accordingly, it will be a term under the trust deed for the Sukuk Mudharabah Programme (“Trust Deed ”) that when Danajamin serves such accelerated payment notice to the Trustee, the Trustee shall automatically, without the need to seek further instructions or directions from the Sukuk holders, make a claim on the relevant Al-Kafalah Guarantee, only in respect of the series/tranche of Sukuk which Danajamin has served such notice. In such event, the Trustee will not be entitled to make a claim on the Al-Kafalah Guarantees issued in relation to other series/tranche of Sukuk unless Danajamin has issued a similar accelerated payment notice in relation to such other series/tranche of Sukuk to which the Al-Kafalah Guarantee relates. Under the Trust Deed, other scenarios that entitle the Trustee to make an automatic claim on the Al-Kafalah Guarantee, without the need to seek further instructions or directions from the Sukuk holders is:

(a) if the Issuer fails to pay any amount due from it under any series/tranche of

the Sukuk. In such event, the Trustee shall automatically make a claim on the Al-Kafalah Guarantee that relates only to such series/tranche of the

ISSUER

DANAJAMIN

INVESTORS

Pays profit/coupon and principal

Invests

Provision of Guarantee Facility for

Sukuk/Bonds issuance

Payment of Guarantee Fee

Funding requirements

Returns

AAA-rated Sukuk/Bonds

• Guarantees Sukuk/Bonds issued

• AAA credit enhancement

Payment of coupon/profit and principal on behalf of issuer should issuer fail to do so


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Sukuk that the Issuer has failed to make payment. The Trustee is not entitled to make a claim on the Al-Kafalah Guarantee issued in relation to other series/tranche of Sukuk unless the Issuer has also failed to make payment under such other series/tranche of the Sukuk that relates to such other Al-Kafalah Guarantee; and

(b) where Danajamin fails to pay any amount due under any Al-Kafalah Guarantee when a claim has been made by the Trustee to Danajamin. In such event, the failure by Danajamin to pay under a Al-Kafalah Guarantee will automatically entitle the Trustee to make a claim on all the other Al-Kafalah Guarantees. The Trustee will not be required to seek instructions or directions from the Sukuk holders of such other series/tranche of the Sukuk prior to making a claim on all the other Al-Kafalah Guarantees.

Other than the abovementioned scenarios, the Trustee is required to seek

instructions or directions from the Sukuk holders of each of the relevant series/tranche of Sukuk (pursuant to a special resolution) prior to making a claim under the Al-Kafalah Guarantee. It will also be a term under each Al-Kafalah Guarantee that prior written consent of Danajamin is required before any amendment, modification, insertion, addition or substitution is made to the following:

(a) the purpose and the utilisation of the proceeds of each issuance of the Sukuk

(the list of the said purpose and utilisation will be attached to each Al-Kafalah Guarantee); and/or

(b) Events of Default under the Sukuk (such events of default of which shall comprise only those contained in the list of events of defaults that has been agreed with Danajamin and which will be attached to each Al-Kafalah Guarantee).

Failure to obtain such consent will result in the automatic termination of the Al-Kafalah Guarantee and the obligations of Danajamin thereunder without any further notice or consent to the Trustee.



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Section 6.0 Economy and Industry Overview 6.1 Overview of the Economic and Financial Developm ents in Malaysia in the First

Quarter of 2011 Sustained growth in the first quarter The Malaysian economy registered a growth of 4.6% in the first quarter of 2011, driven by firm domestic demand and a stronger expansion in external demand. The strong expansion in domestic demand was supported mainly by private sector spending. External demand registered an improved performance during the quarter supported by regional demand for commodities and non-E&E products. On the supply side, all major economic sectors, except for the primary sectors, continued to expand during the quarter, but at a more moderate pace. Domestic demand continued to expand Domestic demand expanded by 6.6% in the first quarter (4Q 10: 5.9%), supported mainly by the expansion in private sector spending and public consumption. Private consumption expanded by 6.7% in the first quarter (4Q 10: 6.4%), supported by sustained labour market conditions, positive consumer sentiments and continued income expansion. Consumer spending was also boosted by the sales promotions held in the early part of the quarter due to festive celebrations. Major consumption indicators such as sales of passenger cars, credit card spending and bank lending for consumption continued to show strong positive trend, reflecting robust consumption activity during the quarter. Although the first quarter MIER Consumer Sentiments Index was lower at 108.2 points (4Q 10: 117.2 points), it remained above the 100-point benchmark, reflecting sustained positive consumer confidence. Public consumption increased by 6.1% (4Q 10: 0.1%) due to higher spending on emoluments and supplies and services. On the supply side, most major economic sectors recorded continued expansion in the first quarter of 2011. Growth in the services sector was sustained, supported by favourable domestic and external demand conditions. Growth in the manufacturing sector was supported mainly by growth in the export-oriented industries and sustained performance of selected domestic-oriented industries. Meanwhile, the primary sectors experienced smaller contraction in the first quarter, reflecting the decline in production given supply-side factors. Inflation increased in the first quarter The headline inflation rate, as measured by the change in the Consumer Price Index (“CPI”), rose by 2.8% on an annual basis in the first quarter of 2011 (4Q 10: 2.0%). The increase in consumer prices was largely contributed by the food and non-alcoholic beverages category, which rose by 4.3% (4Q 10: 2.9%). The increase in food prices was the result of an increase of 12.4% (4Q 10: 7.7%) in the vegetables sub-category due partly to adverse weather conditions domestically. Prices in the transport category also registered an increase of 4.4% (4Q 10: 2.5%) during the


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quarter due to the upward adjustment in the price of RON97 in January and February following the higher global crude oil prices. These price increases, however, were partially mitigated by declining prices in the clothing and footwear and communication categories. The Producer Price Index (“PPI”) increased at a higher rate of 7.4% on a yearly basis in the first quarter of 2011 (4Q 10: 4.8%). Prices in the commodity-related components were higher at 19.5% (4Q 10: 13.0%). Similarly, prices in the non commodity-related components of the PPI registered a higher increase of 1.7% (4Q 10: 1.1%). In terms of composition, prices in the imported component of the PPI recorded an increase of 1.8% (4Q 10: 1.1%) while prices in the local component of the PPI rose by 9.9% (4Q 10: 6.6%). FDI moderated while portfolio investment recorded a higher net inflow On a cash basis, gross inflows of foreign direct investment (“FDI”)* amounted to RM7.8 billion in the first quarter following the exceptional volume of RM13 billion recorded in the fourth quarter of 2010. After adjusting for gross outflows due mainly to repayments of inter-company loans, net FDI was also lower at RM4.6 billion (4Q 10: +RM8.6 billion). Gross FDI inflows were broad-based, channelled mainly into the manufacturing, services and mining sectors. In the manufacturing sector, the bulk of the inflows went to electrical and electronics as well as petroleum-related industries. Investments in the services sector were mainly undertaken by companies in the finance, insurance, business services and wholesale and retail trade sub-sectors. Net outflows of direct investment abroad (“DIA”)* by Malaysian companies amounted to RM3.8 billion in the first quarter (4Q 10: -RM3.9 billion), reflecting mainly lower outflows of equity capital which more than offset the larger net extension of inter-company loans to subsidiaries abroad. These investments were largely undertaken by companies in the services sector, particularly companies in the finance and insurance, business services and communications sub-sectors. There were also sizeable investments in the oil and gas as well as the manufacturing sectors. * The statistics for FDI and DIA are stated on a cash basis and does not include retained earnings. International reserves remained high The international reserves of Bank Negara Malaysia amounted to RM344.5 billion (equivalent to USD113.8 billion) as at 31 March 2011. The reserves level has taken into account the quarterly adjustment for foreign exchange revaluation changes. As at 29 April 2011, the reserves position amounted to RM393.2 billion (equivalent to USD130 billion), sufficient to finance 9.3 months of retained imports and is 4.3 times the short-term external debt. Lower fiscal deficit on higher revenue The Federal Government recorded a smaller fiscal deficit of 2.6% of GDP in the first quarter of 2011 (1Q 10: -5.6% of GDP), due to higher revenue collection particularly from petroleum and corporate income taxes. Total expenditure increased moderately by 15%, contributed mainly by higher operating expenditure. The increase was due


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to higher payments for debt service and pensions. The deficit was financed from domestic sources. As at end-March 2011, total outstanding debt of the Federal Government amounted to RM430.2 billion or 51.8% of GDP. (Source: Bank Negara Malaysia Quarterly Report for First Quarter 2011)

6.2 Monetary Policy Statement At the Monetary Policy Committee (“MPC”) meeting on 5 May 2011, Bank Negara Malaysia decided to raise the Overnight Policy Rate (“OPR”) by 25 basis points to 3.00 percent. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.75 percent and 3.25 percent respectively. The global economic recovery has continued in the first quarter of the year, but the growth has been highly uneven across regions. Growth in the advanced economies during this period has remained modest. In the region, despite some moderation, the growth has remained strong, supported by robust domestic economic activity. Global inflation has, however, increased on account of rising energy and commodity prices. In several countries, further upward pressure on inflation has been exerted by domestic demand conditions. Although the global recovery is expected to continue going forward, downside risks have increased, arising from the potential for higher energy and commodity prices, possible supply disruptions following developments in Japan, and the heightened volatility in capital flows to emerging economies. In the domestic economy, the latest indicators point towards the continued strengthening of private investment and sustained private consumption expenditure in the first quarter. The export performance also improved, supported by regional demand. Going forward, the assessment is for the Malaysian economy to remain firmly on a steady growth path, with growth improving gradually during the course of the year. Growth will be underpinned by the firm expansion of domestic demand. Sustained employment conditions and income growth is expected to provide support to private consumption, while private investment is projected to strengthen amidst the improved investment environment. The developments in Japan are expected to have a limited impact on the overall domestic economy. Positive prospects for the region and strong demand for commodities are expected to continue to support the Malaysian economy. Domestic headline inflation has continued to increase, rising to 3% in March to average 2.8% for the first quarter of 2011. The increase was mainly due to higher food and fuel prices. The assessment is that supply factors will continue to be a key determinant affecting consumer prices. Global commodity and energy prices are projected to remain elevated during the year, with inflation in major trading partners also expected to rise further. There are also some signs that domestic demand factors could exert upward pressure on prices in the second half of the year. With the economy firmly on a steady growth path, the MPC decided to adjust the degree of monetary accommodation. At the current OPR level, the stance of monetary policy remains supportive of growth. The future stance of monetary policy will depend on the assessment of the risk to growth and inflation prospects. (Source: Bank Negara Malaysia Press Release on Monetary Policy Statement dated 5 May 2011)


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6.3 SCORE Project – Tanjung Manis Halal Park

