BENALEC HOLDINGS BERHAD -...

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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Securities takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

BENALEC HOLDINGS BERHAD (Company No. 702653-V) (Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS IN RELATION TO THE

PART A

PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK

PART B PROPOSED GRANT OF OPTIONS UNDER THE SHARE ISSUANCE SCHEME TO MS LEAW AI LIN,

AN EXECUTIVE DIRECTOR OF THE COMPANY

The Ordinary Resolutions in respect of the above proposals will be tabled as Special Businesses at the Twelfth Annual General Meeting (“12th AGM”) of Benalec Holdings Berhad (“Benalec” or the “Company”). The Notice of the 12th AGM of the Company together with the Proxy Form, are set out in the 2017 Annual Report of the Company (“Annual Report”), which is dispatched together with this Circular. The Proxy Form must be completed and deposited at the Company’s Share Registrar at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or alternatively, the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time stipulated for holding the 12th AGM. The lodgement of the Proxy Form will not preclude you from attending and voting in person at the 12th AGM should you subsequently wish to do so. Last date and time for lodging the Proxy Form : Monday, 20 November 2017 at 10.00 a.m.

Date and time of the 12th AGM : Wednesday, 22 November 2017 at 10.00 a.m.

Venue of the 12th AGM : Ballroom Selangor 3, Grand Dorsett Subang Hotel,

Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan

This Circular is dated 24 October 2017

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DEFINITIONS

The following definitions shall apply throughout this Circular unless the context requires otherwise:- Act : The Companies Act 2016, as amended from time to time and any re-enactment AGM : Annual General Meeting Benalec or Company : Benalec Holdings Berhad (Company No. 702653-V) Benalec Group or Group

: Benalec and its subsidiaries, collectively

Benalec Share(s) or Share(s)

: Ordinary share(s) in Benalec

Board of Directors or Board

: Board of Directors of Benalec

Bursa Securities : Bursa Malaysia Securities Berhad (Company No. 635998-W) By-Laws : The rules, terms and conditions of the Share Issuance Scheme as may be modified,

varied and/or amended from time to time Code : Malaysian Code on Take-Overs and Mergers 2016, including any amendment which

may be made from time to time Constitution : The Constitution of Benalec Circular : This Circular is dated 24 October 2017 Eligible Person(s) : The employee or Director of Benalec who meets the criteria of eligibility for

participation in the Scheme as stipulated in the By-Laws

EPS : Earnings per share FYE : Financial year ended/ending, as the case may be Listing Requirements : Main Market Listing Requirements of Bursa Securities including any amendment

thereto which may be made from time to time LPD : 20 September 2017, being the latest practicable date prior to the printing of this

Circular MFRS 2 : Malaysian Financial Reporting Standard 2 on Share Based Payment as issued by

the Malaysian Accounting Standards Board NA : Net assets Oceancove : Oceancove Sdn Bhd (Company No. 863187-T) Oceanview Cove : Oceanview Cove Sdn Bhd (Company No. 898867-V) Offer : A written offer made by the Option Committee to an Eligible Person(s) in the

manner provided in the By-Laws Options : The right of a Grantee which may be conditional or unconditional to subscribe for

new Shares upon acceptance of an Offer under the Scheme Option Committee : A committee appointed by the Board to administer the Scheme

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DEFINITIONS (CONT”D) Proposals : Proposed Renewal of Authority for Share Buy-Back and Proposed Grant of

Options under the Share Issuance Scheme to Ms Leaw Ai Lin, an Executive Director of the Company, collectively

Proposed Grant of Options

: Proposed Grant of Options under the Share Issuance Scheme to Ms Leaw Ai Lin, an Executive Director of the Company

Proposed Share Buy-Back

: Proposed renewal of authority for the Company to purchase its own shares of up to 10% of the issued shares pursuant to Section 127 of the Act

Purchased Shares : Benalec Shares to be purchased by the Company pursuant to the Proposed Share

Buy-Back RCSB : RM200 million nominal value of 7-year Redeemable Convertible Secured Bonds

issued by Benalec on 29 April 2015 RM and Sen : Ringgit Malaysia and sen respectively, being the lawful currency of Malaysia SC : Securities Commission Malaysia Scheme or SIS : Share Issuance Scheme implemented by Benalec on 17 January 2011 Substantial Shareholders : Has the meaning given in Section 136 of the Act Treasury Shares : The Purchased Shares which are or will be retained in treasury by the Company

and shall have the meaning given under Section 127 of the Act WAMP : Weighted average market price Words incorporating the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include corporation(s), unless otherwise specified. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise stated.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

