Contents :

1. INTRODUCTION

 

On behalf of the Board of Directors of KKB, AmMerchant Bank Berhad (formerly known as Arab-Malaysian Merchant Bank Berhad) ("AmMerchant Bank") wishes to announce that the Company is proposing to establish a new employee share option scheme of up to ten percent (10%) of the issued and paid-up share capital of the Company at any point in time during the duration of the Proposed New ESOS or such additional number of shares that may be permitted by the Securities Commission (“SC”) from time to time during the duration of the Proposed New ESOS, upon expiry of its existing ESOS in October 2003.

2. DETAILS OF THE PROPOSED NEW ESOS
     
The Proposed New ESOS will be governed by a set of bye-laws ("Bye-Laws") and shall, inter-alia, stipulate the following: -

2.1 Total Number of New Shares Available Under the Proposed New ESOS  

The maximum number of new shares which may be allotted pursuant to the exercise of Options under the Proposed New ESOS shall not exceed ten percent (10%) of the issued and paid-up share capital of the Company at any point in time during the duration of the Proposed New ESOS or such additional number that may be permitted by the SC from time to time during the duration of the Proposed New ESOS.

Any full time employee or executive director of KKB and its subsidiaries (“KKB Group”) who is at least eighteen (18) years of age and have been employed for a continuous period of at least 1 year in the KKB Group and who fulfil the conditions to be set out in the Bye-Laws of the Proposed New ESOS shall be eligible to participate in the Proposed New ESOS.

2.3 Duration of the Proposed New ESOS      

The Proposed New ESOS shall be in force for a duration of five (5) years from the date of the confirmation letter submitted by the adviser of the Company to the SC in accordance with the requirements of the SC subject however to a renewal of up to a further five (5) years, if the Board of Directors of the Company deems fit, upon the recommendation by the Option Committee.

2.4 Subscription Price      

The subscription price for each new share under the Proposed New ESOS shall be the higher of the following:-

(a) the weighted average market price of the shares for the five (5) market days immediately preceding the date of offer, with a discount of not more than ten percent (10%) (if deemed appropriate); and

(b) the par value of the shares.

2.5 Rights Attaching to New Shares

The new shares to be allotted and issued upon any exercise of the options under the Proposed New ESOS will, upon such allotment and issuance, rank pari passu in all respects with the then existing and issued shares except that the new shares so issued will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of the new shares. The new shares will be subject to all the provisions of the Articles of Association of the Company in relation to their transfer, transmission or otherwise of the shares.
 

3. RATIONALE FOR THE PROPOSED NEW ESOS

The Board of Directors of the Company have proposed the establishment of a new ESOS to achieve the following objectives: -
(a) to recognise the contribution of eligible employees and executive directors whose services are valued and considered vital to the operations and continued growth of the KKB Group;
(b) to motivate employees and executive directors of the KKB Group towards better performance through greater productivity and loyalty;

(c) to stimulate a greater sense of belonging and dedication since employees and executive directors are given the opportunity to participate directly in the equity of the Company;

(d) to encourage employees to remain with the KKB Group thus ensuring that the loss of key personnel is kept to a minimum; and

(e) to reward employees and executive directors by allowing them to participate in the Company’s profitability and eventually realise capital gains arising from any appreciation in the value of the Company’s shares.

4. FINANCIAL EFFECTS OF THE PROPOSED NEW ESOS

The Proposed New ESOS will not have any immediate material effect on the share capital of the Company. However, assuming all options which may be granted under the Proposed New ESOS are granted and exercised, the issued and paid-up share capital of the Company will be increased in the manner as set out in Table 1.

4.1 Share Capital

The Proposed New ESOS will not have any immediate material effect on the share capital of the Company. However, assuming all options which may be granted under the Proposed New ESOS are granted and exercised, the issued and paid-up share capital of the Company will be increased in the manner as set out in Table 1.

4.2 Shareholdings of Directors and Major Shareholders

The Proposed New ESOS is not expected to have any material effect on the shareholdings of the directors and major shareholders of the Company. However, the shareholdings of the directors and major shareholders may be diluted upon the exercise of the ESOS options.


4.3 Earnings

The Proposed New ESOS is not expected to have any material effect on the earnings of the group for the financial year ending 31 December 2003. Any potential effect on the earnings per share of the KKB Group in the future would be dependent on the number of options granted and exercised at any point in time as well as the price payable upon exercise of the options and the utilisation of proceeds arising from the exercise of the options.


