this circular is important and requires … - circular dated 19.05.2020...this circular is important...

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to the next course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately. Bursa Malaysia Securities Berhad 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.

TANCO HOLDINGS BERHAD

(Registration No. 195801000190 (3326-K)) (Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS IN RELATION TO THE:-

PART A

PROPOSED SETTLEMENT OF DEBTS OWING TO A DIRECTOR OF OUR COMPANY, NAMELY ANDREW TAN JUN SUAN (THE GROUP MANAGING DIRECTOR OF TANCO HOLDINGS BERHAD (“TANCO”)) AMOUNTING TO RM17,079,920 TO BE FULLY SATISFIED VIA THE ISSUANCE OF 341,598,402 NEW ORDINARY SHARES IN TANCO (“SETTLEMENT SHARES”) AT AN ISSUE PRICE OF RM0.05 PER SETTLEMENT SHARE (“PROPOSED SETTLEMENT”)

PART B

INDEPENDENT ADVICE LETTER IN RELATION TO THE PROPOSED SETTLEMENT

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Principal Adviser Independent Adviser

MERCURY SECURITIES SDN BHD

(Registration No. 198401000672 (113193-W)) (A Participating Organisation of Bursa Malaysia Securities Berhad)

BDO CAPITAL CONSULTANTS SDN BHD (Registration No. 199601032957 (405309-T))

(Incorporated in Malaysia)

The Notice of the Extraordinary General Meeting (“EGM”) of Tanco to be conducted fully virtual at the Broadcast Venue to be held at Auditorium, 3A Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia on Wednesday, 3 June 2020 at 10.30 a.m. or at any adjournment thereof is enclosed together with the Form of Proxy in this Circular. Please refer to the Administrative Guide for the EGM in Appendix II of this Circular on the conduct of a fully virtual EGM. You are entitled to participate, speak and vote at the EGM or appoint a proxy or proxies (where applicable) to participate, speak and vote on your behalf. If you wish to do so, the Form of Proxy duly completed must be deposited at the Share Registrar’s office at Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia, not less than 48 hours before the time set for holding the EGM or any adjournment thereof. Alternately, the Proxy Form can be deposited electronically through the Share Registrar’s website, Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my before the Proxy Form lodgement cut-off time as mentioned above. The completion and lodgement of the Form of Proxy shall not preclude you from participating, speaking and voting in person at the EGM should you subsequently wish to do so. Last day, date and time for lodging the Form of Proxy : Monday, 1 June 2020 at 10.30 a.m. Day, date and time of the EGM : Wednesday, 3 June 2020 at 10.30 a.m.

This Circular is dated 19 May 2020





PART A


PART B


AND













PART A


PART B


AND













PART A


PART B


AND













PART A


PART B


AND













PART A


PART B


AND









THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in doubt as to the next course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

Bursa Malaysia Securities Berhad 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.

TANCO HOLDINGS BERHAD (Registration No. 195801000190 (3326-K))



PART A

PROPOSED SETTLEMENT OF DEBTS OWING TO A DIRECTOR OF OUR COMPANY, NAMELY ANDREW TAN JUN SUAN (THE GROUP MANAGING DIRECTOR OF TANCO HOLDINGS BERHAD (“TANCO”))AMOUNTING TO RM17,079,920 TO BE FULLY SATISFIED VIA THE ISSUANCE OF 341,598,402 NEW ORDINARY SHARES IN TANCO (“SETTLEMENT SHARES”) AT AN ISSUE PRICE OF RM0.05 PER SETTLEMENT SHARE (“PROPOSED SETTLEMENT”)

PART B


AND



MERCURY SECURITIES SDN BHD(Registration No. 198401000672 (113193-W))

(A Participating Organisation of Bursa Malaysia Securities Berhad)

BDO CAPITAL CONSULTANTS SDN BHD(Registration No. 199601032957 (405309-T))

(Incorporated in Malaysia under the Companies Act, 1965)

The Notice of the Extraordinary General Meeting (“EGM”) of Tanco to be conducted fully virtual at the Broadcast Venue to be held at Auditorium, 3A Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia on Wednesday, 3 June 2020 at 10.30 a.m. or at any adjournment thereof is enclosed together with the Form of Proxy in this Circular. Please refer to the Administrative Guide for the EGM in Appendix II of this Circular on the conduct of a fully virtual EGM.

You are entitled to participate, speak and vote at the EGM or appoint a proxy or proxies (where applicable) to participate, speak and vote on your behalf. If you wish to do so, the Form of Proxy duly completed must be depositedat the Share Registrar’s office at Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia, not less than 48 hours before the time set for holding the EGM or any adjournment thereof. Alternately, the Proxy Form can be deposited electronically through the Share Registrar’s website, Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my before the Proxy Form lodgement cut-off time as mentioned above. The completion and lodgement of the Form of Proxy shall not preclude you from participating, speaking and voting in person at the EGM should you subsequently wish to do so.

Last day, date and time for lodging the Form of Proxy : Monday, 1 June 2020 at 10.30 a.m.Day, date and time of the EGM : Wednesday, 3 June 2020 at 10.30 a.m.


DEFINITIONS

i

Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- Act : Companies Act, 2016 Andrew Tan or the Creditor : Andrew Tan Jun Suan BDO or the Independent Adviser

: BDO Capital Consultants Sdn Bhd (199601032957 (405309-T))

Board : Board of Directors Bursa Securities : Bursa Malaysia Securities Berhad (200301033577 (635998-W)) Circular : This circular to our shareholders dated 19 May 2020 in relation to

the Proposed Settlement Debts : Debts owing to the Creditor by our Group amounting to

RM17,079,920 Directors : Directors of our Company EGM : Extraordinary general meeting FPE : Financial period ended FYE : Financial year ended / ending, as the case may be IAL : Independent advice letter from BDO dated 19 May 2020 to the

non-interested Shareholders in relation to the Proposed Settlement as set out in Part B of this Circular

Listing Requirements : Main Market Listing Requirements of Bursa Securities LPD : 13 May 2020, being the latest practicable date prior to the printing

of this Circular LTD : 4 March 2020, being the last trading date prior to the

announcement of the Proposed Settlement Mercury Securities or the Principal Adviser

: Mercury Securities Sdn Bhd (198401000672 (113193-W))

NA : Net assets Proposed Settlement : Proposed settlement of Debts to be fully satisfied via the issuance

of 341,598,402 Settlement Shares at an issue price of RM0.05 per Settlement Share

RCN : Redeemable convertible notes of our Company Settlement Agreement : The settlement agreement dated 5 March 2020 entered into

between Andrew Tan and his nominee, TJN Capital (a major shareholder of Tanco and a company controlled by Andrew Tan) and Tanco for the Proposed Settlement

i

DEFINITIONS (cont’d)

ii

Settlement Shares : 341,598,402 new Tanco Shares to be allotted and issued to TJN Capital under the Proposed Settlement in accordance with the Settlement Agreement

Shareholders : Shareholders of our Company Tan Family : Collectively, the late Datuk Seri Tan Jing Nam and his family,

including through companies controlled by them Tanco or our Company : Tanco Holdings Berhad (195801000190 (3326-K)) Tanco Group or our Group : Collectively, Tanco and our subsidiaries Tanco Shares or our Shares : Ordinary shares in our Company TJN Capital : TJN Capital Sdn Bhd (201101037303 (965437-A)) VWAP : Volume weighted average market price Warrants B : Existing warrants 2018/2021 of our Company

All references to “our Company” or “Tanco” in this Circular are to Tanco Holdings Berhad and references to “our Group” or “Tanco Group” are to our Company and its subsidiaries, collectively. All references to “you” in this Circular are to the shareholders of our Company. Words importing 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 corporations, 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. Any discrepancies in the tables between amounts stated and the totals in this Circular are due to rounding. “RM” and “sen” refer to Ringgit Malaysia and sen respectively. Certain statements in this Circular may be forward-looking in nature, which are subject to uncertainties and contingencies. Forward-looking statements may contain estimates and assumptions made by our Board after due enquiry, which are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of a forward-looking statement in this Circular should not be regarded as a representation or warranty that our Company’s plans and objectives will be achieved.