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TABLE OF CONTENTS

PAGE

INTRODUCTION iv PART A - PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK

1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED SHARE BUY-BACK 1 3. FUNDING 2 4. RATIONALE FOR THE PROPOSED SHARE BUY-BACK 2 5. POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-

BACK 3

6. EFFECTS OF THE PROPOSED SHARE BUY-BACK 4 7. PUBLIC SHAREHOLDING SPREAD 8 8. IMPLICATION OF THE CODE 8 9. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS 8 10. APPROVAL REQUIRED 8 11. DIRECTORS’ STATEMENT AND RECOMMENDATION 8 12. FURTHER INFORMATION 8 PART B - PROPOSED GRANT OF OPTIONS UNDER THE SHARE ISSUANCE SCHEME TO

MS LEAW AI LIN, AN EXECUTIVE DIRECTOR OF THE COMPANY

1. INTRODUCTION 9 2. DETAILS OF THE PROPOSED GRANT OF OPTIONS 9 3. RATIONALE FOR THE PROPOSED GRANT OF OPTIONS 10 4. EFFECTS OF THE PROPOSED GRANT OF OPTIONS 10 5. APPROVALS REQUIRED 11 6. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS 11 7. CORPORATE PROPOSALS ANNOUNCED BUT NOT YET COMPLETED 11 8. DIRECTORS’ STATEMENT AND RECOMMENDATION 11 9. ANNUAL GENERAL MEETING 11 10. FURTHER INFORMATION 12 APPENDIX I 13 APPENDIX II 14 & 15

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Registered Office: Unit 30-01, Level 30, Tower A

Vertical Business Suite Avenue 3, Bangsar South

No. 8 Jalan Kerinchi 59200 Kuala Lumpur

24 October 2017

Board of Directors Datuk Aznam bin Mansor (Chairman, Independent Non-Executive Director) Dato’ Leaw Seng Hai (Group Managing Director/Chief Executive Director) Koo Hoong Kwan (Senior Independent Non-Executive Director) Wong Yoke Nyen (Independent Non-Executive Director) Leaw Ai Lin (Executive Director) To: The Shareholders of Benalec Holdings Berhad Dear Sir / Madam, (I) PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK; AND (II) PROPOSED GRANT OF OPTIONS UNDER THE SHARE ISSUANCE SCHEME TO MS LEAW AI LIN, AN

EXECUTIVE DIRECTOR OF THE COMPANY INTRODUCTION On 9 October 2017, the Board had announced to Bursa Securities that the Company proposed to seek shareholders’ approval on the Proposed Renewal of Authority for Share Buy-Back and Proposed Grant of Options at the forthcoming 12th AGM of the Company to be convened on Wednesday, 22 November 2017. The purpose of this Circular is to provide shareholders with relevant information and explain details of the above Proposals and to seek shareholders’ approval for resolutions pertaining to the Proposals to be tabled at the forthcoming 12th AGM, which will be held at Ballroom Selangor 3, Grand Dorsett Subang Hotel, Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Wednesday, 22 November 2017 at 10.00 a.m.

The Notice of the forthcoming 12th AGM and the Proxy Form are enclosed in the Company’s 2017 Annual Report, which is dispatched to you together with this Circular.

YOU ARE ADVISED TO READ AND CONSIDER THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN CAREFULLY BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE 12TH AGM.

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PART A


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1. INTRODUCTION

At the 11th AGM of the Company held on 28 November 2016, the Board obtained shareholders’ approval for the authority to purchase its own shares of up to a maximum of 10% of the total number of issued shares of the Company. This authority which took effect upon passing of the ordinary resolution, will expire at the conclusion of the forthcoming 12th AGM of the Company unless it is renewed. The Board proposes to seek renewal of the authority to purchase up to 10% of the issued shares of the Company as quoted on Bursa Securities at the point of purchase, subject to compliance with the provisions of the Act, Listing Requirements and/or any other relevant authorities. The renewal of authority for share buy-back, if approved by the shareholders at the forthcoming 12th AGM, will be effective immediately upon the passing of the ordinary resolution proposed at the forthcoming 12th AGM and the authority conferred under the Proposed Share Buy-Back shall only continue to be in force until:-

(i) the conclusion of the next AGM of the Company at which time the authority shall lapse unless by ordinary

resolution passed at that general meeting, the authority is renewed either unconditionally or subject to conditions; or

(ii) the expiration of the period within the next AGM after that date is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by shareholders in a general meeting;

whichever occurs first.