Tanjung Manis Halal Park is the first one-stop Halal Park in East Malaysia for upstream and downstream Halal Food and manufacturing activities. With 30,000 hectares of land available, Tanjung Manis Halal Park (“TMHP”) offers investors tremendous potential and opportunity to capture the increasing demand for halal products from both Muslim and non-Muslim markets globally. TMHP is strategically located on the west coast of Sarawak, the fastest growing and dynamic state in Malaysia. One of the advantages of the TMHP is its fast-track approval for Halal certification and endorsement. This will allow the smooth establishment of operations and reduce waiting period, ensuring a hassle-free procedure in dealing with approving agencies. Earmarked as the Southern Growth Node of the Sarawak Corridor of Renewable Energy (“SCORE”) development, Tanjung Manis will see rapid infrastructure, utilities and social amenities development. Apart from the existing Deep Sea Fishing Complex and the mission to be an Industrial port city by 2030, the initiative by STIDC, Regional Economic Development Authority (“RECODA”) and the State Planning Unit jointly with Tanjung Manis Food and Agro Sdn Bhd has added another development milestone to Tanjung Manis by this establishment of the Tanjung Manis Halal Park. Its existing and planned air and sea transport network will assist the TMHP in being the largest Halal Hub in Malaysia with an area of 9000 hectares of land serving the Aquaculture, Poultry and Animal Feed Mill, Organic Chicken and Egg production, Eel Farming industry and provides support for the Rice Bowl development in the areas neighbouring Tanjung Manis. The development of the TMHP will significantly improve the socio-economic well-being of the people in the area, and Sarawak as a whole by creating opportunities that will be able to contribute immensely to the prosperity and growth of the country. Tanjung Manis is the Southern Node Industrial Port City, strategically located at the delta of the Rajang River in Sarawak, the longest waterway in the country. It will be developed into a leading regional port city to facilitate the development of the western end of the corridor, and the development of Sarawak in general. New bridges, good roads, electricity, telecommunication, waste water management and solid waste system will connect Tanjung Manis with the hinterland to the north, south and east and eventually develop it into the resource-based industrial centre for Southern Growth Node of SCORE. While the bridge to Sarikei and other road projects would expand the port's natural hinterland, improved draught of access channel would allow for bigger ships and improved attractiveness for shipping lines. For SMEs, there is also a great scope to expand in Tanjung Manis, especially to invest further in downstream value-added manufacturing. Tanjung Manis has its own port modelled after its counterpart in Skagen, Denmark, sitting on 35.1ha of land and has a 600m wharf that runs parallel to Sungai Rajang in Sarawak, the longest river in Malaysia. Strategic location as a natural deepwater port, Tanjung Manis is set to emerge as an important fishing port when the proposed RM200mil integrated fishing complex is ready in two years' time. The federal-funded project under implementation now will have modern landing facilities for deep sea fishing vessels, cold storage and marine processing facilities, a dockyard and a


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training institute. The jetty is operated by STIDC's subsidiary, Tanjung Manis Shipping Sdn Bhd, which owns an ice plant and other warehouse facilities to cater for the needs of the fishing boats. (Source: www.sarawakscore.com as at 1 June 2011)

6.4 Tanjung Manis Halal Hub – Potential Growth and Trends The Halal industry has become a multi-trillion dollar business, with Halal food and non-food products generating an estimated USD2.1 trillion a year. The total Halal market is growing at USD500 billion a year, while the Halal food market alone is worth an estimated USD150 billion a year according to Meat Livestock Australia. Globally, Halal products are expected to continue to see growth rates of 10% - 20% annually for the next couple of years, leading to an increase in Halal supplies, as more food exporters look to tap into this lucrative market. The potential of Halal products and services is not only limited to Muslim consumers but also gaining increasing acceptance among non-Muslim, as consumers normally perceive Halal products as having undergone stringent inspection and standard control in terms of ingredients used, strict safety and hygiene specifications and sanitation procedures. The global Halal food market is on the threshold of major developments that hold the promise of rapid and sustained growth. With the Halal food market currently accounting for as much as 12% of global trade in agri-food products, major growth will generate growth opportunities throughout the agri-food industry. Many reports on the Halal market focus on meat, but products sold under the Halal label cover virtually every agri-food product plus non-food products such as cosmetics. In Malaysia for instance, a very wide range of products are labelled Halal such as sauces, bottled water, tea, coffee and fruit drinks. Global trade in Halal food products is estimated to be USD80 billion, or some 12% of total trade in agri-food products. With expected increases in both population and incomes of Halal consumers, this percentage is certain to increase. Furthermore, with the Muslim population projected to account for 30% of the world’s population by 2025, Halal food could easily account for 20% of world trade in food products in the future. (Source: www.tanjungmanishalalhub.com as at 1 June 2011)

6.5 Market Assessment – Oil & Gas Production Oil & Gas Production Global oil and gas production has grown by approximately 1.5 percent per year in the last decade, driven by robust demand in OECD countries and rapidly rising demand from developing economies, notably China and India. According to the International Energy Agency the global growth outlook for 2010 to 2020 for both oil and gas demand will shift further to developing economies in this decade. While “green” policies and de-carbonisation are taking place, especially in developed economies, any impact on oil and gas demand is not expected to be marked until the end of the


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decade. Demand for gas, especially, may actually benefit in the near term, as natural gas is both plentiful and green vis-à-vis other fossil fuels. Global oil and gas supply capacity jumped ahead of demand during the financial crisis of 2008 and 2009. This created a temporary but significant price dip in oil prices and enduring turmoil in global gas markets. The ongoing volatility in gas markets has been exacerbated by significant supply additions in the USA from domestic production of shale gas. A tighter balance of supply and demand is expected in both oil and gas by the middle of the decade, as demand growth catches up with supply infrastructure. In the last decade, growth in the upstream sector in Malaysia has been driven more by rising prices in oil and gas than by increases in production. PETRONAS’ international expansion has also contributed to Malaysia’s Gross National Income (“GNI”). Malaysian oil production peaked in the mid 1990s at approximately 600,000 barrels per day. This is due to the normal maturation of the traditional shelf basins and means that most of the economically attractive fields are likely to have been found and developed, and new discoveries are more likely to be smaller and more technically demanding than those that were developed earlier. It is unlikely that domestic oil and gas production will grow substantially beyond current levels, as the oil and gas discoveries from the mature basins are, on average, smaller than in the past. Despite a stable number of exploration wells being drilled, the size of discovered resources is declining. Without significant efforts being made in upstream exploration, development and production, it is expected that oil and gas production in Malaysia will likely decline by 1 to 2 percent per year on average in the coming decade. Despite the declining conventional oil and gas resource base, there remains significant potential in mature, small and technically more complex fields. Future growth could come from initiatives such as enhanced oil recovery, innovative approaches to the development of small fields, or through intensifying exploration activities to achieve a faster pace of oil and gas discoveries. Oil Field Services The Asian market for oil field services (“OFSE”) has grown by approximately 20 percent per year over the last decade, primarily driven by the shift towards more technically challenging fields, e.g. deepwater, and increases in the price of oil, which has boosted industry margins. The sector outlook continues to be bright, driven by the upbeat outlook for offshore exploration activity in Southeast Asia, tight gas developments across Asia and the liquefied natural gas (“LNG”) boom in Australia. The market for OFSE in the region is quite fragmented, with most of the players setting up operations in Malaysia, Indonesia, Singapore and Thailand. This is unlike Europe and America, where OFSE activities are centred around hubs such as Aberdeen, Stavanger and Houston. This presents an opportunity for Malaysia, as most of Malaysia’s offshore producing fields are more mature than those of Malaysia’s Southeast Asian neighbours (i.e. Indonesia, Thailand and Vietnam). This means that there will be significant opportunities for maintenance and replacement of


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assets, in addition to development of new fields, which will continue to drive growth in this subsector. Mid and Downstream Oil The regional midstream logistics market (oil and oil product storage) also offers a positive growth outlook, as crude oil consumption in the Asian region is expected to grow by 420 thousand barrels per day in each year from 2010 to 2015. The increased flow of hydrocarbons in the region will require additional storage capacity (for transhipment, sales and marketing and trading purposes). At the same time, the region’s existing trading hub, Singapore, is nearing full utilisation. Downstream processing (petrochemicals and refining) and marketing industries are likely to also show at least modest growth levels. The opportunity to expand the large installed petrochemical complexes in Malaysia will depend on regional supply and demand balances as well as on the opportunity to introduce process and product innovations. Likewise, the pace of potential refinery expansion will be driven by regional supply-demand balances. Mid and Downstream Natural Gas There exists a positive growth outlook for the Malaysian domestic gas market: economic growth will increase the volumes needed by existing gas consumers, and the lower gas prices compared with fuels like diesel and liquefied petroleum gas (LPG) will make switching to natural gas attractive. The depletion of gas resources in Peninsular Malaysia and the technical and economic challenge of sending gas from Sabah and Sarawak to Peninsular Malaysia by pipeline limit the availability of gas to feed this demand-growth. The import of LNG from international markets into Peninsular Malaysia could help to meet the growing demand for gas, provided that such gas is sold in Peninsular Malaysia at liberalised and unregulated market prices. Energy Malaysia is going to need more energy as the economy continues grow: 6 gigawatts of new generation capacity is expected to be needed by 2020 to provide energy for businesses and the growing population, representing an increase of about 25 percent over installed capacity in 2009. The power sector faces a major challenge as declining gas production will have an impact on the power generation industry. Currently, 58 percent of power generation in Peninsular Malaysia is based on natural gas, with the remainder coming from coal (37 percent) and hydro (5 percent). However, domestic gas supply within the Peninsula is projected to decline. (Source: Economic Transformation Programme – Chapter 6: Powering the Malaysian Economy with Oil, Gas and Energy)


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Section 7.0 Key Investment Considerations Potential investors of the Sukuk should carefully consider all information set out in this Information Memorandum and in particular, the following risks involved. The Sukuk are subject to certain risks that could adversely affect the business of the Issuer. The following section does not purport to be complete or exhaustive. Potential investors of the Sukuk should conduct an independent evaluation and analysis on the Issuer, its business and the risks associated with investing in the Sukuk. Each Sukuk issue will carry different risks and all potential investors are strongly encouraged to evaluate each Sukuk issue on its own merit. 7.1 General Industry and Business Considerations 7.1.1 Source of Payment

The principal source of payment for the Sukuk shall be derived from the following:

• IOT tariffs payable under the user agreement entered into between Assar

Chemicals, PDB and STSB; and

• CODT tariffs payable under the user agreement entered into between Assar Chemicals Dua, PDB and STSB.

Assar Chemicals and Assar Chemicals Dua will charge the users of the IOT and CODT, i.e. PDB and STSB, a tariff fee based on a tariff rate and the user’s throughput volume. Margins are expected to be stable as revenues are generated through monthly operating fees charged to the users on a cost-plus basis.