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

ii

TABLE OF CONTENTS

iii

PART A PAGE LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSED SETTLEMENT:- 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED SETTLEMENT 2 3. RATIONALE FOR THE PROPOSED SETTLEMENT 6 4. RISK FACTOR RELATING TO THE PROPOSED SETTLEMENT 7 5. EFFECTS OF THE PROPOSED SETTLEMENT 7 6. TENTATIVE TIMELINE 10 7. HIGHEST PERCENTAGE RATIO AND APPROVALS REQUIRED 10 8. CONDITIONALITY 11 9. CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION 11 10. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS

CONNECTED WITH THEM 11

11. RELATED PARTY TRANSACTION 12 12. TOTAL AMOUNT TRANSACTED WITH THE SAME RELATED PARTY FOR THE

PRECEDING 12 MONTHS 12

13. BOARD’S RECOMMENDATION 13 14. AUDIT AND RISK MANAGEMENT COMMITTEE’S STATEMENT 13 15. EGM 13 16. FURTHER INFORMATION 14

PART B IAL TO THE NON-INTERESTED SHAREHOLDERS OF TANCO IN RELATION TO THE PROPOSED SETTLEMENT

15

APPENDICES APPENDIX I FURTHER INFORMATION 42 APPENDIX II ADMINISTRATIVE GUIDE FOR THE EGM 48

NOTICE OF EGM ENCLOSED FORM OF PROXY ENCLOSED

iii

PART A

LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSED SETTLEMENT

1



Registered office: No. 1, Jalan Bandar 1 Pusat Bandar Puchong 47160 Puchong Selangor Darul Ehsan 19 May 2020

Board of Directors Dato’ Dr. Mohd. Aminuddin bin Mohd. Rouse (Independent Non-Executive Chairman) Andrew Tan Jun Suan (Group Managing Director) Dato’ Tan Lee Sing (Group Executive Director) Datuk Rashidi bin Hasbullah (Independent Non-Executive Director) James Wong Kwong Yew (Independent Non-Executive Director) Koay Ghee Teong (Executive Director) Christopher Tan Khoon Suan (Executive Director) To: Our Shareholders Dear Sir / Madam, PROPOSED SETTLEMENT 1. INTRODUCTION

On 5 March 2020, Mercury Securities had, on behalf of our Board, announced that our Company proposes to undertake the Proposed Settlement. On 9 April 2020, Mercury Securities had, on behalf of our Board, announced that Bursa Securities had, vide its letter dated 9 April 2020, resolved to approve the listing and quotation of 341,598,402 new Shares to be issued pursuant to the Proposed Settlement. The approval of Bursa Securities is subject to the conditions as set out in Section 7, Part A of this Circular. On 28 April 2020, Mercury Securities had, on behalf of our Board, announced that Bursa Securities had, vide its letter dated 28 April 2020, resolved to grant our Company an extension of time until 14 market days after the date of the eventual upliftment of the movement control order imposed by the Government of Malaysia to issue this Circular to the Shareholders.

1

2

In view of the interests of the related parties as set out in Section 10, Part A of this Circular, the Proposed Settlement is deemed a related party transaction pursuant to Paragraph 10.08 of the Listing Requirement. Accordingly, BDO has been appointed as the Independent Adviser to advise the non-interested Shareholders in relation to the Proposed Settlement on whether the Proposed Settlement is fair and reasonable and whether the transaction is to the detriment of the non-interested Shareholders. THE PURPOSE OF PART A OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE DETAILS OF THE PROPOSED SETTLEMENT AND TO SEEK YOUR APPROVAL FOR THE RESOLUTION PERTAINING TO THE PROPOSED SETTLEMENT WHICH WILL BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF EGM AND THE FORM OF PROXY ARE ENCLOSED WITH THIS CIRCULAR. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF PART A OF THIS CIRCULAR TOGETHER WITH THE APPENDICES AND PART B CONSISTING OF THE IAL BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED SETTLEMENT.

2. DETAILS OF THE PROPOSED SETTLEMENT 2.1 Background of the Proposed Settlement

Our Group is principally engaged in investment holding, provision of management services, properties development, management and operation of resort, operation of golf and marina clubs, contracting and building works, money lending business, vacation ownership schemes and point based schemes and property investment. In the course of its business, our Group has been receiving financial support from the Tan Family in the form of cash advances and payments made on behalf of our Group since the FYE 30 June 2012. Such amounts extended by the Tan Family to our Group are unsecured, interest free and mostly repayable on demand in cash. Majority of such amounts was owed by our Group to companies controlled by the Tan Family, which in turn owe Andrew Tan (hence, being the ultimate creditor). For the ease of administration and settlement, the Tan Family undertook an exercise to set off part of such amounts owing to Andrew Tan by consolidating and assigning to Andrew Tan all relevant amounts owing by our Group to the said companies.


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As shown above, most of the financial support had been provided for a period of more than 1 year. As a matter of fact, our Group ought to make cash repayments to satisfy the Debts as and when demanded, regardless of when the Debts arose. Notwithstanding his rights to demand for cash repayments, the Creditor had expressed his intention to capitalise the Debts into equity of Tanco as full satisfaction of the Debts. After taking into consideration the current financial position of our Group and that a debt capitalisation seems to be more beneficial and advantageous to our Group as compared to other forms of repayment such as rights issue or bank borrowings (see further details in Section 3, Part A of this Circular), Tanco had on 5 March 2020 entered into the Settlement Agreement with Andrew Tan and his nominee, TJN Capital (a major shareholder of Tanco and a company controlled by Andrew Tan) for the Proposed Settlement. Pursuant to the Proposed Settlement, the Debts will be fully satisfied via the issuance of 341,598,402 Settlement Shares (representing 41.1% of the existing Tanco Shares) at an issue price of RM0.05 per Settlement Share, without involving any cash consideration.

2.2 Salient terms of the Settlement Agreement (i) Conditions precedent

The obligations of Tanco, Andrew Tan and TJN Capital that are set out in the Settlement Agreement are conditional upon the following being fulfilled or obtained within 120 days from the date of the Settlement Agreement or such other extended date the parties may mutually agree in writing (“Conditional Period”):- (a) the approval from Bursa Securities for the listing and quotation of the

Settlement Shares on the Main Market of Bursa Securities; and

(b) your approval at an EGM to be convened for the Proposed Settlement and the allotment and issuance of the Settlement Shares.

(ii) Settlement of indebtedness Subject to the fulfilment of the conditions precedent, Tanco shall settle the Debts to the Creditor by issuing the Settlement Shares to TJN Capital on a date no later than 8 market days from the fulfilment of all the conditions precedent or such other extended date mutually agreed in writing by the parties. The Settlement Shares shall, upon issuance and allotment, rank equally in all respects with then existing Tanco Shares.

(iii) Termination The Settlement Agreement shall be terminated in the event that:- (a) the conditions precedent are not met within the Conditional Period;

(b) a breach by Tanco of any of its representations and warranties or any

other obligations(1) under the Settlement Agreement has occurred at any time and the Creditor has not agreed in writing to waive such breach; or

(c) a breach by the Creditor of any of its representations and warranties or any other obligations(2) under the Settlement Agreement has occurred at any time and Tanco has not agreed in writing to waive such breach.

4

5

Upon the termination of the Settlement Agreement, the Debts shall immediately become due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date(3). Notes:- (1) The representations, warranties and obligations of Tanco as specified in the

Settlement Agreement relate to those which are usual and customary in such a transaction, including amongst others, in respect of the power and authority of Tanco as a valid legal entity in entering into the Proposed Settlement and perform its obligations under the Settlement Agreement, which are mainly to fulfill the conditions precedent and thereafter, to issue the Settlement Shares to the Creditor.

(2) Save for in respect of receiving the Settlement Shares, the Creditor does not have any representations, warranties and obligations under the Settlement Agreement.

(3) As highlighted in Section 2.1, Part A of this Circular, the Debts are repayable on demand in cash. Nonetheless, for the purposes of full satisfaction of the Debts, the Creditor had expressed his intention to capitalise the Debts into equity of Tanco, failing which Tanco is obliged to immediately fulfill the Creditor’s demand for repayment of the Debts in such manner to be mutually agreed.

2.3 Basis and justification of determining the issue price of the Settlement Shares The issue price of RM0.05 for each Settlement Share was mutually agreed by the parties to the Settlement Agreement, after taking into consideration the following:- (i) the issue price of RM0.05 per Settlement Share represents a premium of

16.0% over the 5-day VWAP of Tanco Shares up to and including the LTD of RM0.0431; and

(ii) the rationale for the Proposed Settlement as set out in Section 3, Part A of this Circular.