2. DETAILS OF THE PROPOSED SHARE BUY-BACK

As at the LPD, the details of the issued Shares of Benalec are as follows: No. of Shares

Issued Shares of the Company 811,802,500* 10% of the issued Shares 81,180,250 Less: number of Treasury Shares held as at the LPD (12,715,400) Balance for Proposed Share Buy-Back 68,464,850

Note:- *Inclusive of 12,715,400 Benalec Shares which have been purchased and retained as Treasury Shares as at the LPD.

The Purchased Shares held as Treasury Shares may be distributed as share dividends to shareholders of the Company and/or subsequently cancelled and/or resold on the market of Bursa Securities as may be determined from time to time by the Board.

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The Purchased Shares shall be at prices not exceeding 15% above the WAMP of the Purchased Shares for 5 market days immediately prior to the purchase and will be purchased from the open market through Bursa Securities. The Treasury Shares arising from the share buy-back, including those Purchased Shares shall be resold on the market, if so determined by the Board, at:-

a) a price which is not less than 5% to the WAMP of the Purchased Shares for 5 market days immediately

before the resale; or

b) a discounted price of not more than 5% to the WAMP of the Purchased Shares for 5 market days immediately before the resale provided that:-

(i) the resale takes place no earlier than 30 days from the date of purchase; and (ii) the resale price is not less than the cost of purchase of the Shares being resold.

The Board will, at its discretion, deal with the Purchased Shares in the following manner:- a) cancel the Purchased Shares; or

b) retain the Purchased Shares as Treasury Shares; or

c) retain part of the Purchased Shares as Treasury Shares and cancel the remainder of the Shares; or

d) such other manner as allowed by the Act and Bursa Securities from time to time.

3. FUNDING

In accordance with the Listing Requirements, the maximum funds to be utilised for the Proposed Share Buy-Back shall not exceed the aggregate of the retained profits of the Company based on the latest audited financial statements and/or latest management accounts of the Company available (where applicable). Based on the latest audited financial statements of the Company for FYE 30 June 2017, the retained profits of the Company was RM18,814,326. The funding of the Proposed Share Buy-Back will be financed by internally generated funds and/or external borrowings and the proportion of which to be utilised will depend on the actual number of Shares to be purchased, the price of the Shares and the availability of funds at the time of purchase(s). The actual number of Shares that may be purchased will depend on, amongst others, the prevailing market condition and the sentiment of the overall stock market. In the event that the Company purchases its own shares using external borrowings, the Board will ensure that there are sufficient funds to repay the external borrowings and repayment would not be expected to have any material effect on the cash flow of the Company.

4. RATIONALE FOR THE PROPOSED SHARE BUY-BACK

The Proposed Share Buy-Back is expected to benefit the Company and its shareholders in the following manner:

a) Benalec is able to utilise its surplus financial resources which are not immediately required for other usage

to purchase its own shares from the open market;

b) where the Purchased Shares are retained as Treasury Shares, the Board would have an option to distribute the Purchased Shares as share dividends to reward shareholders of the Company;

c) the Purchased Shares may be held as Treasury Shares and resold in the open market to reap potential capital appreciation of the Shares without affecting the total issued shares of the Company;

d) the Company may be able to reduce any unwarranted volatility of its Shares and assist to stablise the supply, demand and price of its Shares in the open market, thereby supporting the fundamental value of its Shares; and

e) where the Board resolves to cancel the Purchased Shares, the Group’s EPS is expected to be enhanced as a result of the reduction in the issued shares of the Company, thereby enabling long term and genuine investors to enjoy any potential corresponding increase in the value of their investments in the Company.

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5. POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK

5.1 Potential Advantages The potential advantages of the Proposed Share Buy-Back are as follows:-

a) It allows the Company to take preventive measures against excessive speculation, particularly when

the Shares are undervalued which would in turn stabilise the market price of the Shares to enhance investors’ confidence and may also assist in facilitating future fund raising via the equity market;

b) It allows the flexibility for the Group in attaining its desired capital structure, in terms of the debt and

equity composition and the size of equity;

c) The resultant reduction in the total number of issued Shares (in respect of Shares so purchased which are then cancelled) is expected to improve the EPS and the NA per Share of the Group as well as the probability of declaring a higher quantum of dividends in the future;

d) To stabilise any downward trend of the market price of the Shares;

e) Opportunities for potential gains from the resale of Treasury Shares at prices higher than the purchase prices when the market price improves and consequently increase the working capital and NA of the Group; and

f) In the event the Treasury Shares are distributed as share dividends by the Company, it may then serve to reward shareholders of the Company.