7.1.2 Competition

The IOT project at Senari, Kuching has been implemented and developed with the approvals given by the State Government of Sarawak and Kuching Port Authority in terms of the State’s decision to relocate the existing oil terminals from Bintawa to Senari and with the long-term land lease agreement (30 years) executed with the Kuching Port Authority. IOTM is the IOT operator in Senari and is responsible to fully manage the IOT to handle storage and distribution of petroleum products. For bulk petroleum products, the facilities include receiving, storing and distribution of bulk petroleum and its related products within the southern region of Sarawak. For LPG, the facilities include facilities for receipt, storage, bottling and reconditioning of valves and cylinders and refilling of bottled and bulk LPG. The oil terminal is designed to handle a throughput of up to 1,100,000 kilolitres of petroleum and related products annually. The possibility or likelihood of any new oil terminal in Kuching is remote, and any new entry would have to work to convince the IOT users on duplication of investment as well as having to work on higher tariff and longer payback period.


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7.1.3 Demand Risk Based on the user agreement, PDB and STSB are entitled to use the IOT and CODT facilities for 30 years commencing from the commercial operation date. With regard to the offtakers, the strong credit standing of the two companies ensures prompt payments due to the Group for the utilisation of the facilities. PDB is the principal domestic marketing arm national oil company Petroliam Nasional Bhd, which MARC maintains a long-term public information rating of AAA/Stable, while STSB is part of the Royal Dutch Shell group of companies.

7.1.4 Supply Risk

The supply of petroleum products for the IOT and CODT would be from the users-owned refineries or other sources that they may decide in the future. As each of the users has more than one refinery in the region for supply of petroleum products in the Kuching and Tanjung Manis market, the supply risk or interruption is mitigated. Furthermore, the IOT and CODT are able to run or operate throughout the year, regardless of season. The IOT and CODT facilities were designed to cater for the monsoon season as the height of the tank foundation was raised 3.5 metre above the chart datum. The jetty design also incorporated the berthing of ships during such situations, thus minimising exposure to supply risk.

7.1.5 Dependencies on Directors and Senior Management Personnel

The Group relies to a significant extent on some of its directors and senior management personnel for its business directions and effective implementation of business strategy. The loss of the existing senior management personnel could adversely affect its ability to operate its business or to compete in the industry, and in turn, affect its financial performance and prospects. Every effort is presently made to groom younger members of the senior management to ensure a smooth transition in the management team, should change occur.

7.1.6 Adequacy of Insurance Coverage

The Group has taken up the necessary insurances, either for commercial purposes or as required under the respective agreements and/or contracts. However, there is no assurance that the insurance policies taken up by the Group are sufficient to cover all potential losses, and to indemnify it against all possible liabilities arising from its operations. In the event that the amounts of any claims exceed the insurance coverage of its insurance policies, the Group may be liable to cover the amounts claimed. If such events were to occur, its business and financial performance may be materially and adversely affected. There are also other risks such as natural disasters, riots, general strikes, acts of terrorism and other risks that cannot reasonably be insured against, which may adversely affect the Group’s operations. However, its operations have not been affected by any of such events thus far.


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7.1.7 Political and Economic Considerations Like all other business entities, adverse changes in political, economic, business and credit environment both domestically and internationally could materially and adversely affect the financial and business prospects of the Group. Political and economic uncertainties include (but are not limited to) risks of war, riots, change in political leadership, political and social development, nationalisation, renegotiations or nullification of existing contracts, changes in rates of interest and methods of taxation. While the Group continue to take measures such as prudent financial management and efficient operating procedures, there can be no assurance that adverse developments in political and economic conditions will not materially affect the Group.

7.1.8 Business Continuity Plan

Disruption to business operation can occur with or without warning due to adverse events such as natural disasters, technological failures or human error. In view of the uncertainty and in ensuring minimal disruption to services, effective Business Continuity Plan (“BCP”) is an essential operational tool to be implemented across the Group. However, the dynamism of the business direction and its risk factors may cause the existing BCP to be obsolete should there be delays to regular review and update of the preventive and recovery plan. This uncertainty may have adverse impact on customer satisfaction and retention programme of the Group.

7.2 Risks Relating to Proposed Financing 7.2.1 Rating of the Sukuk

A rating is not a recommendation to buy, hold or sell the Sukuk and there can be no assurance that such a rating will not be revised on a periodic review by the rating agency during the tenor of the Sukuk or that such a rating will not be withdrawn entirely if circumstances in the future so warrant. Further, such a rating is not a guarantee of repayment or that there will be no default by the Issuer under the Sukuk. In the event that the ratings initially assigned to the Sukuk are subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to the Sukuk. Any downgrade or withdrawal of a rating may have an adverse effect on the liquidity and the market price of the Sukuk. Any reduction or withdrawal of a rating will not constitute an event of default or an event obliging the Issuer to prepay the Sukuk.

7.2.2 Liquidity of the Sukuk The Sukuk comprise a new issue of securities for which no secondary market currently exists. As such, there can be no assurance regarding the development of a market for the Sukuk, the liquidity of any market that may develop for the Sukuk, the ability of holders to sell their Sukuk, or the prices at which holders may be able to sell their Sukuk.


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Accordingly, the purchase or subscription of the Sukuk may be suitable only for investors who can bear the risks associated with a lack of liquidity in the Sukuk and the financial and other risks associated with an investment in the Sukuk.

7.2.3 Issuer’s Ability to Meet its Obligations Under the Sukuk The ability of the Issuer to meet its payment obligations under the Sukuk will depend on the cash flow availability at the Issuer’s level with limited recourse on the specific security created in the event that the cash flow is insufficient to meet such redemption. The Sukuk will not be the obligations or responsibilities of any other person other than Issuer. In particular, the Sukuk will not be the obligations or responsibilities of, or guaranteed by any of the Lead Arranger, the Facility Agent, the Trustee or any subsidiary or affiliate thereof, and any other person involved or interested in the transactions envisaged under the Sukuk. None of such persons will accept any liability whatsoever to the holders of the Sukuk in respect of any failure by the Issuer to pay any amount due under the Sukuk. The Sukuk are, however, guaranteed by an irrevocable and unconditional Al-Kafalah Guarantee to be provided by Danajamin to guarantee all payment obligations of the Issuer (except Ta’widh) under the Purchase Undertaking.

7.2.4 Market Value of the Sukuk may be subject to fluctuations Trading prices of the Sukuk may be influenced by numerous factors, including the operating results and/or financial condition of the Issuer, political, economic, financial and any other factors that can affect the capital markets, the industry the Issuer operates in, and/or the Issuer. Adverse economic developments could have a material adverse effect on the market value of the Sukuk.

7.2.5 Investment in Sukuk is subject to interest rate risk Sukukholders may suffer unforeseen losses due to fluctuations in interest rates. Although the Sukuk are Islamic securities which do not pay interest, they are similar to fixed income securities and may therefore see their prices 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 the Sukukholders.

7.2.6 Suitability of investments The Sukuk issued under the Sukuk Mudharabah Programme may not be a suitable investment for all investors. Each potential investor in the Sukuk must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:


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i) have sufficient knowledge and experience to make a meaningful evaluation of the Sukuk, the merits and risks of investing in the Sukuk and the information contained in this Information Memorandum;

ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Sukuk and the impact the Sukuk will have on its overall investment portfolio;

iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Sukuk, including where the currency of payment is different from the potential investor’s currency;

iv) understand thoroughly the terms of the Sukuk and be familiar with the behaviour of any relevant indices and financial markets; and

v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic and other factors that may affect its investment and its ability to bear the applicable risks.

7.3 Forward Looking Statements – Disclaimer

Certain statements in this Information Memorandum are based on historical facts, including without limitation, those regarding the financial position and business strategy of the Group and plans and objectives of the management for future operations, which may not be reflective of future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and numerous assumptions made by the Issuer regarding the present and future business strategies, the environment in which the present and future business strategies have been developed, and the environment in which the Group will operate in future. Although the Issuer believes that these forward-looking statements are reasonable, such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In light of the above factors and other uncertainties, there is no assurance that forward-looking statements in this Information Memorandum will eventually materialize in the manner which such statements may have been expressed or implied.



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Section 8.0 Other Material Information 8.1 Material Litigation

As at 1 June 2011, the Issuer is not engaged in any material litigation, either as plaintiff or defendant, and the Directors of the Issuer have no knowledge of any proceedings, pending or threatened, against the Issuer, or any facts likely to give rise to any proceedings, which may materially and adversely affect the position or business of the Issuer.

8.2 Conflict of Interest Save as disclosed below, after making enquiries as were reasonable in the circumstances, the Issuer is not aware of any existing or potential interest or any circumstances which could give rise to a conflict of interest by virtue of its roles in relation to the Proposal: (a) AmInvestment Bank will be assuming multiple roles in relation to the Sukuk

Mudharabah Programme as follows:-

(i) Principal Adviser; (ii) Lead Arranger; (iii) Lead Manager; and (iv) Facility Agent.

(b) AmInvestment Bank has made available certain credit facilities to the Group.

Part of the proceeds raised from the issuance of the Sukuk under the Sukuk Mudharabah Programme shall be utilised by the Issuer to repay some of the credit facilities.

The following mitigating measures have been or will be adopted by AmInvestment Bank in order to mitigate or address any potential conflict of interest:- (a) AmInvestment Bank will ensure that the abovementioned roles are governed

by legally binding agreements, specifying the respective functions, responsibilities, procedures and priorities;

(b) AmInvestment Bank will undertake the roles on an arms’ length basis and

based upon the standard market terms and conditions; (c) Due diligence review in relation to the Sukuk Mudharabah Programme has

been undertaken by professional advisers; (d) In addition, AmInvestment Bank is a licensed investment bank regulated by

Bank Negara Malaysia and the SC and governed under, inter alia, the Banking and Financial Institutions Act, 1989 (“BAFIA ”) and the CMSA;

(e) AmInvestment Bank is governed by its internal controls and segregation of

roles and requisite checks and balances procedures. The employees are competent and skilled to carry out the functions required of the roles they have undertaken and/or will undertake in relation to the Sukuk Mudharabah Programme; and


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(f) The Board of Directors of the Issuer are aware of the potential conflict of

interest situations and are agreeable to proceed with the implementation of the Sukuk Mudharabah Programme based on the present arrangement and terms.

8.3 Material Contracts outside the Ordinary Course of Business Save as disclosed below, as at 1 June 2011, there are no contracts which have been entered into by the Group outside the ordinary course of business of the Group and which are or may be material to the Group and warrant disclosure. (a) Master Group Wide Re-Engineering Exercise Understanding dated 4 August

2010 The Issuer, Lembaga Amanah Kebajikan Masjid Negeri Sarawak (“LAKMNS ”), Assar Industri Sdn. Bhd. (“Assar Industri ”), Yayasan Sarawak, Sarawak Timber Industry Development Corporation (“STIDC”), Assar Senari Holdings Sdn. Bhd. (“Assar Senari Holdings ”) and Assar Senari Sdn Bhd (“Assar Senari ”) had on 4 August 2010 entered into a Master Group Wide Re-Engineering Exercise Understanding for the purposes of implementing and carrying out various proposals comprised in the understanding.