Further, the issue price is justifiable in view that it represents a premium of 13.64% over the 5-day VWAP of Tanco Shares up to and including the LPD of RM0.0440.

2.4 Ranking of the Settlement Shares to be issued The Settlement Shares shall, upon issuance and allotment, rank equally in all respects with then existing Tanco Shares.

2.5 Listing of and quotation of Settlement Shares Bursa Securities had, vide its letter dated 9 April 2020, granted its approval for the listing and quotation of the Settlement Shares to be issued under the Proposed Settlement on the Main Market of Bursa Securities.

2.6 Utilisation of proceeds There will not be any gross proceeds raised from the issuance of the Settlement Shares as they are issued to settle the amount owing to the Creditor.

2.7 Information on Andrew Tan Andrew Tan, a Malaysian, aged 40, is currently our Group Managing Director. He graduated from the University of Melbourne, Australia, with a degree in Commerce and subsequently joined our Company in year 2005 as Business Development Director. He was appointed to our Board as an Executive Director on 22 November 2007 before he assumes his current position in Tanco on 18 March 2015.

5

6

He is also a major shareholder of our Company, holding 1.69% direct shareholding and 51.49% indirect shareholding through his interest in TJN Capital. Andrew Tan is the eldest son of the late Datuk Seri Tan Jing Nam, the nephew of Dato’ Tan Lee Sing and the brother of Christopher Tan Khoon Suan.

2.8 Information on TJN Capital TJN Capital was incorporated in Malaysia on 24 October 2011 as a private limited company under the Companies Act, 1965 under the name of Nam Lee Equities Sdn Bhd before assuming its current name on 12 February 2019. TJN Capital is an investment holding company. As at the LPD, the issued share capital of TJN Capital is RM10,000 comprising 10,000 ordinary shares, which are held by Andrew Tan (76.35%), Benjamin Tan Bock Suan (6.10%), Christopher Tan Khoon Suan (5.85%), Derrick Tan Teik Suan (5.85%) and Edwin Tan Kium Suan (5.85%). As at the LPD, the directors of TJN Capital are Andrew Tan and Benjamin Tan Bock Suan. For information purposes, Andrew Tan, Benjamin Tan Bock Suan, Christopher Tan Khoon Suan, Derrick Tan Teik Suan and Edwin Tan Kium Suan are brothers.

3. RATIONALE FOR THE PROPOSED SETTLEMENT Since the FYE 30 June 2012, the Tan Family has been extending financial support to our Group for its business operations. Such amounts are unsecured, interest free and mostly repayable on demand in cash. Most of the financial support had been provided for a period of more than 1 year and the Creditor had expressed his intention to capitalise the Debts into equity of Tanco as full satisfaction of the Debts. The Proposed Settlement allows the settlement of the Debts via the issuance of Settlement Shares in an expedient manner, without involving any cash consideration. This enables our Group to reduce its total liabilities whilst maintaining its cash reserves. For information purposes, our Group’s cash and cash equivalents stand at RM2.60 million based on the unaudited consolidated financial statements of Tanco for the 6-month FPE 31 December 2019. Upon completion of the Proposed Settlement, our Group will be able to reduce its total liabilities of approximately RM132.66 million as at 31 December 2019 to approximately RM115.58 million. In addition, the Proposed Settlement will also enhance our Group’s financial position and reduce gearing ratio as a result of the enlarged share capital from the issuance of Settlement Shares. In turn, these will enhance our Group’s credibility with bankers, customers, suppliers, investors and other stakeholders. Furthermore, the Settlement Shares will be issued at an issue price of RM0.05 per Settlement Share which represents a premium of 16.0% over the 5-day VWAP of Tanco Shares of RM0.0431 and a premium of 12.6% over the 1-month VWAP of Tanco Shares of RM0.0444 up to and including the LTD. Further, the issue price represents a premium of 13.64% over the 5-day VWAP of Tanco Shares up to and including the LPD of RM0.0440. In view that the Settlement Shares are issued at a premium over the prevailing market prices, a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of our Company.

6

7

Prior to entering into the Settlement Agreement, our Group had considered other forms of repayment such as rights issue or bank borrowings and that a debt capitalisation seems to be more beneficial and advantageous to our Group in view that:- (i) an equity fund-raising exercise such as rights issue is usually implemented with a

discount to the prevailing market prices of Tanco Shares (as opposed to the issue price of RM0.05 for each Settlement Share which is at a premium over prevailing market prices). The issuance of new Tanco Shares at a discount to the prevailing market prices will entail issuance of a larger number of Tanco Shares. Accordingly, this may result in a greater dilution in the existing shareholdings of the non-interested Shareholders in Tanco who do not participate in such issuance of new Tanco Shares; and

(ii) additional borrowings will place more constraints on cash flows of our Group due to the debt servicing obligations in respect of payments of interest and principal repayments. Further, assuming the Debts are repaid using bank borrowings, the gearing of our Group will increase from 0.31 times (as at 31 December 2019 and after adjusting for subsequent events as set out in Section 5.2, Part A of this Circular) to 0.42 times.

4. RISK FACTOR RELATING TO THE PROPOSED SETTLEMENT Non-completion risk of the Proposed Settlement The completion of the Proposed Settlement is subject to, amongst others, the fulfilment of the conditions precedent within the Conditional Period, failing which may result in termination of the Settlement Agreement. As a result of such termination, the Debts shall immediately become due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date. In this respect, Tanco will take reasonable steps that are within its control to ensure completion of the Proposed Settlement, including but not limited to closely monitoring the progress of the Proposed Settlement and ensuring timely fulfilment of the conditions precedent within the Conditional Period.

5. EFFECTS OF THE PROPOSED SETTLEMENT 5.1 Share capital

The pro forma effects of the Proposed Settlement on the issued share capital of our Company are as follows:- Share capital

No. of Shares (RM’000) Issued share capital as at the LPD 830,432,452 56,827 Settlement Shares to be issued arising from the Proposed Settlement(1)

341,598,402 17,080

Enlarged issued share capital 1,172,030,854 73,907

Note:- (1) Based on the issue price of RM0.05 per Settlement Share.

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of T

anco

Sha

res

in is

sue

(‘000

) 73

1,43

3 83

0,43

2 1,

172,

031

NA

per T

anco

Sha

re (R

M)(3

) 0.

20

0.18

0.

14

Tota

l bor

row

ings

(inclu

din

g o

uts

tandin

g R

CN

) (R

M‘0

00)

48,0

36

46,8

44(4

) 46

,844

Gea

ring

ratio

(tim

es)(5

) 0.

33

0.31

0.

28

Note

s:-

(1)

After

the r

ecognitio

n o

f th

e follow

ing s

ubsequent events

:-

(i)

convers

ion o

f R

CN

am

ounting t

o R

M2,7

50,0

00 t

o 5

5,0

00,0

00 n

ew

Tanco S

hare

s a

t a c

onvers

ion p

rice o

f R

M0.0

5 p

er

RC

N in A

ugust

and

Octo

ber

2019;

(ii)

exerc

ise o

f 44,0

00,0

00 W

arr

ants

B a

t an e

xerc

ise p

rice o

f R

M0.0

5 p

er

Warr

ant B

in O

cto

ber

2019;

(iii)

issuance o

f new

RC

N a

mounting to R

M2,0

00,0

00 in A

ugust, S

epte

mber

and O

cto

ber

2019; and

(iv)

exte

nsio

n o

f th

e m

atu

rity

date

of

RC

N t

o 7

years

(in

ste

ad o

f 3 y

ears

) fr

om

29 S

epte

mber

2019 p

urs

uant to

the 2nd

supple

menta

l agre

em

ent

date

d 2

2 A

ugust 2019 e

nte

red into

betw

een T

anco a

nd A

dvanced O

pport

unitie

s F

und I.

(2)

After

deducting the e

stim

ate

d c

osts

of th

e P

roposed S

ettle

ment of R

M480,0

00.

(3)

Com

pute

d b

ased o

n tota

l equity d

ivid

ed b

y n

um

ber

of S

hare

s in issue.