5.2 Potential Disadvantages The potential disadvantages of the Proposed Share Buy-Back are as follows:-

a) The purchase(s) may result in a reduction of the reserves available for distribution as dividends and/or bonus issue(s) to shareholders if the Shares so purchased are cancelled;

b) The purchase(s) of existing Shares will reduce the financial resources of the Group and may result in the Group foregoing other investment opportunities that may emerge in the future;

c) The purchase(s) may result in the Group having to forego any income that may be derived from the deposit of such funds in interest bearing instruments; and

d) In the event the purchase(s) of existing Shares are funded by bank borrowings, the net cash flow of the Group may decline to the extent of the interest costs associated with the said borrowings.

Nevertheless, the Board will be mindful of the interest of the Company and its shareholders in exercising any decision to purchase its own Shares.


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6. EFFECTS OF THE PROPOSED SHARE BUY-BACK

The effects of the Proposed Share Buy-Back on the share capital, EPS, NA, working capital, dividends and shareholdings of Benalec are as set out below:-

6.1 Share Capital

The effect of the Proposed Share Buy-Back on the share capital of the Company will depend on whether the Shares purchased are cancelled or retained as Treasury Shares. The Proposed Share Buy-Back will result in a reduction of the issued shares of the Company if the Shares purchased are cancelled. On the assumption that the Proposed Share Buy-Back is carried out in full and the Shares so purchased are fully cancelled, the Proposed Share Buy-Back will result in the issued shares of Benalec as at the LPD to be reduced as shown below:-

MINIMUM SCENARIO MAXIMUM SCENARIO

No. of Shares RM# No. of Shares RM#

Issued Shares as at the LPD 811,802,500* 202,950,625 811,802,500* 202,950,625 Exercise of all outstanding Options as at the LPD Conversion of the outstanding RCSB as at the LPD

-

-

-

-

28,281,500

283,687,943

7,070,375

70,921,986

Total issued Shares 811,802,500 202,950,625 1,123,771,943 280,942,986

Maximum number of Benalec Shares which may be purchased and cancelled pursuant to the Proposed Share Buy-Back

(81,180,250) (20,295,063) (112,377,194) (28,094,299)

Resultant issued Shares after cancellation of Benalec Shares purchased under the Proposed Share Buy-Back

730,622,250

182,655,562

1,011,394,749

252,848,687

Notes:-

* Inclusive of 12,715,400 Benalec Shares which have been purchased and retained as Treasury Shares as at the LPD.

# Not inclusive of amounts standing to credit of the share premium of RM157,537,902, which has been

transferred to the share capital account of the Company pursuant to the transitional provisions set out in Section 618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the share premium amount for purposes as set out in Sections 618(3) of the Act. There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

Minimum Scenario: Assuming no additional exercise of Options and conversion of RCSB as at the LPD,

prior to the implementation of the Proposed Share Buy-Back. Maximum Scenario: Assuming full exercise of Options and conversion of RCSB as at the LPD, prior to

the implementation of the Proposed Share Buy-Back. Full conversion of the RM200,000,000 nominal value of RCSB at the conversion price of RM0.705 represents a premium of approximately 16.3% over the 5-day WAMP of Benalec shares, up to and including 2 January 2015, of RM0.6061 per Benalec Share.

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The Proposed Share Buy-Back will not have any effect on the issued Shares of the Company if the Purchased Shares are retained as Treasury Shares. Pursuant to the Act, if the Purchased Shares are treated as Treasury Shares, the rights attached to them as to voting, dividends and participation in other distribution and otherwise are suspended and the Treasury Shares shall not be taken into account in calculating the number or percentage of shares or of a class of shares in the Company for any purpose including, without limiting the generality of this provision, the provisions of any law or requirements of the Constitution or the Listing Requirements on substantial shareholdings, takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting.

6.2 EPS

The effects of the Proposed Share Buy-Back on the earnings and EPS of the Group will depend on the purchase price(s) of the Shares, the quantum of Shares to be bought back and the effective funding cost to the Group to finance the Purchased Shares or any loss in interest income to the Group. Where the Shares so purchased are to be cancelled, the EPS of the Group will generally, all else being equal, increase as a result of the reduction in the issued Shares of the Company.