(b) Subscription Agreement dated 26 August 2010 The Issuer, Assar Industri, LAKMNS, Yayasan Sarawak and STIDC had further to the terms of the Master Group-Wide Re-Engineering Exercise Understanding, on 26 August 2010 executed a Subscription Agreement in which Yayasan Sarawak and STIDC have agreed to subscribe for and the Issuer has agreed to allot up to 12,000,000 new ordinary shares of RM1.00 each in the capital of the Issuer together with free warrants to Yayasan Sarawak and STIDC respectively.

(c) Share Sale Agreement dated 26 August 2010 in respect of Assar Refinery Services Sdn. Bhd., Assar Refinery Services Dua Sdn. Bhd., Assar Hartanah Sdn. Bhd. and Assar Chemicals Dua Sdn. Bhd. Simultaneously, the Issuer and Assar Senari Holdings had executed a Share Sale Agreement to purchase/acquire the following shares of the following companies from Assar Senari Holdings: (i) 60% of the total issued and paid-up share capital of Assar Refinery

Services Sdn. Bhd.; (ii) 100% of the total issued and paid-up share capital of Assar Refinery

Services Dua Sdn. Bhd.; (iii) 90% of the total issued and paid-up share capital of Assar Hartanah

Sdn. Bhd.; and


Confidential 37

(iv) 51% of the total issued and paid-up share capital of Assar Chemicals Dua Sdn. Bhd.,

for a total sale and purchase consideration of RM40,817,196 to be satisfied by the Issuer via the allotment and issuance of new ordinary shares of RM1.00 each together with free warrants to Assar Senari Holdings.

(d) Share Sale Agreement dated 26 August 2010 in respect of Assar Chemicals Sdn. Bhd., IOT Management Sdn. Bhd. and Assar Senari Port Sdn. Bhd. The Issuer and Assar Senari had on 26 August 2010 further executed a Share Sale Agreement to purchase/acquire the following shares of the following companies from Assar Senari: (i) 100% of the total issued and paid-up share capital of Assar Chemicals

Sdn. Bhd.; (ii) 70% of the total issued and paid-up share capital of IOT Management

Sdn. Bhd.; and (iii) 100% of the total issued and paid-up share capital of Assar Senari

Port Sdn. Bhd.,

for a total sale and purchase consideration of RM58,889,290 to be satisfied by the Issuer via the allotment and issuance of new ordinary shares of RM1.00 each together with free warrants to Assar Senari.

(e) Share Sale Agreement dated 26 August 2010 in respect of Assar Hartanah Sdn. Bhd., Assar Chemicals Dua Sdn. Bhd. and Tanjung Manis OGC Port Sdn. Bhd. The Issuer, Yayasan Sarawak and STIDC had also on 26 August 2010 executed a Share Sale Agreement to purchase/acquire the following shares of the following companies from Yayasan Sarawak and STIDC: (i) 10% of the total issued and paid-up share capital of Assar Hartanah

Sdn. Bhd.; (ii) 9% of the total issued and paid-up share capital of Assar Chemical

Dua Sdn. Bhd.; and (iii) 49% of the total issued and paid-up share capital of Tanjung Manis

OGC Port Sdn. Bhd.,

for a total sale and purchase consideration of RM545,513 to be satisfied by the Issuer via the allotment and issuance of new ordinary shares of RM1.00 each together with free warrants to Yayasan Sarawak and STIDC respectively.

All the aforesaid agreements have been completed on 30 November 2010.

APPENDIX I

PRINCIPAL TERMS AND CONDITIONS FOR THE SUKUK MUDHARABAH PROGRAMME

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1. BACKGROUND INFORMATION

(a) Issuer

(i) Name Senari Synergy Sdn Bhd (“Senari Synergy” or “Issuer”)

(ii) Address Lot 7689 & 7690 Section 64, Kuching Town Land District, Jalan Pending, 93450 Kuching, Sarawak, Malaysia

(iii) Business registration no.

909900-K

(iv) Date/Place of Incorporation

Date of incorporation: 29 July 2010 Place of incorporation: Malaysia

(v) Date of listing Not applicable

(vi) Status Resident controlled company Bumiputra controlled company

(vii) Principal activities Investment holding

(viii) Board of Directors As at 1 June 2011, the Board of Directors of Senari Synergy consists of the following members:

1) Dato Sri Ahmad Tarmizi Bin Haji Sulaiman

2) Tan Sri Datuk Amar Hj Bujang Bin Mohammed Bujang Mohammed Nor

3) Datu Haji Sarudu Bin Haji Hoklai

4) Datu Haji Misnu Bin Haji Taha

5) Mohamad Abu Bakar Bin Marzuki

6) Haji Hashim Bin Bojet (Alternate Director to Datu Haji Sarudu Bin Haji Hoklai)

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1. BACKGROUND INFORMATION

(ix) Structure of

shareholdings and names of shareholders

As at 1 June 2011, the shareholders of Senari Synergy are as follows:

Shareholders No. of shares %

Lembaga Amanah Kebajikan Masjid Negeri Sarawak

22,421,801 34.82

Assar Industri Sdn Bhd 21,542,515 33.46

Yayasan Sarawak 11,572,929 17.97

Sarawak Timber Industry Development Corporation

8,851,576 13.75

64,388,821 100

(x) Authorised and paid-up capital

As at 1 June 2011, the authorised and paid-up capital of Senari Synergy are as follows:-

Authorised capital: RM500,000,000 divided into 500,000,000 ordinary shares of RM1.00 each

Paid-up capital: RM64,388,821 divided into 64,388,821 ordinary shares of RM1.00 each

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2. PRINCIPAL TERMS AND CONDITIONS

(a) Names of parties involved in the proposed transaction (where applicable)

(i) Principal Adviser/Lead Arranger

AmInvestment Bank Berhad (“AmInvestment Bank”) (Company No. 23742-V)

(ii) Arranger(s) AmInvestment Bank

(iii) Valuers Not applicable

(iv) Solicitors (i) Messrs. Wong & Partners

Acting on behalf of Principal Adviser/Lead Arranger/Danajamin Nasional Berhad (as guarantor)/Sukukholders

(ii) Messrs. Mah-Kamariyah & Philip Koh

Acting on behalf of Issuer

(v) Financial Adviser Astramina Advisory Sdn Bhd (Company No. 810705-K)

(vi) Technical Adviser Not applicable

(vii) Guarantor Danajamin Nasional Berhad (“Danajamin”) (Company No. 854686-K)

(viii) Trustee AmanahRaya Trustees Berhad (Company No. 766894-T)

(ix) Facility Agent AmInvestment Bank

(x) Primary Subscriber(s) and amount subscribed (where applicable)

The Primary Subscriber(s) (if any) will be determined prior to each issuance under the Sukuk Mudharabah Programme. Primary Subscribers are not applicable for issuance via book building or direct placement.

(xi) Underwriter(s) and amount underwritten

Not applicable

(xii) Shariah Adviser Dr. Mohd Daud Bakar

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(xiii) Central Securities Depository

Bank Negara Malaysia (“BNM”), who for purposes of carrying out its functions, duties and obligations under the Central Securities Depository and Paying Agency Rules (“CSDPAR”) issued by Malaysian Electronic Clearing Corporation Sdn Bhd (“MyClear”) on 6 May 2011 (as may be amended and substituted from time to time), as a Central Securities Depository, has appointed MyClear to act as its agent.

(xiv) Paying Agent BNM

(xv) Reporting Accountant

Not applicable

(xvi) Others 1. Lead Manager

AmInvestment Bank

2. Rating Agency

Malaysian Rating Corporation Berhad (“MARC”) (364803-V)

3. Roles undertaken by Senari Synergy in respect of the Mudharabah transaction

(i) Issuer

As the Issuer of the Sukuk.

(ii) Mudarib

As the manager, who manages the Mudharabah Venture and administers the collection of income from the said venture.

(iii) Obligor

As the Obligor, who undertakes to purchase the Trust Assets (as defined in item (c)) from the Trustee at the Exercise Price (more particularly described in item (z)(iv)).

4. RabbulmalThe Trustee shall act on behalf of the investors as the capital provider in the Mudharabah Venture.

(b) Islamic Principle Used Mudharabah

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(c) Facility Description An Islamic securities or sukuk (“Sukuk”) issuance programme based on the Shariah principles of Mudharabah (“Sukuk Mudharabah Programme”).

Under the Mudharabah transaction, the Issuer (as “Mudarib”) shall enter into a Mudharabah contract with the Trustee, acting on behalf of the investors (as “Rabbulmal”).

Pursuant to the Mudharabah contract, the investors (hereinafter referred to as the “Sukukholders”) shall from time to time participate in the Shariah compliant business of the Issuer and its subsidiaries (“Mudharabah Venture”). The business activities of the Issuer and its subsidiaries (collectively, “Group”) involves the provisioning of centralized storage and distribution facilities to the oil and gas industry, the palm oil refinery business and property development.

The Sukukholders shall participate in each Mudharabah Venture by subscribing to the Sukuk, to be issued in series pursuant to the Sukuk Mudharabah Programme. Each issuance represents a Mudharabah Venture on its own. Proceeds from the Sukuk represent 100% of the Sukukholders’ capital contribution (“Mudharabah Capital”) in the said Mudharabah Venture. The Issuer on the other hand, as the Mudarib shall have the absolute entrepreneurial authority to manage the Mudharabah Venture and administer the collection of income from the Mudharabah Venture.

The Issuer shall make a declaration of trust over the rights and entitlements under the Mudharabah Venture (“Trust Assets”) for the benefit of the Sukukholders and itself. The Sukuk hence represent each of the Sukukholders’ undivided proportionate beneficial interests in the Mudharabah Venture.

Profits generated from the Mudharabah Venture will be shared between the Rabbulmal and the Mudarib according to the pre-agreed profit-sharing ratio (“PSR”) of 99:1 while losses will be borne solely by the Rabbulmal. In respect of Sukuk with periodic payments, the payment of profits shall be based on the income generated from the Mudharabah Venture (“Periodic Payment(s)”) which shall be distributed semi-annually (“Periodic

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Payment Date”) to the Sukukholders. In respect of Sukuk without Periodic Payments, the payment of profits shall be based on the income generated from the Mudharabah Venture which shall be distributed to the Sukukholders on a one-off basis (“One-off Distribution”) on the respective maturity dates of such Sukuk.

For the avoidance of doubt, whenever a Periodic Payment is paid out on a particular scheduled Periodic Payment Date, such payment shall comprise of distributable income generated from the relevant Mudharabah Venture (“Periodic Distribution”) and Advance Profit Payment (as defined below), if any.