(4)

The low

er

tota

l borr

ow

ings o

f our

Gro

up is d

ue t

o t

he n

et

reduction in t

he lia

bility c

om

ponent

of

RC

N p

urs

uant

to s

ubsequent

events

in N

ote

(1)(

i),

(1)(

iii) a

nd (

1)(

iv)

above,

(5)

Com

pute

d b

ased o

n tota

l borr

ow

ings d

ivid

ed b

y tota

l equity.

8

9

5.3

Subs

tant

ial s

hare

hold

ers’

sha

reho

ldin

gs

The

subs

tant

ial s

hare

hold

ers

of o

ur C

ompa

ny b

ased

on

the

regi

ster

of

subs

tant

ial s

hare

hold

ers

of o

ur C

ompa

ny a

s at

the

LP

D a

nd t

he p

ro

form

a ef

fect

s of

the

Pro

pose

d S

ettle

men

t on

thei

r sha

reho

ldin

gs a

re a

s fo

llow

s:-

As a

t th

e L

PD

A

fter

the P

rop

osed

Sett

lem

en

t

Dir

ect

Ind

irect

Dir

ect

Ind

irect

No

. o

f S

hare

s

%(1)

No

. o

f S

hare

s

%(1)

No

. o

f S

hare

s

%(2)

No

. o

f S

hare

s

%(2)

An

drew

Tan

14

,000

,000

1.

69

427,

566,

075(3

) 51

.49

14,0

00,0

00

1.19

76

9,16

4,47

7(3)

65.6

3

TJN

Cap

ital

427,

566,

075

51.4

9 -

- 76

9,16

4,47

7 65

.63

- -

P

ub

lic s

hare

ho

ldin

g s

pre

ad

(%

) 46.2

5

32.7

7

Note

s:-

(1)

Based o

n the tota

l num

ber

of 830,4

32,4

52 T

anco S

hare

s a

s a

t th

e L

PD

.

(2)

Based o

n the e

nla

rged tota

l num

ber

of 1,1

72,0

30,8

54 T

anco S

hare

s u

pon issuance o

f th

e S

ettle

ment S

hare

s.

(3)

Deem

ed inte

reste

d b

y v

irtu

e o

f his

inte

rest in

TJN

Capital purs

uant to

Section 8

of th

e A

ct.

S

ave

for

106,

894,

587

War

rant

s B

hel

d by

TJN

Cap

ital,

And

rew

Tan

and

TJN

Cap

ital d

o no

t hol

d an

y co

nver

tible

sec

uriti

es in

Tan

co a

s at

the

LPD

. A

ssum

ing

full

exer

cise

of

the

War

rant

s B

by

TJN

Cap

ital

afte

r th

e P

ropo

sed

Set

tlem

ent,

the

incr

ease

in

subs

tant

ial

shar

ehol

ders

’ sh

areh

oldi

ngs

is a

s sh

own

belo

w:-

Assu

min

g f

ull e

xerc

ise o

f th

e W

arr

an

ts B

by

TJN

Cap

ital aft

er

the P

rop

osed

Sett

lem

en

t

Dir

ect

Ind

irect

No

. o

f S

hare

s

%(1)

No

. o

f S

hare

s

%(1)

An

drew

Tan

14

,000

,000

1.

09

876,

059,

064(2

) 68

.50

TJ

N C

apita

l 87

6,05

9,06

4 68

.50

- -

P

ub

lic s

hare

ho

ldin

g s

pre

ad

(%

) 30.0

3

Note

s:-

(1)

Based on th

e enla

rged to

tal

num

ber

of

1,2

78,9

25,4

41 T

anco S

hare

s after

the P

roposed S

ettle

ment

and assum

ing fu

ll exerc

ise of

106,8

94,5

87

Warr

ants

B h

eld

by T

JN

Capital.

(2)

Deem

ed inte

reste

d b

y v

irtu

e o

f his

inte

rest in

TJN

Capital purs

uant to

Section 8

of th

e A

ct.

9

10

5.4 Earnings and earnings per Tanco Share The Proposed Settlement is not expected to have any material effect on the earnings of our Group for the FYE 30 June 2020. However, the earnings per Tanco Share for the FYE 30 June 2020 is expected to be diluted as a result of the increase in the number of Tanco Shares in issue pursuant to the issuance of the Settlement Shares.

5.5 Convertible securities Save for the outstanding RCN amounting to RM2.35 million and 271,684,240 Warrants B, our Company does not have any other existing convertible securities as at the LPD. The Proposed Settlement will not result in any adjustment to the exercise price and number of the outstanding RCN and Warrants B.

6. TENTATIVE TIMELINE Subject to all relevant approvals being obtained, the Proposed Settlement is expected to be completed by the second quarter of 2020. The tentative timeline of events leading to the completion of the Proposed Settlement is as follows:- Date Events 3 June 2020 ¥ EGM for the Proposed Settlement

Mid-June 2020 ¥ Listing and quotation of the Settlement Shares

¥ Completion of the Proposed Settlement

7. HIGHEST PERCENTAGE RATIO AND APPROVALS REQUIRED The highest percentage ratio applicable to the Proposed Settlement pursuant to Paragraph 10.02(g) of the Listing Requirements is 47.7%. The Proposed Settlement is subject to approvals being obtained from the following:- (i) Bursa Securities for the listing and quotation of the Settlement Shares to be issued

under the Proposed Settlement on the Main Market of Bursa Securities. The approval of Bursa Securities was obtained vide its letter dated 9 April 2020, subject to the following conditions:- Conditions imposed Status of compliance

(1) Tanco and Mercury Securities must fully comply with the

relevant provisions under the Listing Requirements

pertaining to the implementation of the Proposed

Settlement, including compliance with the public

shareholding spread requirements pursuant to Paragraph

8.02 of the Listing Requirements;

Noted.

(2) Tanco and Mercury Securities to inform Bursa Securities

upon the completion of the Proposed Settlement;

To be complied.

(3) Tanco and Mercury Securities to furnish Bursa Securities

with a written confirmation of its compliance with the terms

and conditions of Bursa Securities’ approval once the

Proposed Settlement is completed;

To be complied.

10

11

Conditions imposed Status of compliance

(4) Tanco to furnish Bursa Securities with a certified true copy

of the resolution passed by the Shareholders at the EGM

for the Proposed Settlement; and

To be complied.

(5) To incorporate the comments made in the Circular to the

Shareholders provided in the attachment to the letter dated

9 April 2020 from Bursa Securities.

Complied.

(ii) Shareholders at an EGM to be convened for the Proposed Settlement; and

(iii) any other relevant parties / authorities, if required.

8. CONDITIONALITY The Proposed Settlement is not conditional upon any other corporate exercise / scheme undertaken or to be undertaken by our Company.

9. CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION Save for the Proposed Settlement, there are no other corporate exercises which have been announced by our Company but are pending completion as at the LPD.

10. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM Save as disclosed below, none of our Directors, major shareholders and/or persons connected with them have any interest, whether direct or indirect in the Proposed Settlement:- (i) Andrew Tan is deemed interested in the Proposed Settlement by virtue of him being

the Group Managing Director and a major shareholder of our Company, a director and major shareholder of TJN Capital as well as the Creditor;

(ii) Christopher Tan Khoon Suan is deemed interested in the Proposed Settlement by virtue of him being an Executive Director of our Company, a shareholder of TJN Capital as well as a person connected to Andrew Tan, by virtue of him being a brother of Andrew Tan; and

((i) and (ii) are collectively referred to as the “Interested Directors”)

(iii) TJN Capital is deemed interested in the Proposed Settlement by virtue of it being a major shareholder of our Company and the nominee of Andrew Tan pursuant to the Proposed Settlement (“Interested Major Shareholder”).