6.3 NA

The Proposed Share Buy-Back, if carried out, may increase or decrease the NA per Share of the Group depending on the purchase price(s) of the Shares to be purchased. The NA per Share will increase if the purchase price is less than the audited NA per Share but will decrease if the purchase price exceeds the audited NA per Share at the time the Shares are purchased. If the Treasury Shares are resold on Bursa Securities, the NA per Share of the Group would increase if the Company realises a gain from the resale and vice versa.

6.4 Working Capital

The Proposed Share Buy-Back, if carried out, will reduce the working capital of the Company. The quantum of the reduction of the working capital of the Group would depend on the purchase price(s), number of Purchased Shares and the effective funding cost thereof. However, upon resale of the Treasury Shares, the working capital of the Group will increase. Again, the quantum of the increase in the working capital will depend on the number of Treasury Shares resold and the selling price.

6.5 Dividends

The Proposed Share Buy-Back, if carried out, may have an impact on the Company’s dividend policy as it may reduce the cash available, which may otherwise be used for the dividend payment. However, the Treasury Shares so purchased may be distributed as dividends to shareholders of the Company if the Board so decides.

6.6 Shareholdings

Assuming the Proposed Share Buy-Back is carried out in full by the Company, and the Purchased Shares are cancelled, the effects of the Proposed Share Buy-Back on the shareholdings of the directors and substantial shareholders based on the Benalec’s Register of Directors’ Shareholdings and Register of Substantial Shareholders’ Shareholdings as at the LPD are as follows:-

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7. PUBLIC SHAREHOLDING SPREAD

As at the LPD, the public shareholding spread of the Company is 58.02%.

7.1 Under the Minimum Scenario:

The public shareholding spread is expected to be reduced to 54.08% assuming the Proposed Share Buy-Back is implemented in full and all the Shares so purchased are cancelled assuming no additional exercise of Options and conversion of RCSB as at the LPD.

7.2 Under the Maximum Scenario: The public shareholding spread is expected to be increased to 66.24% assuming the Proposed Share Buy-Back is implemented in full and all the Shares so purchased are cancelled assuming full exercise of Options and conversion of RCSB as at the LPD. In implementing the Proposed Share Buy-Back, the Board will be mindful of maintaining a public shareholding spread of at least 25% pursuant to Paragraph 8.02(1) of the Listing Requirements.

8. IMPLICATION OF THE CODE

The Proposed Share Buy-Back is not expected to trigger any obligation to undertake a mandatory general offer pursuant to the Code as a result of the Proposed Share Buy-Back. It is the intention of Benalec to implement the Proposed Share Buy-Back in a manner that will not result in any of the shareholders of Benalec having to undertake a mandatory take-over offer pursuant to the Code.

9. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

None of the Directors or Substantial Shareholders and/or persons connected to them has any interest, direct or indirect, in the Proposed Share Buy-Back.

10. APPROVAL REQUIRED The Proposed Share Buy-Back is subject to the approval being obtained from shareholders of the Company at

the forthcoming 12th AGM. 11. DIRECTORS’ STATEMENT AND RECOMMENDATION

The Board is of the opinion that the Proposed Share Buy-Back is in the best interest of the Company and its shareholders. The Board recommends that shareholders vote in favour of the resolution in respect of the Proposed Share Buy-Back at the forthcoming 12th AGM.

12. FURTHER INFORMATION

Shareholders are advised to refer to the Appendices set out in this Circular for further information.


8

PART B

PROPOSED GRANT OF OPTIONS UNDER THE SHARE ISSUANCE SCHEME TO

MS LEAW AI LIN, AN EXECUTIVE DIRECTOR OF THE COMPANY


PROPOSED GRANT OF OPTIONS UNDER THE SHARE ISSUANCE SCHEME TO MS LEAW AI LIN, AN EXECUTIVE DIRECTOR OF THE COMPANY 1. INTRODUCTION

On 9 October 2017, the Board had announced to Bursa Securities of the Company’s intention to seek shareholders’ approval at the forthcoming 12th AGM for the Proposed Grant of Options under the Scheme to Ms Leaw Ai Lin, an Executive Director of the Company.