4.4 Net Tangible Assets ("NTA")      

The Proposed New ESOS is not expected to have any immediate material effect on the NTA of the KKB Group, until such time when the options are exercised. Any effect on the NTA per share of the KKB Group will depend on the number of options granted and exercised at any point in time as well as the price payable upon exercise of the options.

The Proposed New ESOS is not expected to have any material effect on the dividend to be declared by the Company, if any, for the financial year ending 31 December 2003. Any potential effect on the dividends to be declared in the future will be dependent on the dividend rate to be determined after taking into consideration the number of new shares issued pursuant to the exercise of the options.

5. CONDITIONS OF THE PROPOSED NEW ESOS  

The Proposed New ESOS is conditional upon approvals being obtained from the following:-

(i) the SC;

(ii) the shareholders of KKB at an Annual General Meeting (“AGM”) to be convened for the Proposed New ESOS;

(iii) the KLSE for the listing of and quotation for the new shares to be issued pursuant to the Proposed New ESOS; and

(iv) any other relevant authorities, if applicable.

6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM  

Mr. Kho Kak Beng (JBK), Mr. Tan Heong Ming, Mr. Kho Pok Tong and Ms. Kho Poh Lin are deemed interested in the proposed allocation of options under the Proposed New ESOS to each of them in their capacity as Chairman & Group Managing Director and Executive Directors respectively. Mr. Kho Kak Beng (JBK) is the father of Mr. Kho Pok Tong and Ms. Kho Poh Lin and is also a substantial shareholder of the Company by virtue of his substantial shareholding in Kho Kak Beng Holding Company Sdn Bhd.

Accordingly Mr. Kho Kak Beng (JBK), Mr. Tan Heong Ming, Mr. Kho Pok Tong and Ms. Kho Poh Lin will abstain from all deliberations and voting at the Board meetings of the Company on the proposed allocation of options under the Proposed New ESOS to each of them and will also respectively abstain from voting on the resolutions pertaining to the same in respect of their direct and/or indirect shareholdings, if any in the Company at the AGM to be convened.

Mr. Chris Teh Kiang Meng and his wife, Ms. Kho Poh Joo, are the son-in-law and daughter respectively to Mr. Kho Kak Beng (JBK) and brother-in-law and sister respectively to Mr. Kho Pok Tong and Ms. Kho Poh Lin. Accordingly, they are persons connected to Mr. Kho Kak Beng (JBK), Mr. Kho Pok Tong and Ms. Kho Poh Lin and are also deemed interested in the Proposed ESOS by virtue of their eligibility for options to be granted to them under the Proposed New ESOS as employees of KKB. Mr. Chris Teh Kiang Meng and Ms. Kho Poh Joo will also abstain from voting on the resolutions pertaining to the proposed allocations of options to Mr. Kho Kak Beng (JBK), Mr. Kho Pok Tong and Ms. Kho Poh Lin under the Proposed New ESOS to be tabled at the forthcoming AGM in respect of their direct and indirect shareholdings, if any in the Company.

Ms. Kho Hong Luan who is the sister to Mr. Kho Kak Beng (JBK) is also a person connected to Mr. Kho Kak Beng (JBK). She is also deemed interested in the Proposed New ESOS by virtue of her eligibility for options to be allocated under the Proposed New ESOS as an employee of KKB Group. Accordingly, Ms. Kho Hong Luan will abstain from voting on the resolution pertaining to the proposed allocation of options to Mr. Kho Kak Beng (JBK) under the Proposed New ESOS to be tabled at the forthcoming AGM in respect of her direct and indirect shareholdings, if any in the Company.

Mr. Kho Kak Beng (JBK), Mr. Tan Heong Ming, Mr. Kho Pok Tong and Ms. Kho Poh Lin also undertake to ensure that any other persons connected with them will abstain from voting on the resolutions pertaining to the proposed allocation of options to them under the Proposed New ESOS, at the forthcoming AGM.

Save as disclosed above, none of the other Directors and/ or major shareholders of the Company and/ or persons connected (as defined in Section 122A of the Companies Act, 1965) with the Directors and/ or major shareholders of the Company, have any interest, directly or indirectly, in the Proposed New ESOS.  

7. DIRECTORS' STATEMENT

The Board of Directors of KKB, having taken into consideration all aspects of the Proposed New ESOS, is of the opinion that the Proposed New ESOS is in the best interest of the Company.


8. ADVISER

AmMerchant Bank has been appointed to act as the Adviser of the Company for the Proposed New ESOS.

9. SUBMISSION TO THE SC

The application to the SC seeking its approval for the Proposed New ESOS is expected to be made within two (2) months from the date of this announcement.

This announcement is dated 27 February 2003.