The shareholdings of the Interested Directors and Interested Major Shareholder as at the LPD are set out as follow:-

Direct Indirect

No. of Shares (1)% No. of Shares (1)%

Interested Directors

Andrew Tan 14,000,000 1.69 427,566,075(2) 51.49

Christopher Tan Khoon Suan - - - -

Interested Major Shareholder

TJN Capital 427,566,075 51.49 - -

11

12

Notes:- (1) Based on the total number of 830,432,452 Tanco Shares as at the LPD. (2) Deemed interested by virtue of his interest in TJN Capital pursuant to Section 8 of the Act. In view of the interests of the Interested Directors and the Interested Major Shareholder, the Proposed Settlement is deemed a related party transaction under Paragraph 10.08 of the Listing Requirements. Accordingly, the Interested Directors have abstained and will continue to abstain from deliberating and voting at the Board meetings of our Company in relation to the Proposed Settlement. The Interested Directors and Interested Major Shareholder will abstain and have undertaken to ensure that persons connected to them will also abstain from voting in respect of their direct and/or indirect shareholdings in our Company on the resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM. Dato’ Tan Lee Sing is the Group Executive Director and a shareholder of our Company as well as a person connected to Andrew Tan, by virtue of her being an aunt of Andrew Tan. Pursuant to the Listing Requirements, Dato’ Tan Lee Sing is not deemed to be interested in the Proposed Settlement. Notwithstanding, Dato’ Tan Lee Sing has voluntarily abstained from and will continue to abstain from deliberating and voting at the Board meetings of our Company as well as abstain from voting in respect of her direct and/or indirect shareholdings in our Company on the resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

11. RELATED PARTY TRANSACTION In view of the interests of the Interested Directors and the Interested Major Shareholder in the Proposed Settlement as set out in Section 10, Part A of this Circular, the Proposed Settlement is deemed a related party transaction under Paragraph 10.08 of the Listing Requirements. In this respect, BDO has been appointed as the Independent Adviser to undertake the following in relation to the Proposed Settlement:- (i) comment as to whether the Proposed Settlement is:-

(a) fair and reasonable so far as the Shareholders are concerned; and

(b) to the detriment of the non-interested Shareholders, and such opinion must set out the reasons for, the key assumptions made and the factors taken into consideration in forming that opinion;

(ii) advise the non-interested Shareholders on whether they should vote in favour of the Proposed Settlement; and

(iii) take all reasonable steps to satisfy itself that it has a reasonable basis to make the comments and advice in relation to subparagraphs (i) and (ii) above.

The IAL in relation to the Proposed Settlement is set out in Part B of this Circular. You are advised to read the IAL together with Part A of this Circular carefully before voting on the resolution pertaining to the Proposed Settlement at the forthcoming EGM.

12. TOTAL AMOUNT TRANSACTED WITH THE SAME RELATED PARTY FOR THE PRECEDING 12 MONTHS Save for the Proposed Settlement, there are no other related party transactions entered into by our Group with the same related parties, namely Andrew Tan and TJN Capital, for the 12 months preceding the LPD.

12

13

13. BOARD’S RECOMMENDATION

Our Board (save for the Interested Directors and Dato’ Tan Lee Sing), after having considered all aspects of the Proposed Settlement, which include amongst others, the salient terms of the Settlement Agreement, basis and justification of the issue price of the Settlement Shares, rationale and effects of the Proposed Settlement as well as the advice of the Independent Adviser, is of the opinion that the Proposed Settlement is in the best interests of our Company.

Accordingly, our Board (save for the Interested Directors and Dato’ Tan Lee Sing) recommends that you vote in favour of the resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

14. AUDIT AND RISK MANAGEMENT COMMITTEE’S STATEMENT

The Audit and Risk Management Committee of Tanco having considered all aspects of the Proposed Settlement, including the salient terms of the Settlement Agreement, basis and justification of the issue price of the Settlement Shares, rationale and effects of the Proposed Settlement as well as the advice of the Independent Adviser, is of the opinion that the Proposed Settlement is:-

(i) in the best interests of our Company;

(ii) fair, reasonable and on normal commercial terms; and

(iii) not detrimental to the interests of the non-interested Shareholders.

15. EGM

Our Company’s forthcoming EGM, the notice of which is enclosed in this Circular, will be conducted fully virtual at the Broadcast Venue to be held at Auditorium, 3A Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia on Wednesday, 3 June 2020 at 10.30 a.m. or at any adjournment thereof, for the purpose of considering and if thought fit, passing the resolution, with or without modifications, to give effect to the Proposed Settlement. Please refer to the Administrative Guide for the EGM in Appendix II of this Circular on the conduct of a fully virtual EGM.

If the Shareholders are unable to participate, speak and vote in person at the EGM, they may complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible and in any event so as to deposit at the Share Registrar’s office at Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia, not less than 48 hours before the time set for holding the EGM or any adjournment thereof. Alternately, the Proxy Form can be deposited electronically through the Share Registrar’s website, Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my before the Proxy Form lodgement cut-off time as mentioned above. The completion and lodgement of the Form of Proxy shall not preclude you from participating, speaking and voting in person at the EGM should you subsequently wish to do so.

13

14

16. FURTHER INFORMATION

You are advised to refer to the IAL in Part B of this Circular and the attached appendices for further information.

Yours faithfully, For and on behalf of the Board of TANCO HOLDINGS BERHAD KOAY GHEE TEONG Executive Director

14

PART B

IAL TO THE NON-INTERESTED SHAREHOLDERS OF TANCO IN RELATION TO THE

PROPOSED SETTLEMENT

15

EXECUTIVE SUMMARY

Definitions or defined terms used in this Executive Summary shall have the same meanings as defined in the “Definitions” section of the Circular except where the context requires otherwise or as otherwise defined.

All references to “we”, “us” and “our” in this executive summary are ascribed to BDO, being theIndependent Adviser for the Proposed Settlement.

THIS EXECUTIVE SUMMARY HIGHLIGHTS THE SALIENT INFORMATION OF THE PROPOSEDSETTLEMENT. THE NON-INTERESTED SHAREHOLDERS OF TANCO IN RELATION TO THE PROPOSED SETTLEMENT (“NON-INTERESTED SHAREHOLDERS”) ARE ADVISED TO READ AND UNDERSTAND THIS IAL IN ITS ENTIRETY, TOGETHER WITH PART A OF THE CIRCULAR AND THE APPENDICES THERETO FOR ANY OTHER RELEVANT INFORMATION,AND ARE NOT TO RELY SOLELY ON THIS EXECUTIVE SUMMARY BEFORE FORMING AN OPINION ON THE PROPOSED SETTLEMENT. YOU ARE ALSO ADVISED TO CONSIDER CAREFULLY THE RECOMMENDATION CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTION RELATING TO THE PROPOSED SETTLEMENT TO BE TABLED AT THE FORTHCOMING EGM.

IF YOU ARE IN DOUBT AS TO THE COURSE OF ACTION TO BE TAKEN, YOU SHOULD CONSULT YOUR STOCKBROKER, SOLICITOR, ACCOUNTANT, BANK MANAGER OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY.

1. INTRODUCTION

On 5 March 2020, Mercury Securities had, on behalf of the Board, announced that the Company proposes to undertake the Proposed Settlement.

As set out in Section 2.1 of Part A of the Circular, in the course of its business, the Group has been receiving financial support in the form of cash advances and payments made on behalf of the Group from the Tan Family since the FYE 30 June 2012. Such amounts extended by the Tan Family to the Group are unsecured, interest free and mostly repayable on demand in cash.

Arising from an internal debt consolidation exercise undertaken by the Tan Family, the Group owes a total amount of RM17,079,920 to Andrew Tan as at 31 January 2020.

On 5 March 2020, Tanco has entered into the Settlement Agreement with Andrew Tan and his nominee, TJN Capital (a major shareholder of Tanco and a company controlled by Andrew Tan) for the Proposed Settlement. Pursuant to the Proposed Settlement, the Debtswill be fully satisfied via the issuance of 341,598,402 Settlement Shares at an issue price of RM0.05 per Settlement Share, without involving any cash consideration.

The Proposed Settlement is deemed as a related party transaction under Paragraph 10.08 of the Listing Requirements in view that it involves the interests of the related parties as set out in Section 10 of Part A of the Circular.

Accordingly, BDO has been appointed as the Independent Adviser to advise the Non-Interested Shareholders of Tanco in relation to the Proposed Settlement on whether the Proposed Settlement is fair and reasonable and whether the transaction is to the detriment of the Non-Interested Shareholders together with recommendations on whether the Non-Interested Shareholders should vote in favour of the resolution pertaining to the Proposed Settlement.

15

16

EXECUTIVE SUMMARY

The purpose of this IAL is to provide the Non-Interested Shareholders of Tanco with an independent evaluation on the fairness and reasonableness of the Proposed Settlement, as well as whether or not the Proposed Settlement is detrimental to the Non-InterestedShareholders, together with our recommendation thereon, subject to the limitations of our role and evaluation as specified in the IAL.