2. DETAILS OF THE PROPOSED GRANT OF OPTIONS

Benalec had on 17 January 2011 implemented the Scheme for Eligible Person(s) for a period of 5 years until the expiry on 16 January 2016. Subsequently, the Scheme was extended for another 5 years until 15 January 2021. The Scheme is administered by the Option Committee comprising of Directors and senior management appointed by the Board, in accordance with the terms of the By-Laws. Pursuant to the Scheme, the Company is allowed to offer and grant Options to Eligible Person(s) who meet the criteria of eligibility for participation in the Scheme to subscribe for new Shares in accordance with the provisions of the By-Laws. As at the LPD, the status of the Options are as follows:-

Status of Options Number of Options

Options offered to Eligible Person(s) 49,412,000

Options accepted by Eligible Person(s) (A) 49,307,000

Options forfeited (B) (12,183,000)

Option exercised by Eligible Person(s) (C) (8,842,500)

Options remain unexercised by Eligible Person(s) (A-B-C) 28,281,500

Ms Leaw Ai Lin was appointed as Executive Director of the Company on 20 January 2017. The Board proposes to grant Options to Ms Leaw Ai Lin to participate in the Scheme by virtue of her position as an Executive Director of the Company provided that:- (i) she must not participate in the deliberation or discussion of her own allocation of the number of Options to

be offered to her, as well as that of persons connected with her, under the Scheme. (ii) not more than 10% (or such percentage as allowable by the relevant authorities) of the new Shares

available under Scheme shall be allocated to her, if she, either singly or collectively through persons connected with her (as defined in the Listing Requirements of Bursa Securities), holds 20% (or such other percentage as may be permitted by Bursa Securities or any other relevant authorities from time to time) or more of the total number of issued shares of the Company (excluding treasury shares).

In accordance with the By-Laws, the subscription price of the new Shares pursuant to the Options granted under the Proposed Grant of Options shall be the higher of the par value of the Shares, or based on the 5-day WAMP of Benalec Shares immediately preceding the date the Options is offered, at a discount of not more than 10% as may be determined by the Option Committee in a fair and equitable manner.

9

The new Shares to be allotted upon the exercise of an Option granted pursuant to the Proposed Grant of Options shall, upon issue and allotment, rank parri passu in all respects with the existing Shares, except that the new Shares issued and allotted pursuant to the exercise of Options will not be entitled to any dividend, rights, allotments or distributions, the entitlement date of which is prior to the date of allotment of the said new Shares. The new Shares allotted shall be subject to all the provisions of the Constitution of the Company.

3. RATIONALE FOR THE PROPOSED GRANT OF OPTIONS

The Proposed Grant of Options is in recognition of Ms Leaw Ai Lin’s valued contribution in charting and executing the strategic direction and goals of the Group in her role as an Executive Director. Furthermore, her participation in the Scheme will further strengthen the Group’s ability to attract and retain capable individuals to act as Executive Directors of the Company.

4. EFFECTS OF THE PROPOSED GRANT OF OPTIONS

4.1 Issued Shares and Substantial Shareholders’ Shareholding

The Proposed Grant of Options is not expected to have any immediate effect on the existing issued shares of the Company. The issued shares of the Company will increase progressively depending on the number of new Shares which may need to be issued pursuant to the exercise of Options. The Proposed Grant of Options is not expected to have any immediate effect on the substantial shareholders’ percentage of shareholding in the Company until and unless new Shares are issued in connection with the exercise of the Options. Any potential effect on the substantial shareholders’ shareholdings in the Company would depend on the number of new Shares issued at such relevant point in time.

4.2 NA and Gearing

The Proposed Grant of Options will not have an immediate effect on the consolidated NA, NA per Share and gearing of the Group until such time that new Shares are issued pursuant to the exercise of the Options granted and vested under the Scheme. Any potential effect on the consolidated NA per share and gearing of the Group will depend on the number of new Shares to be issued upon exercise of the Options and the subscription price. In any event, the Group’s NA per Share will increase if the subscription price exceeds the consolidated NA per Share at the point of exercise and conversely, will decrease if the subscription price is less than the NA per Share at the point of exercise.

4.3 Earnings The Proposed Grant of Options is not expected to have any immediate material effect on the earnings of

the Group save for the possible impact of MFRS 2, upon granting of the Options. However, any potential effect on the EPS of the Group in the future would depend on the impact of MFRS 2, the number of Options exercised as well as the utilisation of the proceeds arising therefrom.

Under MFRS 2, the potential cost arising from the issuance of the Options, which is measured by the fair value of the Options after taking into account, inter-alia, the number of Options granted and vested and the subscription price, will need to be measured at the grant date and to be recognised as an expense over the vesting period, and therefore may affect the future earnings of the Group, the quantum of which can be determined only at the grant date. However, the estimated cost does not represent a cash outflow by the Company as it is merely an accounting treatment. The Company has taken note of the potential impact of MFRS 2 on the Group’s future earnings and shall take into consideration such impact in the allocation and granting of Options to Eligible Person(s).