The Rabbulmal’s share of profits shall be the return expected (“Expected Return”) by the Sukukholders from the Mudharabah Venture which shall be the yield of the Sukuk up to the respective maturity dates, upon the date of declaration of a Dissolution Event or upon the exercise of the Call Option on the Call Date which dissolves the Mudharabah Venture (the maturity dates, the date of declaration of a Dissolution Event or the Call Date shall hereinafter be referred to as “Dissolution Date”).

Under each Mudharabah Venture, the Sukukholders have agreed upfront that they shall receive profits up to the Expected Return.

If, on any Periodic Payment Date, the income generated from the relevant Mudharabah Venture is insufficient and the amounts in the finance service account (which is created pursuant to the Al-Kafalah Facility and more particularly described below) is utilized to meet the expected Periodic Payment(s) on any Periodic Payment Date in full, such amounts shall be deemed to be advance profit payments by the Issuer during the tenor of the Sukuk (“Advance Profit Payment”).

For the avoidance of doubt, the Advance Profit Payment is sourced from funds other than the Mudharabah Venture and such Advance Profit Payment made by the Issuer shall be off-set against the relevant exercise price (“Exercise Price”) determined in the manner as provided in the relevant Purchase Undertaking (as defined in item (z)(iv)).

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Any amounts in excess of the Expected Return on the Dissolution Date shall be given to the Mudarib as an incentive fee for successfully managing the Mudharabah Venture.

Senari Synergy (as the “Obligor”) shall grant to the Trustee (acting on behalf of the Sukukholders) an undertaking (“Purchase Undertaking”) whereby the Obligor shall undertake to purchase the Trust Assets from the Trustee at the Exercise Price upon the occurrence of the respective maturity dates of such series of the Sukuk, on such date upon which a dissolution event (“Dissolution Event” more particularly described in item (x)) is declared or upon the exercise of the Call Option (as defined in item (z)(v)) on the Call Date (as defined in item (f)), whichever is earlier. Please refer to item 2(z)(iv) on details of the Purchase Undertaking.

Upon the exercise of the Purchase Undertaking and the payment of the Exercise Price, the relevant Mudharabah Venture and declaration of trust shall be dissolved and the Sukuk shall be cancelled.

Pursuant to the Islamic guarantee facility in accordance with the Shariah principle of Al-Kafalah (“Al-Kafalah Facility”) to be granted by Danajamin to the Issuer, all payment obligations of the Obligor (except payment obligation on compensation (“Ta’widh”)) under the Purchase Undertaking are guaranteed by Danajamin. For the avoidance of doubt, the Al-Kafalah Facility is a separate arrangement from the Sukuk Mudharabah Programme and entered into separately between the Issuer and Danajamin.

The Al-Kafalah Facility requires the Issuer to open a Shariah-compliant finance service account in which an amount equivalent to the next Periodic Payment is to be maintained at all times and amounts in the finance service account shall only be utilised to meet such Periodic Payment.

Please refer to Annexure I for the illustrative diagram of the Sukuk transaction structure.

(d) Issue Size (RM) Up to RM380.0 million nominal value subject to the Sukuk Mudharabah Programme Reduction Schedule (as defined below).

Sukuk Mudharabah Programme Reduction Schedule

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The limit of the Sukuk Mudharabah Programme shall be reduced as follows:

Year from date of first issuance *

Reduction Amount

(RM’million) **

Revised Limit

(RM’million)

3 25 355

4 25 330

5 25 305

6 25 280

7 20 260

8 20 240

9 20 220

10 20 200

11 20 180

12 20 160

13 20 140

14 20 120

15 20 100

16 20 80

17 20 60

18 20 40

19 20 20

20 20 0

Note:* First issuance being the date of first issuance under the Sukuk Mudharabah Programme

** Reduction amount of limit shall take effect from each anniversary date following the date of first issuance

For the avoidance of doubt, any amount of Sukuk that has been issued and redeemed in accordance with the reduction schedule can be reissued subject always to the Sukuk Mudharabah Programme Reduction Schedule.

(e) Issue Price (RM) The Sukuk shall be issued at par, at premium or at discount to the nominal value and shall be calculated in accordance with the Operational Procedures for Securities Services issued by Malaysian Electronic Clearing Corporation Sdn Bhd (“Securities Services Procedures”) and/or any other procedures/ guidelines issued by the relevant authority(ies).

(f) Tenure of the Facility/Issue The first issuance of the Sukuk under the Sukuk Mudharabah Programme shall be made within two (2) years from the date of approval by the

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Securities Commission Malaysia (“SC”) (“SC’s Approval”).

Tenure of the Sukuk Mudharabah Programme:

Up to twenty (20) years from the date of the first issuance of Sukuk under the Sukuk Mudharabah Programme (“Sukuk Availability Period”).

Tenure of the Sukuk:

The Sukuk shall have a tenure of more than one (1) year and up to twenty (20) years, provided always that the maturity date of the Sukuk shall not exceed the remaining Sukuk Availability Period.

The Sukuk issued under the Sukuk Mudharabah Programme will be issued and utilised over a period of twenty (20) years from the first issuance date which shall be made within two (2) years from the date of the SC’s Approval and upon compliance of the conditions precedent for the availability of the Sukuk Mudharabah Programme.

Call Option

The Issuer shall have the option to redeem all but not part of the Sukuk Mudharabah at such value as provided under item (z)(v) on the Call Date (as defined below).

“Call Date” means a Periodic Payment Date falling on or after twenty four (24) months from the date of first (1st) issuance of the Sukuk.

(g) Profit Rate (%) The Sukuk may be issued with or without expected profit rate. The expected profit rate for the Sukuk will only be determined upon issuance of the Sukuk.

Periodic Payment

The Periodic Payment(s) shall be calculated based on the expected profit rates on the nominal amount of the Sukuk and shall be determined prior to each issuance under the Sukuk Mudharabah Programme.

Profit-Sharing Ratio (“PSR”)

The PSR between the Rabbulmal and the Mudarib shall be pre-agreed at 99:1 (Rabbulmal:Mudarib).

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(h) Profit Payment Frequency and Basis

The Periodic Payment(s) shall be made on a semi-annual basis with the first payment to be made six (6) months from the date of the respective dates of issuance of the Sukuk and the last Periodic Payment payable on the respective maturity dates of the Sukuk or the date of declaration of a Dissolution Event, as the case may be.

The Periodic Payment(s) shall be calculated on the basis of the actual number of days elapsed and actual days basis (actual/actual days).

(i) Yield to Maturity (%) The yield to maturity (“YTM”) shall be the Expected Return to the Sukukholders up to the respective maturity dates under the Mudharabah Venture and which shall be determined prior to each issuance under the Sukuk Mudharabah Programme.

(j) Security/Collateral Unsecured

Please refer to (z)(i) on Danajamin’s Al-Kafalah Guarantee.

(k) Details on utilisation of proceeds

Purpose RM’million i) To redeem the bridging

loan and part finance Shariah-compliant capital expenditure in relation to the Centralised Oil Distribution Terminal; Oil, gas and chemical jetty; Bitumen plant, Light industrial park for petrochemical, oleochemical and related industries.

Up to RM194.0

ii) To redeem outstanding

securities issued by Assar Chemicals Sdn Bhd, a wholly-owned subsidiary of the Issuer and the existing financing facilities of the Group*.

Up to RM139.0

iii) To pre-fund finance service account under the Al-Kafalah Facility up to the required balance.

Up to RM20.0

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iv) To finance Shariah-

compliant future capex investments of the Group**.

Up to RM27.0

RM380.0

The aforementioned purposes are for the initial issuances under the Sukuk Mudharabah Programme, and subsequent issuances shall be utilised to finance and/or to refinance the Shariah-compliant capital expenditure of the Group in relation to the developmental activities of the Group and for the purposes of refinancing maturing Sukuk issued under the Sukuk Mudharabah Programme.

Note* Settlement of the existing term loan by Assar

Senari Port Sdn Bhd and Assar Hartanah Sdn Bhd, the wholly-owned subsidiaries of the Issuer.

** Subject to meeting terms and conditions as mutually agreed for disbursement.

(l) Sinking Fund Not available

(m) Rating AAAIS(fg) by MARC

(n) Form and denomination Form

The Sukuk shall be represented by Global Certificates in bearer form (exchangeable for definitive certificates only in limited circumstances) in accordance with the operational Procedures for Securities Services issued by MyClear dated 6 May 2011, as amended and substituted from time to time (“MyClear OPSS”) and/or any other procedures/ guidelines issued by the relevant authority(ies). No physical delivery of the Sukuk is permitted. The global certificates will be deposited with BNM acting as the Central Depository.

The Sukuk shall be issued in accordance with (a) the “Participation and Operation Rules for Payment and Securities Services issued by MyClear (“MyClear Rules”) and (b) MyClear OPSS, or their replacement thereof (collectively the “MyClear Rules and Procedures”) applicable from time to time.

Denomination

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The Sukuk shall be issued in denominations of RM1.0 million or in integral multiples thereof or if required, in such other denominations in accordance with the MyClear Rules and Procedures and/or any other procedures or guidelines issued by the relevant authorities.

(o) Mode of Issue Via private placement or book building.

At the option of the Issuer, the issuance may be effected by way of private placement or a “book-building” process on a best effort basis or on bought-deal basis without prospectus. Issuance of the Sukuk will be reported in FAST.

(p) Selling Restrictions Selling Restrictions at Issuance

The Sukuk may 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 Section 4 (6) of the Companies Act, 1965, as amended from time to time, 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 & Services Act, 2007 as amended from time to time (“CMSA”).

Selling Restrictions Thereafter

The Sukuk may 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 Section 4 (6) of the Companies Act, 1965, as amended from time to time, Schedule 6 or Section 229(1)(b) and Schedule 9 or Section 257(3) of the CMSA.

(q) Listing Status The Sukuk will not be listed on the Bursa Malaysia Securities Berhad or on any other stock exchanges.

(r) Minimum Level of Subscription (RM or %)

Minimum level of subscription for each issue that is not issued on a private placement basis (which shall be fully subscribed) shall be 5% of the issuance size. In the event any issue, offer or invitation is undersubscribed and cannot meet the minimum level of subscription, the same shall be aborted and where applicable, any consideration received for the purpose of subscription must be immediately returned to the respective investors.

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(s) Other Regulatory Approvals required in relation to the Issue

Not applicable

(t) Identified Assets Not applicable

Trust AssetsThe Trust Assets shall comprise the rights and entitlements under the Mudharabah Venture.