2. EVALUATION OF THE PROPOSED SETTLEMENT

In evaluating the Proposed Settlement, we have taken into consideration the following:

Section in this IAL

Area of evaluation

Comments

Section 7 Basis and justifications in arriving at the issue price of theSettlement Shares

We noted the issue price of RM0.05 per Settlement Shareswas mutually agreed by the parties to the Settlement Agreement, after taking into consideration the following:-

(i) The Issue price of RM0.05 for each Settlement Shares represents a premium of 16.0% over the 5-day VWAPof Tanco shares up to and including the LTD of RM0.0431; and

(ii) The rationale for the Proposed Settlement as set out in Section 3 of Part A of the Circular.

We noted the issue price of RM0.05 per Settlement Sharerepresents the following:

(i) A premium ranging from RM0.0036 (7.8%) to RM0.0100 (25.0%) over the last closing price as at the LTD, five (5)-day, one (1)-month and three (3)-month VWAPs up to LTD.

(ii) A discount ranging from RM0.0120 (19.4%) to RM0.0146 (22.6%) for the six (6)-month and one (1)-year VWAPs up to LTD.

(iii) A premium ranging from RM0.0060 (13.6%) to RM0.0100 (25.0%) over the last closing price as at the LPD and five (5)-day VWAP up to LPD.

In view of the premiums of the issue price of RM0.05 over the last closing price as at LTD, five (5)-day, one (1)-monthand three (3)-month VWAPs up to LTD, this means a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of Tanco.

We noted the discounts over the six (6)-month and one (1)-year VWAPs up to LTD. We are of the opinion that the last closing price as at LTD, five (5)-day, one (1)-month and three (3)-month VWAPs up to LTD would serve as a more meaningful reference for our evaluation on the fairness of the Issue Price of the Settlement Shares as these market prices reflect the more recent market transactions and market prices of Tanco Shares.

16

EXECUTIVE SUMMARY

The purpose of this IAL is to provide the Non-Interested Shareholders of Tanco with an independent evaluation on the fairness and reasonableness of the Proposed Settlement, as well as whether or not the Proposed Settlement is detrimental to the Non-InterestedShareholders, together with our recommendation thereon, subject to the limitations of our role and evaluation as specified in the IAL.


In evaluating the Proposed Settlement, we have taken into consideration the following:

Section in this IAL

Area of evaluation

Comments

Section 7 Basis and justifications in arriving at the issue price of theSettlement Shares

We noted the issue price of RM0.05 per Settlement Shareswas mutually agreed by the parties to the Settlement Agreement, after taking into consideration the following:-

(i) The Issue price of RM0.05 for each Settlement Shares represents a premium of 16.0% over the 5-day VWAPof Tanco shares up to and including the LTD of RM0.0431; and






In view of the premiums of the issue price of RM0.05 over the last closing price as at LTD, five (5)-day, one (1)-monthand three (3)-month VWAPs up to LTD, this means a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of Tanco.


16

17

EXECUTIVE SUMMARY

Hence, BDO is of the view that the issue price of RM0.05 is fair.

Section 8 Rationale for theProposedSettlement

We noted the views of the Board that the Proposed Settlement is an opportunity for the Tanco Group to enhance its financial position and to reduce its gearing ratio upon the settlement of the Group’s debts owing to theCreditor. Consequently, the reduction in gearing ratio is aresult of the increase in share capital arising from the issuance of Settlement Shares.

We also noted that management had represented that based on the audited consolidated financial statements ofthe Group for the FYE 30 June 2019, 90.8% of the borrowings of the Group are long term in nature and are not current and are not due for payment. Meanwhile, the short term borrowings comprise mainly of banking facilities such as bank overdraft which are revolving in nature.

Therefore, the Proposed Settlement will help to reduce the liabilities of Tanco, as the advances owing to the Creditor which constitute part of its liabilities will be repaid, without incurring additional debt while helping conserve the Group’s cash reserve, which then helps Tanco to improve its gearing ratio on pro forma basis. We also noted that the Creditor is ready to accept the Settlement Shares to settle the advances extended to the Group since the FYE 30 June 2012.

In addition, there is no cash outflow from the Group arising from the Proposed Settlement.

Based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, the Group’s cash and cash equivalents stood at RM0.20 million, which isinsufficient to fund the Proposed Settlement. The Group recorded net cash outflow from operating activities of RM5.71 million for FYE 30 June 2019.

Based on the unaudited consolidated financial statements of the Group for the 6-month FPE 31 December 2019, the Group’s cash and cash equivalents stood at RM2.60 million, which is insufficient to fund the Proposed Settlement. The Group also recorded an unaudited net cash outflow from operating activities of RM6.10 million for the 6-month FPE 31 December 2019.

Arising from the Proposed Settlement only, we noted that the shareholding of Non-Interested Shareholders will be diluted from 46.82% to 33.18%. Given that TJN Capital has statutory control over Tanco before the Proposed Settlement, i.e. holding of more than 50% of the voting shares in Tanco, we noted that the statutory control of Tanco will still remain with the same shareholder after the Proposed Settlement. We also noted that Tanco will still comply with the public shareholding spread requirement at

17

EXECUTIVE SUMMARY










17

EXECUTIVE SUMMARY










17

EXECUTIVE SUMMARY










17

EXECUTIVE SUMMARY










17

EXECUTIVE SUMMARY










17

EXECUTIVE SUMMARY










17

18

EXECUTIVE SUMMARYthe completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders. Notwithstanding this, we noted that the dilution in shareholding of the Non-Interested Shareholders is a consequence of settlement of the amount owing to the Creditor.

We also noted from the Circular that the Group had considered other forms of repayment such as rights issue or bank borrowings and its impact to the shareholders and their shareholdings. We further take note that repayment of the Debts through additional borrowings may place more constraints on the Group’s cash flows due to the debt servicing obligations arising from the payments of interest and principal repayments.

In view of this, BDO is of the view that the rationale of the Proposed Settlement is reasonable and not detrimentalto the interests of the Non-Interested Shareholders.

Section 9 Evaluation of the salient terms of the Settlement Agreement

The salient terms of the Settlement Agreement have been mutually agreed upon by the parties pursuant to the Proposed Settlement and are common commercial term in transaction of such nature and are considered reasonableand not detrimental to the interests of the Non-Interested Shareholders of Tanco.

We note that it is reasonable for the amount of settlementto be fixed based on amount owing to the Creditor in the books and to be settled via issuance of a fixed number of shares at a fixed issue price.

We also note that it is reasonable that the 341,598,402 Settlement Shares at an issue price of RM0.05 per Settlement Share are to be allotted to Andrew Tan’s nominee, TJN Capital, for the Proposed Settlement as this does not affect the total indebtedness, TJN Capital is a company controlled by Andrew Tan and that TJN Capital has statutory control over Tanco, i.e. holding of more than 50% of the voting shares in Tanco.

Section 10 Financial effects of the Proposed Settlement

Arising from the Proposed Settlement only, we noted that the pro forma net assets of Tanco are expected to increase with the issuance of Settlement Shares from RM153.15 million (after Subsequent Events described in Section 10.2 of this IAL) to RM169.75 million.

Arising from the Proposed Settlement only, the pro formagearing is expected to decrease from 0.31 times (after Subsequent Events described in Section 10.2 of this IAL) to 0.28 times, as a result of increase in share capital arising from issuance of Settlement Shares and with borrowings remaining unchanged (after Subsequent Events described in Section 10.2 of this IAL).

Arising from the Proposed Settlement only, the EPS is expected to be diluted as a result of the increase in the

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EXECUTIVE SUMMARYnumber of Tanco shares in issue.

As for the effects on substantial shareholders’ shareholdings, arising from the Proposed Settlement only,the interests of TJN Capital (being a major shareholder of the Company and the nominee of Andrew Tan pursuant to the Proposed Settlement) in Tanco is expected to increase from 51.49% to 65.63% whereas the interests of Andrew Tan in Tanco is expected to be diluted from 1.69% to 1.19%. Given that TJN Capital has statutory control over Tanco, i.e. holding of more than 50% of the voting shares in Tanco, this will not trigger an obligation to undertake a mandatory takeover offer to acquire the remaining Tanco Shares not held by him under the Rules on Take-Overs, Mergers and Compulsory Acquisitions. We also noted that Tanco will comply with the public shareholding spreadrequirement at the completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders.