4.4 Convertible Securities

As at the LPD, save for 28,281,500 outstanding Options pursuant to the Scheme and 283,687,943 new shares to be issued in the event of full conversion of the outstanding RCSB, the Company does not have any other outstanding convertible securities.

10

5. APPROVALS REQUIRED

The Proposed Grant of Options is subject to the approval of shareholders of Benalec at the forthcoming 12th AGM and any other relevant authorities, if required.

6. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

Ms Leaw Ai Lin is deemed interested in the Proposed Grant of Options in view of her eligibility for the Options to be allocated pursuant to the By-Laws. Accordingly, she has abstained and will continue to abstain from all deliberations and voting at Board Meetings of the Company in respect of her entitlement in the Proposed Grant of Options. Ms Leaw Ai Lin is the daughter of Dato’ Leaw Seng Hai, a director and substantial shareholder of the Company (“Person Connected”). She has undertaken that she will ensure that the Person Connected to her shall abstain from voting in respect of his direct and/or indirect shareholdings in the Company on the resolution deliberating or approving the Proposed Grant of Options at the forthcoming 12th AGM. She does not have any interest in the Company, direct or indirect as at the LPD. Save as disclosed above, none of the other Directors and/or Major Shareholder of the Company and its subsidiaries or persons connected to them has any interest, direct or indirect, in the Proposed Grant of Options.

7. CORPORATE PROPOSALS ANNOUNCED BUT NOT YET COMPLETED Save for the Proposals which have been announced and the Proposed Grant of Options, the Board confirms that

there is no other outstanding corporate exercise which has been announced but pending implementation or completion as at the LPD.

8. DIRECTORS’ STATEMENT AND RECOMMENDATION

Save for Ms Leaw Ai Lin and the Person Connected to her who are interested in the Proposed Grant of Options, the Board is of the opinion that the Proposed Grant of Options is in the best interest of the Company and its shareholders. Accordingly, the Board (except for Ms Leaw Ai Lin and the Person Connected to her who had abstained and will continue to abstain from expressing any opinion and voting in relation to the Proposed Grant of Options in view of their interests) recommends that shareholders vote in favour of the resolution pertaining to the Proposed Grant of Options at the forthcoming 12th AGM.

9. ANNUAL GENERAL MEETING

The ordinary resolution to approve the Proposed Grant of Options is set out as Special Business in Notice of 12th AGM contained in the 2017 Annual Report of the Company, which is being sent to all shareholders together with this Circular. The 12th AGM of the Company will be held at Ballroom Selangor 3, Grand Dorsett Subang Hotel, Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Wednesday, 22 November 2017 at 10.00 a.m. If you wish to appoint a proxy to attend and vote on your behalf, you are requested to complete, sign and return the Proxy Form enclosed in the 2017 Annual Report of the Company in accordance with the instructions printed thereon as soon as possible, so as to arrive at the Registered Office of the Company not less than 48 hours before the time set for the 12th AGM. The completion and return of the Proxy Form does not preclude you from attending and voting in person at the meeting if you are able to do so.

11

10. FURTHER INFORMATION

Shareholders are advised to refer to the Appendices set out in this Circular for further information.

Yours faithfully For and on behalf of the Board of BENALEC HOLDINGS BERHAD KOO HOONG KWAN Senior Independent Non-Executive Director


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APPENDIX I FURTHER INFORMATION 1. DIRECTORS’ RESPONSIBILITY STATEMENT

This Circular has been seen and approved by the Board of Benalec who collectively and individually accept full responsibility for the accuracy and correctness of the information contained herein and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement in this Circular false or misleading.

2. MATERIAL LITIGATION

Save as disclosed in the 2017 Annual Report of the Company, as at the LPD, the Board is not aware of any proceedings pending or threatened, or of any facts likely to give rise to any proceedings, which might materially and adversely affect the business or financial position of our Group.

3. MATERIAL CONTRACTS

Save as disclosed in the 2017 Annual Report of the Company, the Board is not aware of any contracts which are or may be material, not being contracts entered into in the ordinary course of business, during the past two (2) years preceding the date of this Circular.

4. MATERIAL COMMITMENTS

As at the LPD, the Board is not aware of any material commitments incurred or known to be incurred by the Group which may have a material impact on the financial results/position of the Group.