(u) Purchase and Selling Price/Rental (where applicable)

Not applicable under the contract of Mudharabah

(v) Conditions Precedent a) Receipt of the following documents in respect of the Issuer:

i) Certified true copy of resolution of Board of Directors of Issuer authorising the issuance of the Sukuk, acceptance, delivery and performance of the programme agreement, the trust deed and other relevant documents pertaining to the Sukuk Mudharabah Programme (collectively referred to as the “Transaction Documents” and more particularly described in item (z) (xvii));

ii) Certified true copy of each of the Certificate of Incorporation, Memorandum and Articles of Association and latest Forms 24,44 and 49 of the Issuer;

iii) List of authorised persons and their respective specimen signatures;

iv) A report of the relevant company search of the Issuer; and

v) Report of the relevant winding-up search or the relevant statutory declaration in relation to the Issuer;

b) For the purpose of redeeming the existing borrowings, receipt of redemption statements and letters of undertaking (if applicable) or such other documentary evidence satisfactory to the Facility Agent;

c) Receipt of the necessary resolutions as passed by the holders of the existing Islamic securities

14


issued by Assar Chemicals Sdn Bhd to approve early redemption of the said existing Islamic securities, in form satisfactory to the Facility Agent;

d) The endorsement from the Shariah Adviser in respect of the Sukuk Mudharabah Programme and the relevant Transaction Documents that the same are in compliance with the Shariah principles;

e) The Issuer shall have obtained a rating of AAAIS(fg) from the rating agency for the Sukuk Mudharabah Programme;

f) The Sukuk Mudharabah Programme shall be subject to the applicable prior approval from the SC and/or any other authorities having jurisdiction over matters pertaining to the Sukuk Mudharabah Programme having been obtained for the Issuer to undertake the Sukuk Mudharabah Programme and the compliance with all conditions of such approval;

g) The Transaction Documents and the Securities Lodgement Form for Central Securities Depository and Paying Agency Services as set out in Appendix 1 of CSDPAR shall have been executed and where applicable, stamped or endorsed as exempted from stamp duty and presented for registration;

h) Receipt of satisfactory legal opinion from the solicitors confirming among others:

(i) the Transaction Documents (to which it is a party) are legal, valid, binding and enforceable obligations of the Issuer; and

(ii) that all conditions precedent appearing in the programme agreement relating to the Sukuk Mudharabah Programme have been fulfilled or waived, as the case may be and that the Sukuk Mudharabah Programme is in order for issuance;

i) All transaction fees, costs and expenses due from the Issuer shall be paid in full;

j) All necessary documents in connection with the Al-Kafalah Facility shall have been executed by the respective parties thereto and all conditions

15


precedent for the availability of the Al-Kafalah Facility have been fulfilled; and

k) Such other conditions as advised by the solicitors and to be agreed by the Lead Arranger.

(w) Representations and Warranties

Including but not limited to the following :-

a) The Issuer is a company duly incorporated under the Companies Act 1965 and is validly existing and has full legal power to enter into, exercise its rights under and perform its obligations under the Transaction Documents;

b) There is no litigation, arbitration or dispute whether actual, pending or threatened against the Issuer which, if adversely determined, would or might materially and adversely affect the ability of the Issuer to perform or comply with any of its obligations under any of the Transaction Documents;

c) The latest audited financial statements of the Issuer received or to be received by the Trustee in respect of the Issuer present a true and fair view of its financial position as at the date of such financial statements and have been prepared in full compliance with the requirements of applicable laws of Malaysia;

d) No winding up proceedings have been commenced against the Issuer;

e) The Issuer is not in default of any agreement (whether in relation to payment, performance or otherwise) to which the Issuer is a party or by which the Issuer is bound which will materially and adversely affect the ability of the Issuer to perform any of its obligations under the Transaction Documents to which it is a party;

f) All information furnished by the Issuer do not contain any untrue statement or omit to state any fact which is material in the context of the issue of the Sukuk Mudharabah Programme and all expressions of expectation, intention, belief and opinion and all projections contained therein were honestly made on reasonable grounds after due and careful enquiry; and

16


g) Such other representations and warranties as

advised by the solicitors and to be agreed by the Lead Arranger.

(x) Dissolution Events Including but not limited to the following:

a) Non-Payments:

(1) the Issuer fails to pay any amount due from it under any series of the Sukuk. For the purposes of this sub-clause (a)(1), failure by the Issuer to pay any amount due from it under a series of the Sukuk shall not constitute a Dissolution Event in respect of the other series of the Sukuk issued under the Sukuk Mudharabah Programme unless the Issuer has also failed to pay any amount due from it under the other series of the Sukuk; or

(2) the Issuer fails to pay any amount due from it under any of the Transaction Documents to which it is a party (other than under sub-clause (a)(1) above and (a)(3) below) on the due date or date of demand, if so payable; or

(3) the Obligor fails to pay the relevant Exercise Price due from it under any Purchase Undertaking on the relevant Maturity Date. For the purposes of this sub-clause (a)(3), failure by the Obligor to pay any amount due from it under a Purchase Undertaking in respect of a series of Sukuk shall not constitute a Dissolution Event in respect of the other series of the Sukuk unless the Obligor has also failed to pay the relevant Exercise Price due from it under the other Purchase Undertakings in respect of the other series of Sukuk;

b) Other Breaches:

the Issuer breaches any of its obligations or terms and conditions under any of the Transaction Documents to which it is a party (other than under sub-clause (a) above which has a Material Adverse Effect and, if such breach in the reasonable opinion of the Trustee is capable of being remedied, the Issuer does not remedy the breach within a period of thirty

17


(30) days after the Issuer became aware or having been notified by the Trustee of the breach, whichever is earlier;

c) Misrepresentation:

any representation, warranty or statement which is made by the Issuer in the Transaction Documents is or proves to be incorrect or misleading in any material respect, which will in the reasonable opinion of the Trustee have a Material Adverse Effect;

d) Invalidity:

any provision of the Transaction Documents is or becomes, for any reason, invalid, illegal, void or unenforceable which would prevent the Issuer from or entitle the Issuer to refrain from performing any of its obligations thereunder;

e) Cessation of Business:

the Issuer ceases to carry on all or a substantial part of its business operation as at the date of the Trust Deed, which will in the reasonable opinion of the Trustee have a Material Adverse Effect;

f) Appointment of receiver, legal process:

an encumbrancer takes possession of, or a trustee, liquidator, receiver or similar officer is appointed in respect of, all or a substantial part of the business, assets or undertaking of the Issuer and is not paid out, withdrawn or discharged within thirty (30) days of such appointment, and which will have a Material Adverse Effect;

g) Insolvency:

the Issuer is unable to pay its debts within Section 218(2) of the Companies Act, 1965 and the Issuer has not taken any action in good faith to set aside such claims within twenty one (21) days from the date of service of such claims for payment;

h) Winding up:

a resolution being passed or an order of court

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is made that the Issuer be wound up or similar proceedings which are reasonably determined by the Trustee to be analogous in effect being instituted (other than for the purposes of an intra Group reorganisation on a solvent basis or an amalgamation, merger or reconstruction the terms whereof have previously been approved by the Trustee unless during or following such reconstruction the Issuer becomes or is declared to be insolvent); or a bona fide petition (which for the avoidance of doubt, excludes frivolous or vexatious petition) is presented for the winding-up or dissolution of the Issuer by an order of a court of competent jurisdiction unless such petition is stayed, withdrawn or dismissed within sixty (60) days (or such extended period as the Trustee may consent, such consent not to be unreasonably withheld) of its presentation; or the Issuer undergoes any scheme of reconstruction, arrangement or compromise pursuant to Section 176 of the Companies Act or the same has been instituted against it. For purposes of this clause, “Group” shall mean the Issuer and its subsidiaries;

i) Assets:

all or a material part of the property or assets of the Issuer shall be condemned, seized or otherwise appropriated, nationalised or compulsorily acquired by any person acting under the authority of the governmental body, which will in the reasonable opinion of the Trustee have a Material Adverse Effect;

j) Al-Kafalah Guarantee:

Danajamin has served a notice to require the Trustee to make a demand or claim on any Al-Kafalah Guarantee (more particularly described in item z(i)) pursuant to and in accordance with the terms of the Al-Kafalah Facility and the Al-Kafalah Guarantee. For the purpose of this sub-clause (j), such notice by Danajamin requiring the Trustee to demand or claim on a Al-Kafalah Guarantee issued in relation to a series of the Sukuk shall not constitute a Dissolution Event in respect of the other series of the Sukuk unless Danajamin has also served a notice to the Trustee to make a demand or claim on the Al-Kafalah

19


Guarantee issued in relation to other series of the Sukuk;

k) Composition:

the Issuer makes a general assignment or enters into an arrangement or composition with or for the benefit of its creditors in respect of all or a material part of (or a particular type of) its indebtedness;

l) Repudiation:

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;

m) Cross-default:

save for such indebtedness which are being contested in good faith by the Issuer, any indebtedness of any member of the Group for monies borrowed becomes due or payable or capable of being declared due or payable prior to its stated maturity by reason of a default by any member of the Group in its obligations in respect of the same, or any member of the Group fails to make any payment in respect thereof on the due date for such payment or if due on demand when demanded or the security for any such indebtedness becomes enforceable or any guarantee or similar obligations of any member of the Group for any such indebtedness is not discharged at maturity or when called provided that no Dissolution Event under this sub-clause (m) shall occur if the aggregate amount of indebtedness for monies borrowed is less than fifty per centum (50.0%) of the Group’s total borrowed monies (including Islamic financing but excluding the Sukuk) or Ringgit Malaysia One Hundred Million (RM100,000,000.00), whichever is the higher. For the purpose of this clause, “Group” shall mean the Issuer and its subsidiaries;

n) Judgment Passed:

the Issuer fails to satisfy any judgment which has a Material Adverse Effect passed against it by any court of competent jurisdiction and no

20


appeal against such judgment has been made to the appropriate appellate court within the time prescribed by law or such appeal has been dismissed;

o) Events relating to Danajamin:

the occurrence of any of the following events in respect of Danajamin:

i) the Al-Kafalah Guarantee ceases to be, or is claimed by Danajamin not to be, in full force and effect;

ii) it is or will become unlawful for Danajamin to perform or comply with any one or more of its obligations under the Al-Kafalah Guarantee;

iii) a resolution being passed or an order of court is made that Danajamin be wound up or similar proceedings which are reasonably determined by the Trustee to be analogous in effect being instituted or a bona fide petition (which for the avoidance of doubt, excludes frivolous or vexatious petition) is presented for the winding-up or dissolution of Danajamin by an order of a court of competent jurisdiction unless an application to stay, withdraw or dismiss such petition has been filed by Danajamin with the relevant authority within thirty (30) days of it presentation and such petition is stayed, withdrawn or dismissed within seventy five (75) days of its presentation;

iv) other than such failure by Danajamin as described in sub-clause (o)(vi) below, Danajamin stops or threatens to stop payment in respect of its obligations generally or any other debenture of or monies borrowed or any guarantee or indemnity given by Danajamin is not honoured when due and called upon or any indebtedness of Danajamin for monies borrowed becomes due or payable or capable of being declared due or payable prior to its stated maturity by reason of a default by Danajamin in its obligations in respect of the same, or Danajamin fails to make any payment in