Based on the above, the financial effects of the Proposed Settlement are fair and reasonable and are notdetrimental to the interests of the Non-Interested Shareholders.

Section 11 Risk factors associated with the Proposed Settlement

We note that the completion of the Proposed Settlement is subject to the fulfilment of the conditions precedent within the Conditional Period, failing which may result in termination of the Settlement Agreement. As a result of such termination, the Debts shall immediately become due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date. In this respect, Tanco will take reasonable steps that are within its control to ensure completion of the Proposed Settlement.

We noted the risk factor identified and we are of the opinion that the risk is reasonable and the Board of Tanco and the management of Tanco are expected to take steps to mitigate the risk to the extent possible.

3. CONCLUSION AND RECOMMENDATION

The Non-Interested Shareholders should consider the merits and demerits of the Proposed Settlement carefully based on all relevant and pertinent factors as set out in this IAL, the Circular and other publicly available information prior to making a decision to vote on the resolution pertaining to the Proposed Settlement.

Premised on our overall evaluation and assessment of the Proposed Settlement based on information available to us up to the LPD, we are of the opinion that the Proposed Settlementis fair and reasonable and not detrimental to the Non-Interested Shareholders of Tanco.

Accordingly, we recommend that the Non-Interested Shareholders of Tanco vote in favour of the resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

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19 May 2020

To: The Non-Interested Shareholders of Tanco Holdings Berhad

Dear Sir / Madam,

TANCO HOLDINGS BERHAD (“TANCO” OR THE “COMPANY”)

INDEPENDENT ADVICE LETTER (“IAL”) TO THE NON-INTERESTED SHAREHOLDERS OF TANCO IN RELATION TO THE PROPOSED SETTLEMENT OF DEBTS OWING TO A DIRECTOR OF THE COMPANY AMOUNTING TO RM17,079,920 VIA ISSUANCE OF 341,598,402 SETTLEMENT SHARES AT AN ISSUE PRICE OF RM0.05 PER SETTLEMENT SHARE (“PROPOSED SETTLEMENT”)

This IAL has been prepared to accompany the Circular in relation to the Proposed Settlement.Definitions or defined terms used in this IAL shall have the same meanings as defined in the “Definitions” section of the Circular, except where the context requires otherwise or as otherwise defined.

All references to “we”, “us” and “our” in this IAL are ascribed to BDO, being the Independent Adviser for the Proposed Settlement.

1. INTRODUCTION




On 5 March 2020, Tanco has entered into the Settlement Agreement with Andrew Tan and his nominee, TJN Capital (a major shareholder of Tanco and a company controlled by Andrew Tan) for the Proposed Settlement. Pursuant to the Proposed Settlement, the Debts will be fully satisfied via the issuance of 341,598,402 Settlement Shares at an issue price of RM0.05 per Settlement Share, without involving any cash consideration.

The Proposed Settlement is deemed a related party transaction under Paragraph 10.08 of the Listing Requirements in view that it involves the interests of the related parties as set out in Section 10 of Part A of the Circular.

Accordingly, BDO has been appointed as the Independent Adviser to advise the Non-Interested Shareholders of Tanco in relation to the Proposed Settlement on whether the terms of the Proposed Settlement is fair and reasonable and whether the transaction is to the detriment of the Non-Interested Shareholders together with recommendations on whether the Non-Interested Shareholders should vote in favour of the resolution pertaining to the Proposed Settlement.

The purpose of this IAL is to provide the Non-Interested Shareholders of Tanco with an independent evaluation on the fairness and reasonableness of the Proposed Settlement, as well as whether or not the Proposed Settlement is detrimental to the Non-Interested Shareholders, together with our recommendation thereon, subject to the limitations of our role and evaluation as specified in the IAL.

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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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19 May 2020


Dear Sir / Madam,





1. INTRODUCTION








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NON-INTERESTED SHAREHOLDERS OF TANCO ARE ADVISED TO READ BOTH THIS IAL AND PART A OF THE CIRCULAR, TOGETHER WITH THE ACCOMPANYING APPENDICES, AND CAREFULLY CONSIDER THE RECOMMENDATION CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED SETTLEMENT TO BE TABLED AT THE FORTHCOMING EGM OF TANCO.

IF YOU ARE IN ANY DOUBT AS TO THE COURSE OF ACTION TO BE TAKEN, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, ACCOUNTANT, SOLICITOR OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY.

2. INTEREST OF DIRECTORS AND/OR MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM

As highlighted in Section 10 of Part A of the Circular, the Proposed Settlement is deemed to be a related party transaction under Paragraph 10.08 of the Listing Requirements in view that it involves the interests of Andrew Tan, Christopher Tan Khoon Suan and TJN Capital as follows:

(i) Andrew Tan is deemed interested in the Proposed Settlement by virtue of him being the Group Managing Director and a major shareholder of the Company, a director and major shareholder of TJN Capital as well as the Creditor;

(ii) Christopher Tan Khoon Suan is deemed interested in the Proposed Settlement by virtue of him being an Executive Director of the Company, a shareholder of TJN Capital as well as a person connected to Andrew Tan, by virtue of him being a brother of Andrew Tan; and

((i) and (ii) are collectively referred to as the “Interested Directors”)

(iii) TJN Capital is deemed interested in the Proposed Settlement by virtue of it being a major shareholder of the Company and the nominee of Andrew Tan pursuant to the Proposed Settlement (“Interested Major Shareholder”).

As highlighted in Section 10 of Part A of the Circular, the details of the direct and indirect shareholdings of the Interested Directors and Interested Major Shareholder as at the LPD are as follows:

Direct IndirectNo. of Shares %(1) No. of Shares %(1)

Interested DirectorsAndrew Tan 14,000,000 1.69 427,566,075(2) 51.49Christopher Tan Khoon Suan - - - -

Interested Major ShareholderTJN Capital 427,566,075 51.49 - -

Notes: (1) Based on the total number of 830,432,452 Tanco Shares as at the LPD.(2) Deemed interested by virtue of his interest in TJN Capital pursuant to Section 8 of the Act.

In view of the above interests of the Interested Directors and the Interested Major Shareholder, the Proposed Settlement is deemed a related party transaction under Paragraph 10.08 of the Listing Requirements. Accordingly, the Interested Directors and Interested Major Shareholder have abstained and will continue to abstain from deliberating and voting at the Board meetings of the Company in relation to the Proposed Settlement.

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The Interested Directors and Interested Major Shareholder will abstain and have undertaken to ensure that persons connected to them will also abstain from voting in respect of their direct and/or indirect shareholdings in the Company on the ordinary resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

Dato’ Tan Lee Sing is the Group Executive Director, a shareholder of the Company as well as a person connected to Andrew Tan, by virtue of her being an aunt of Andrew Tan. Pursuant to the Listing Requirements, Dato’ Tan Lee Sing is not deemed to be interested in the Proposed Settlement. Notwithstanding, Dato’ Tan Lee Sing has voluntarily abstained from and will continue to abstain from deliberating and voting at the Board meetings of the Company as well as abstain from voting in respect of her direct and/or indirect shareholdings in the Company on the ordinary resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

3. SCOPE AND LIMITATIONS OF OUR EVALUATION OF THE PROPOSED SETTLEMENT

BDO was not involved in the formulation of the Proposed Settlement and/or any deliberations and negotiations pertaining to the terms and conditions of the Proposed Settlement. BDO’s terms of reference as an Independent Adviser is limited to expressing an independent evaluation of the Proposed Settlement which is based on the information provided to us or which are available to us, including but not limited to the following:

(i) The information contained in Part A of the Circular and the appendices attached thereto;

(ii) Discussions with and representations by the Board and management of Tanco;

(iii) Other relevant information, documents, confirmations and representations furnished to us by the Board and management of Tanco; and

(iv) Other publicly available information which we deemed to be relevant.

We have made such reasonable enquiries to the Board and management of Tanco and have relied upon the information and/or documents as mentioned above and also that relevant facts and information and/or representations necessary for our evaluation of the Proposed Settlement have been disclosed to us and that such information is accurate, reasonable, complete and valid and there is no omission of material facts which would make any information provided to us to be incomplete, misleading or inaccurate. We express no opinion on any such information and have not undertaken any independent investigation into the business and affairs of Tanco and all relevant parties involved in the Proposed Settlement.Based on the above, we are satisfied with the information and documents provided by Tanco and are not aware of any fact or matter not disclosed which renders any such information untrue, inaccurate or misleading or the disclosure of which might reasonably affect our evaluation and opinion as set out in this IAL.