5. CONTINGENT LIABILITIES

Save as disclosed below, as at the LPD, the Board is not aware of any contingent liabilities incurred or known to be incurred by the Group which upon becoming enforceable, may have a material impact on the financial results/position of the Group:- Corporate guarantees given to banks for credit facilities granted to subsidiary companies amount to RM12,893,129.

6. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the Registered Office of the Company at Unit 30-01 Level 30, Tower A Vertical Business Suite, Avenue 3 Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur, during office hours from Mondays to Fridays (except public holidays) from the date of this Circular until the date of the 12th AGM: (i) The Constitution;

(ii) The audited consolidated financial statements of Benalec for the past two (2) financial years ended 30 June

2016 and 30 June 2017; and

(iii) By-Laws of Scheme.

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APPENDIX II EXTRACT OF RESOLUTIONS TO BE TABLED AS SPECIAL BUSINESSES AT THE 12TH ANNUAL GENERAL MEETING ORDINARY RESOLUTION 9 PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO TEN PERCENT OF THE TOTAL NUMBER OF ISSUED SHARES OF THE COMPANY

“THAT, subject always to the Companies Act 2016 (“the Act”), the provisions of the Constitution of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised, to the fullest extent permitted by law, to purchase such amount of ordinary shares in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:- a. the aggregate number of shares purchased does not exceed ten percent (10%) of the total number of issued

shares of the Company as quoted on Bursa Securities as at the point of purchase; b. the maximum funds to be allocated by the Company for the purpose of purchasing its shares shall not exceed

the total retained earnings of the Company at the time of the purchase(s); and

c. the Directors of the Company may decide to:-

i. retain the shares purchased as treasury shares for distribution as dividend to the shareholders and/or resale on the market of Bursa Securities and/or for cancellation subsequently; and/or

ii. cancel the shares so purchased; and/or iii. retain part of the shares so purchased as treasury shares and cancel the remainder in the manner as

allowed by the Act. THAT such authority shall commence upon passing of this resolution and shall continue to be in force until:- a. the conclusion of the next Annual General Meeting of the Company following the forthcoming Annual General

Meeting at which such resolution was passed at which time it will lapse, unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

b. the expiration of the period within which the next Annual General Meeting of the Company after the date is required by law to be held; or

c. revoked or varied by ordinary resolution passed by the shareholders in general meeting; whichever occurs first. AND THAT authority be and is hereby given unconditionally and generally to the Directors of the Company to taken all such steps as are necessary or expedient (including without limitation, the opening and maintaining of central depository account(s) under the Securities Industry (Central Depositories) Act, 1991, and the entering into of all other agreements, arrangements and guarantee with any party or parties) to implement, finalise and give full effect to the aforesaid purchase with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities and with the fullest power to do such acts and things thereafter (including without limitation, the cancellation or retention as treasury shares of all or any part of the purchased shares) in accordance with the Act, the provisions of the Constitution of the Company and the Main Market Listing Requirements of Bursa Securities and/or guidelines of Bursa Securities and all other relevant governmental and/or regulatory authorities.”

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APPENDIX II (CONT”D) EXTRACT OF RESOLUTIONS TO BE TABLED AS SPECIAL BUSINESSES AT THE 12TH ANNUAL GENERAL MEETING (CONT”D) ORDINARY RESOLUTION 10 PROPOSED GRANT OF OPTIONS TO MS LEAW AI LIN, AN EXECUTIVE DIRECTOR OF THE COMPANY “THAT the Option Committee of the Company for administering the Share Issuance Scheme (“SIS”) be and is hereby authorised at any time and from time to time, during the existence of the SIS, to offer and to grant to Ms Leaw Ai Lin, an Executive Director of the Company, options to subscribe for the new Shares under the SIS and to allot and issue from time to time new Shares upon exercise of such options, provided always that:-

i. she must not participate in the deliberation or discussion of her own allocation of the number of Options to be offered to her, as well as that of the persons connected with her, under the SIS; and

ii. not more than ten percent (10%) (or such percentage as allowable by the relevant authorities) of the new Shares

available under SIS shall be allocated to her, if she, either singly or collectively through persons connected with her (as defined in the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), holds twenty percent (20%) (or such other percentage as may be permitted by Bursa Securities or any other relevant authorities from time to time) or more of the total number of issued shares of the Company (excluding treasury shares); and

subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the By-Laws of the SIS and any prevailing guidelines issued by Bursa Securities, the MMLR of Bursa Securities or any other relevant authorities as amended from time to time.”

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