21


respect thereof on the due date for such payment or if due on demand when demanded or the security for any such indebtedness becomes enforceable or any guarantee or similar obligations of Danajamin is not discharged at maturity or when called provided that the aggregate amount of Danajamin’s obligations in respect of which one or more of the events set out in this sub-clause (o)(iv) has occurred equals to or exceeds Ringgit Malaysia One Hundred Million (RM100,000,000.00);

v) Danajamin ceases to carry on its business operation as carried out as at the date of the Trust Deed;

vi) Danajamin fails to pay any amount due from it under any Al-Kafalah Guarantee issued by Danajamin in relation to the Sukuk Mudharabah Programme when due and called upon;

vii) Danajamin shall default in the performance of any covenant (other than the covenant to pay) in the Al-Kafalah Guarantee and, if such default is in the reasonable opinion of the Trustee capable of remedy, such default shall continue for a period of thirty (30) days after written notice thereof shall have been given to Danajamin by the Trustee and such event is materially prejudicial to the interests of the Sukukholders;

viii) any representation, warranty or statement which is made by Danajamin in the Al-Kafalah Guarantee is or proves to be incorrect or misleading in any material respect;

ix) Danajamin repudiates the Al-Kafalah Guarantee or does or causes to be done any act or thing evidencing an intention to repudiate the Al-Kafalah Guarantee;

x) Danajamin declares a moratorium on the payment of the principal or profit/interest on its indebtedness;

xi) Danajamin is unable to pay its debts

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within Section 218(2) of the Companies Act, 1965 and Danajamin has not taken any action in good faith to set aside such claims within twenty one (21) days from the date of service of such claims for payment or Danajamin becomes unable to pay any of its debts as they become due or stops or suspends or threatens to suspend with respect to all or any class of its debts;

xii) an encumbrancer takes possession of, or a trustee, liquidator, receiver or similar officer is appointed in respect of, all or a substantial part of the business, assets or undertaking of Danajamin and is not paid out, withdrawn or discharged within thirty (30) days of such appointment, and which will in the reasonable opinion of the Trustee have a Material Adverse Effect; or

xiii) Danajamin makes a general assignment or enters into an arrangement or composition with or for the benefit of its creditors in respect of all or a material part of (or a particular type of) its indebtedness.

For purposes of the Dissolution Events, the reference to “Material Adverse Effect” shall mean any event or circumstances the occurrence of which, has resulted in, or will be likely to result in a material adverse effect on:-

(a) the assets, business or condition (financial or otherwise) of the Issuer or Danajamin (as the case may be); or

(b) the Issuer’s or Danajamin’s (as the case may be) ability to perform or comply with any of its obligations under Transaction Documents or the Al-Kafalah Guarantee respectively; or

(c) the rights and benefits available to the Sukukholders under any provisions of the Al-Kafalah Guarantee.

In relation to the consequences of the occurrence of a Dissolution Event under any of the four (4) scenarios below, for the avoidance of doubt, submission of a claim by the Trustee on the

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relevant Al-Kafalah Guarantee(s) shall only be made upon the Obligor’s failure to pay the Exercise Price

Upon the occurrence of any of the events above (other than the Dissolution Events referred to in sub-clauses (a)(1), (a)(3), (j) and (o)(vi) above), the Trustee may, or shall if directed to do so by the Sukukholders of all series pursuant to an Extraordinary Resolution, declare that a Dissolution Event (other than the Dissolution Events referred to in sub-clauses (a)(1), (a)(3), (j) and (o)(vi) above) has occurred in respect of the Sukuk of all series, whereupon:

(1) the Exercise Price under all the Purchase Undertakings shall become immediately due and payable;

(2) the Issuer shall immediately acquire the Sukukholders’ interest in the Trust Assets in respect of all the Mudharabah Ventures; and

(3) if so directed by the Sukukholders pursuant to an Extraordinary Resolution, the Trustee shall submit a claim on all the Al-Kafalah Guarantee.

Upon the occurrence of the Dissolution Event referred to in sub-clause (a)(1) and/or (a)(3) above in relation to a series of the Sukuk (“Affected Series”), the Trustee shall without the need to seek further instructions or directions from the Sukukholders of the Affected Series, declare that such Dissolution Event has occurred in respect of the Affected Series, whereupon:

(1) the Exercise Price under the Purchase Undertakings in respect of all the Affected Series shall become immediately due and payable;

(2) the Issuer shall immediately acquire the Sukukholders’ interest in the Trust Assets in respect of the Mudharabah Ventures in respect of all the Affected Series; and

(3) the Trustee shall submit a claim on the Al-Kafalah Guarantee in respect of the Affected Series.

For the avoidance of doubt, apart from the Affected

24


Series, all other series of the Sukuk will continue to be unaffected and will continue to be guaranteed under the respective Al-Kafalah Guarantee.

Upon the occurrence of the Dissolution Event referred to in sub-clause (j) above in relation to a series of the Sukuk (“Invited Series”), the Trustee shall without the need to seek further instructions or directions from the Sukukholders of the Invited Series, declare that such Dissolution Event has occurred in respect of the Invited Series, whereupon:

(1) the Exercise Price under the Purchase Undertakings in respect of all the Invited Series shall become immediately due and payable;

(2) the Issuer shall immediately acquire the Sukukholders’ interest in the Trust Assets in respect of the Mudharabah Ventures in respect of all the Invited Series; and

(3) the Trustee shall submit a claim on the Al-Kafalah Guarantee in respect of the Invited Series.

For the avoidance of doubt, apart from the Invited Series, all other series of the Sukuk will continue to be unaffected and will continue to be guaranteed under the respective Al-Kafalah Guarantee. Upon the occurrence of the Dissolution Event referred to in sub-clause (o)(vi) above, the Trustee shall without the need to seek further instructions or directions from the Sukukholders of all the other series, being the series other than the Affected Series which Danajamin has failed to pay such amount that is due and called upon it (such other series is hereinafter referred to as “Unaffected Series”), declare that such Dissolution Event has occurred in respect of all the Unaffected Series, whereupon:

(1) the Exercise Price under the Purchase Undertakings in respect of all the Unaffected Series shall become immediately due and payable;

(2) the Issuer shall immediately acquire the Sukukholders’ interest in the Trust Assets in respect of the Mudharabah Ventures in respect of all the Unaffected Series; and

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(3) the Trustee shall submit a claim on the Al-

Kafalah Guarantee in respect of all the Unaffected Series.

(y) Principal terms and conditions for warrants (where applicable)

Not applicable

(z) Other Principal Terms and Conditions for the Issue

(i) Al-Kafalah Guarantee

Pursuant to the facility agreement governing the terms of the Al-Kafalah Facility entered into between the Issuer and Danajamin (“Al-Kafalah Facility Agreement”), Danajamin shall issue an irrevocable and unconditional Al-Kafalah Guarantee in respect of each series of the Sukuk in favour of the Trustee to guarantee all payment obligations of the Obligor (except payment obligation on compensation (“Ta’widh”)) under each of the Purchase Undertakings relating to and corresponding with the Sukuk belonging to the same series.

Each Al-Kafalah Guarantee shall only allow one (1) demand to be made against Danajamin. For the avoidance of doubt the Al-Kafalah Facility is a separate arrangement from the Sukuk Mudharabah Programme and entered into separately between the Issuer and Danajamin.

(ii) Positive Covenants Including but not limited to the following: -.

a) The Issuer shall remain effectively, a subsidiary of the Sarawak State Government via direct/indirect holdings by Sarawak State and/or Sarawak State related agencies and/or Sarawak Statutory bodies. For the avoidance of doubt, the Issuer shall be permitted to undertake an initial public offering exercise subject to compliance of this condition;

b) The Issuer shall conduct all inter-company trade transactions on arm’s length commercial terms;

c) The Issuer shall procure that no substantial change is made to the nature or direction of business of the Issuer;

d) The Issuer shall regularly submit a copy of quarterly progress reports to the Trustee in

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relation to capital expenditure undertaken on the Centralised Oil Distribution Terminal, Oil, Gas and Chemicals Jetty projects located in Tanjung Manis and Bitumen plant project located in Senari, including any other capital expenditure envisaged to be financed under future issuances under the Sukuk Mudharabah Programme;

e) The Issuer shall immediately inform the Trustee of any event which may materially and adversely impact the operating performance and/or financial position of the Issuer;

f) The Issuer shall submit its audited financial statements to the Trustee, within 180 days from its fiscal year-end(s);

g) The Issuer shall submit its quarterly management accounts within 60 days from its fiscal quarter-year end(s);

h) The Issuer will at all times ensure that such utilisation of the Sukuk proceeds and instruments in the Mudharabah Ventures shall be for Shariah compliant business purposes or activities; and

i) Such other positive covenants as advised by the solicitors and to be agreed by the Lead Arranger.

(iii) Negative Covenants Including but not limited to the following:

a) Save and except for any encumbrances or liens arising by operation of law or created in the ordinary course of business, pledges created in relation to documentary credits opened in the ordinary course of trading, leasing arrangements and hire purchase transactions, existing encumbrances and security interests and those encumbrances and security Interests contemplated and created or to be created pursuant to the terms of the Sukuk Mudharabah Programme (“Permitted Encumbrances”), the Issuer, Assar Chemicals Sdn Bhd and Assar Chemicals Dua Sdn Bhd shall not pledge any of its assets, present and future, without the prior written consent of the Trustee;

b) The Issuer shall not undertake or permit any

27


merger, consolidation or reorganisation without the prior written consent of the Trustee save for such merger, consolidation or reorganisation to facilitate the initial public offering exercise of the Issuer or merger or reconstruction of the Issuer which will not materially and adversely affect the ability of the Issuer to perform its obligations under the Transaction Documents to which it is party;

c) The Issuer shall not add to, delete, vary or amend its Memorandum and Articles of Association in any manner which would be inconsistent with the terms of the Transaction Documents;

d) The Issuer shall not decrease or alter (save to increase) its authorised or issued capital or alter the structure thereof or the rights attached thereto other than in relation to any share buy-back scheme which has been approved by the Issuer’s shareholders following the conversion of the Issuer to a public company;

e) Save for the Permitted Indebtedness, the Issuer shall not incur further indebtedness;

“Permitted Indebtedness” shall mean indebtedness as follows:-

(i) bank guarantees and/or letters of credit procured or to be procured by the Group in relation to its oil and gas and refinery business;

(ii) any hire purchase or leasing of any equipment or goods or vehicles incurred or assumed by the Group;

(iii) any foreign exchange or interest rate hedging products that arise in the normal course of business;

(iv) borrowings of up to RM50.0 million for the Group’s working capital requirements;

(v) other trade finance facilities which are non-recourse in nature to the Issuer;

(vi) any existing indebtedness disclosed to the Trustee; and

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(vii) short term debt incurred in the ordinary

course of business, and for the purpose of this sub-clause, the short term debt is deemed to be payable on demand or maturing by its terms within twelve (12) months after the date on which it was originally incurred.

f) The Issuer shall not make any distribution to its shareholders or repay advances from its shareholders and/or directors in the event:-

(i) any payment under any of the Sukuk is overdue and unpaid; or

(ii) a Dissolution Event has occurred or if following such distribution or payment a Dissolution Event would occur; or

(iii) post-distribution Finance Service Cover Ratio (“FSCR”) is below 1.75 times. “Finance Service Cover Ratio” means:

Cash opening balance + net cashflows ----------------------------------------------------------

Profit/Interest payments + Principal payment/redemption (if any) + guarantee

fee

g) Such other negative covenants as advised by the solicitors and to be agreed by the Lead Arranger.

(iv) Purchase Undertaking

In respect of each series of the Sukuk, the Obligor shall grant to the Trustee (acting on behalf of the Sukukholders) the Purchase Undertaking whereby the Obligor shall undertake to purchase the Trust Assets from the Trustee at the Exercise Price upon the occurrence of the respective maturity dates of such series of the Sukuk or the declaration of a Dissolution Event in respect of such series of the Sukuk or upon the exercise of the Call Option on the Call Date, whichever is earlier.

The “Exercise Price” shall be determined based on the following formula:

In the event the Dissolution Date falls on a maturity date:

In respect of Sukuk with Periodic Payments, the Exercise Price shall be the Mudharabah Capital

29


plus Expected Return less total Periodic Distributions paid up to such Dissolution Date.

In respect of Sukuk without Periodic Payments, the Exercise Price shall be the Mudharabah Capital plus Expected Return less One-off Distribution.

In the event the Dissolution Date falls on the date of the declaration of a Dissolution Event:

In respect of Sukuk with Periodic Payments, the Exercise Price shall be the Mudharabah Capital plus Expected Return up to such date the Dissolution Event was declared less total of Periodic Distribution(s) paid up to such Dissolution Date, and to be adjusted to be equivalent to the accreted value plus accrued but unpaid Periodic Payment applicable to that Series of Sukuk (if any) up to such Dissolution Date.

In respect of Sukuk without Periodic Payments, the Exercise Price shall be the Mudharabah Capital plus Expected Return less One-off Distribution.

In the event the Dissolution Date falls on the Call Date:

In respect of Sukuk Mudharabah with Periodic Payments, the Exercise Price shall be the Mudharabah Capital plus Expected Return up to the Call Date less total Periodic Distribution(s) paid up to such Dissolution Date, and to be adjusted to be equivalent to the accreted value plus accrued but unpaid Periodic Payment applicable to that Series of Sukuk (if any) up to such Dissolution Date plus the difference between the nominal value of the relevant Series of the Sukuk and the prevailing Bond Pricing Agency Malaysia’s yield of the relevant Series of Sukuk less thirty (30) basis points, which shall be determined by the Lead Arranger / Lead Manager at least ten (10) days prior to the Call Date.

In respect of Sukuk Mudharabah without Periodic Payments, the Exercise Price shall be the Mudharabah Capital plus Expected Return less One-off Distribution plus the difference between the nominal value of the relevant Series of the Sukuk and the prevailing Bond Pricing Agency Malaysia’s yield of the relevant Series of Sukuk less thirty (30) basis points, which shall be determined by the Lead Arranger / Lead Manager

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at least ten (10) days prior to the Call Date.

On any payment of the Exercise Price, the Obligor will be entitled to deduct the aggregate of the Advance Profit Payment made in relation to the portion of the Sukuk outstanding from the Exercise Price.

The Obligor’s obligations pursuant to the Purchase Undertakings will constitute direct, unconditional and unsecured obligations 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 Obligor except: (a) liabilities which benefit from liens or are subject to rights of set off arising in the normal course of business or by operation of law and not by way of contract; and (b) liabilities which are preferred solely by law.

(v) Redemption at the

Option of the Issuer (“Call Option”)

The Issuer shall be granted a one-time call option no earlier than 24 months from the date of first issuance to purchase the Trust Assets from the Trustee (acting on behalf of the Sukukholders) and to fully redeem all of the outstanding Sukuk on the Call Date at the Exercise Price.

(vi) Withholding Tax 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 the Government of Malaysia or under Malaysian law unless such withholding or deduction is required by law, in which event, the Issuer shall not be required to gross up for any such withholding or deduction.

(vii) Repurchase and Cancellation

The Issuer may at any time purchase the Sukuk at any price in the open market or otherwise and these repurchased Sukuk shall be cancelled.

(viii) Compensation for Late and Default Payments (“Ta’widh”) (applicable to the Purchase Undertaking only)

In the event of any overdue payments of any amounts due under the Purchase Undertaking, the Obligor shall pay to the Trustee for the benefit of the Sukukholders compensation (“Ta’widh”) on such overdue amounts at the rate and manner prescribed by the Shariah Advisory Council of the SC from time to time in accordance with Shariah principles.

(ix) Status The Sukuk shall constitute direct, unconditional

31


and unsecured obligations of the Issuer and will rank equally and rateably (pari passu), without discrimination, preference or priority in point of priority and security amongst themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Obligor except: (a) liabilities which benefit from liens or are subject to rights of set off arising in the normal course of business or by operation of law and not by way of contract; and (b) liabilities which are preferred solely by law.

(x) Redemption Unless previously redeemed or purchased and cancelled, the Sukuk shall be redeemed at their face value on the relevant maturity dates.

(xi) Clear Market From the date that Senari Synergy obtains its board of directors’ approval for the issuance under the Sukuk Mudharabah Programme until the ninetieth (90th) day after the first issue of the Sukuk, Senari Synergy undertakes to not accept, mandate, syndicate or privately place any other external borrowings or guarantee facility without the prior written approval of the Lead Arranger/ Lead Manager.

(xii) Adverse Market Condition

At any time prior to the execution of the Transaction Documents, the Lead Arranger/ Lead Manager/Facility Agent/ placee(s)/investor(s) reserves the right to withdraw/ terminate the arrangement of the Sukuk Mudharabah Programme if there occurs any change in national or international financial, political or economic conditions, including but not limited to adversities in international/domestic money, capital or syndicated loan markets, the business activities or financial position of the Issuer which in the opinion of the Lead Arranger/Facility Agent/placee(s)/investor(s) will materially affect the offering and distribution of the Sukuk or dealings in the Sukuk in the secondary market upon successful completion of the arrangement of the same.

(xiii) Changes in Circumstances

If at any time prior to the execution of the Transaction Documents, as a result of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof or if compliance by the Lead Arranger/ Lead Manager /Security Agent / Facility Agent / placee(s)/investor(s) (collectively “Transaction Parties”) with any applicable direction, request or requirement (whether or not having the force of

32


law) will impose on the Transaction Parties any condition, burden or obligation then the commitment of the Lead Arranger/Lead Manager/ Facility Agent to arrange/subscribe (as the case may be) for the Sukuk Mudharabah Programme will terminate upon notice to the Issuer by the Transaction Parties of the occurrence of such event after becoming aware thereof.

(xiv) Incidental Expenses and Legal Fees

All legal and professional fees, Shariah Adviser fees, the cost of due diligence exercises, stamp duties (where applicable), taxes and any other out-of-pocket expenses incurred pursuant to the Issuer’s acceptance of the Sukuk Mudharabah Programme and for purposes of preparation and submission of any application/prospectus/information memorandum (as the case may be) to the relevant authorities and the preparation of security documentation (if applicable, notwithstanding non issuance of the Sukuk Mudharabah Programme by the Issuer) in connection with the Sukuk Mudharabah Programme shall be borne by the Issuer.

(xv) Currency Ringgit Malaysia.

(xvi)

(xvii)

Documentation

Transaction Documents

The Transaction Documents and such other standard documentation satisfactory to all parties concerned incorporating clauses normal and customary for a financing of this nature and/or as advised by the Lead Arranger/ Lead Manager’s solicitor.

The Transaction Documents shall include the following:-

(a) the Sukuk Programme Agreement;

(b) the Trust Deed;

(c) the Purchase Undertaking;

(d) the Declaration of Trust;

(e) the Mudharabah Agreement; and �

�� such other agreements as may be advised by the Legal Counsels. �

(xviii) Governing Laws The Sukuk and the Transaction Documents are governed by, and shall be construed in accordance with, the laws of Malaysia.

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ANNEXURE 1

1 The Issuer (as “Mudarib”) will from time to time enter into a Mudharabah contract with the Trustee acting on behalf of the investors (as “Rabbulmal”) to participate in the Shariah-compliant business of the Issuer and its subsidiaries (“Mudharabah Venture”). The business activities of the Issuer and its subsidiaries (collectively, “Group”) involves the provisioning of centralized storage and distribution facilities to the oil and gas industry, the palm oil refinery business and property development.

2&3 The Issuer will issue Sukuk to the Sukukholders who shall make 100% capital contribution (“Mudharabah Capital”) in the said Mudharabah Venture via the Trustee.

4 The Issuer shall declare a trust over the rights and entitlements under the Mudharabah Venture (“Trust Assets”) for the benefit of the Sukukholders and itself. The Sukuk hence represents each of the Sukukholders’ undivided proportionate beneficial interests in the Mudharabah Venture.

5 Profits generated from the Mudharabah Venture will be shared and distributed between the Rabbulmal and the Mudarib according to a pre-agreed profit sharing ratio (“PSR”) of 99:1, while losses will be borne solely by the Rabbulmal. In respect of Sukuk with periodic payments, the payment of profits shall be distributed semi-annually to the Sukukholders (“Periodic Payment(s)”). In respect of Sukuk without Periodic Payment(s), the payment of profits shall be distributed to the Sukukholders on a one-off basis (the “One-off Distribution”) on the respective maturity dates of such Sukuk Mudharabah.

6 Senari Synergy (as the “Obligor”), shall undertake to purchase the Trust Assets from the Trustee (acting on behalf of the Sukukholders) via a Purchase Undertaking at the Exercise Price, upon occurrence of the earlier of the respective maturity dates of the Sukuk, upon the declaration of a Dissolution Event or upon the exercise of the Call Option.

7 Danajamin (as the “Guarantor”) shall guarantee all payment obligations of the Obligor (except payment obligation on compensation (“Ta’widh”) under the Purchase Undertaking.

APPENDIX II

SENARI SYNERGY’S AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 29 JULY 2010 (DATE OF INCORPORATION) TO 31 DECEMBER 2010