In rendering our advice, BDO had taken note of pertinent issues, which we believe are necessary and important to an assessment of the implications of the Proposed Settlement and therefore of general concern to the Non-Interested Shareholders of Tanco. As such:

(i) The scope of BDO’s responsibility regarding the evaluation and recommendation contained herein is confined to the assessment of the fairness and reasonableness of the terms and conditions of the Proposed Settlement and other implications of the Proposed Settlement only. Comments or points of consideration which may be commercially oriented such as the rationale and potential benefits of the Proposed Settlement are included in our overall evaluation as we deem it necessary for disclosure purposes to enable the Non-Interested Shareholders of to consider and form their views thereon. We do not express an opinion on legal, accounting and taxation issues relating to the Proposed Settlement;

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The Interested Directors and Interested Major Shareholder will abstain and have undertaken to ensure that persons connected to them will also abstain from voting in respect of their direct and/or indirect shareholdings in the Company on the ordinary resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

Dato’ Tan Lee Sing is the Group Executive Director, a shareholder of the Company as well as a person connected to Andrew Tan, by virtue of her being an aunt of Andrew Tan. Pursuant to the Listing Requirements, Dato’ Tan Lee Sing is not deemed to be interested in the Proposed Settlement. Notwithstanding, Dato’ Tan Lee Sing has voluntarily abstained from and will continue to abstain from deliberating and voting at the Board meetings of the Company as well as abstain from voting in respect of her direct and/or indirect shareholdings in the Company on the ordinary resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

3. SCOPE AND LIMITATIONS OF OUR EVALUATION OF THE PROPOSED SETTLEMENT

BDO was not involved in the formulation of the Proposed Settlement and/or any deliberations and negotiations pertaining to the terms and conditions of the Proposed Settlement. BDO’s terms of reference as an Independent Adviser is limited to expressing an independent evaluation of the Proposed Settlement which is based on the information provided to us or which are available to us, including but not limited to the following:

(i) The information contained in Part A of the Circular and the appendices attached thereto;

(ii) Discussions with and representations by the Board and management of Tanco;

(iii) Other relevant information, documents, confirmations and representations furnished to us by the Board and management of Tanco; and

(iv) Other publicly available information which we deemed to be relevant.

We have made such reasonable enquiries to the Board and management of Tanco and have relied upon the information and/or documents as mentioned above and also that relevant facts and information and/or representations necessary for our evaluation of the Proposed Settlement have been disclosed to us and that such information is accurate, reasonable, complete and valid and there is no omission of material facts which would make any information provided to us to be incomplete, misleading or inaccurate. We express no opinion on any such information and have not undertaken any independent investigation into the business and affairs of Tanco and all relevant parties involved in the Proposed Settlement.Based on the above, we are satisfied with the information and documents provided by Tanco and are not aware of any fact or matter not disclosed which renders any such information untrue, inaccurate or misleading or the disclosure of which might reasonably affect our evaluation and opinion as set out in this IAL.

In rendering our advice, BDO had taken note of pertinent issues, which we believe are necessary and important to an assessment of the implications of the Proposed Settlement and therefore of general concern to the Non-Interested Shareholders of Tanco. As such:

(i) The scope of BDO’s responsibility regarding the evaluation and recommendation contained herein is confined to the assessment of the fairness and reasonableness of the terms and conditions of the Proposed Settlement and other implications of the Proposed Settlement only. Comments or points of consideration which may be commercially oriented such as the rationale and potential benefits of the Proposed Settlement are included in our overall evaluation as we deem it necessary for disclosure purposes to enable the Non-Interested Shareholders of to consider and form their views thereon. We do not express an opinion on legal, accounting and taxation issues relating to the Proposed Settlement;

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(ii) BDO’s views and advice as contained in this IAL only cater to the Non-Interested Shareholders of Tanco at large and not to any Non-Interested shareholder individually. Hence, in carrying out our evaluation, we have not given consideration to the specific investment objectives, risk profiles, financial and tax situations and particular needs of any individual Non-Interested shareholder or any specific group of Non-Interested Shareholders; and

(iii) We recommend that any individual Non-Interested shareholder or group of Non-Interested Shareholders of Tanco who are in doubt as to the action to be taken or require advice in relation to the Proposed Settlement in the context of their individual objectives, risk profiles, financial and tax situations or particular needs, shall consult their respective stockbrokers, bankers, solicitors, accountants or other professional advisers immediately.

Our evaluation and recommendation expressed herein are based on prevailing economic, market and other conditions, and the information and/or documents made available to us as at the LPD. Such conditions may change over a short period of time. Accordingly, our evaluation and recommendation expressed herein do not take into account the information, events and conditions arising after the LPD.

The Board (save for Interested Directors) has seen and approved the contents of this IAL. They collectively and individually accept full responsibility for the accuracy and completeness of the information contained in this IAL and confirm that, after making all enquiries as were reasonable in the circumstances and to the best of their knowledge and belief, there are no false or misleading statements or other facts, the omission of which would make any information in this IAL false or misleading.

The responsibility of the Board in respect of the independent advice and expression of opinion by BDO in relation to the Proposed Settlement as set out in Part B of the Circular, is to ensure that accurate information in relation to the Tanco was provided to BDO for its evaluation of the Proposed Settlement and to ensure that all information in relation to Tanco that is relevant to BDO’s evaluation of the Proposed Settlement have been completely disclosed to BDO and that there is no omission of material facts which would make any information provided to BDO false or misleading.

4. DECLARATION OF CONFLICT OF INTEREST

BDO confirms that it is not aware of any existing conflict of interest or any circumstances which would or are likely to give rise to a possible conflict of interest by virtue of BDO’s appointment as the Independent Adviser in respect of the Proposed Settlement.

BDO also confirms that it did not have any other professional relationship with Tanco at any time during the past two (2) years prior to the date of the IAL.

5. CREDENTIALS, EXPERIENCE AND EXPERTISE OF BDO

BDO is a corporate advisory firm in Malaysia with a corporate finance advisory team which provides an extensive range of services to both the corporate and financial sectors as well as the investment community. The areas of expertise include valuation services, capital market transactions, due diligence works and mergers and acquisitions.

The credentials and experience of BDO as an Independent Adviser, where we have been appointed in the past two (2) years prior to the date of this IAL, include the following proposals:

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(i) Appointment by Permaju Industries Berhad as Independent Adviser for the proposed settlement of debt owing to related parties to be fully satisfied via the issuance of new irredeemable convertible preference shares in Permaju Industries Berhad;

(ii) Appointment by TA Enterprise Berhad as Independent Adviser for the conditional mandatory take-over offer by Datuk Tiah Thee Kian to acquire all the remaining ordinary shares in TA Enterprise Berhad not already held by Datuk Tiah Thee Kian and the persons acting in concert at a cash offer price of RM0.66 per offer share;

(iii) Appointment by Pinehill Pacific Berhad as Independent Adviser for the proposed disposal of the plantation assets in the district of Hilir Perak, Perak, measuring approximately 8,999.13 acres to United Plantations Berhad for a total cash consideration of RM413,574,302.49;

(iv) Appointment by ECM Libra Financial Group as Independent Adviser for the proposed acquisition of hospitality assets together with the hospitality businesses for a total cash consideration of RM62.04 million; and

(v) Appointment by DeGem Berhad as Independent Adviser for the proposed selective capital reduction and repayment exercise of DeGem Berhad pursuant to Section 116 of the Companies Act 2016.

Premised on the foregoing, BDO is capable and competent in carrying out its role and responsibilities as the Independent Adviser to advise the Non-Interested Shareholders of Tanco in relation to the Proposed Settlement.


We have considered the following factors in forming our opinion in evaluating the Proposed Settlement:

Section in the IAL

(i) Basis and justifications in arriving at the issue price of the Settlement Shares

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(ii) Rationale for the Proposed Settlement 8

(iii) Evaluation of the salient terms of the Settlement Agreement 9

(iv) Financial effects of the Proposed Settlement 10

(v) Risk factors associated with the Proposed Settlement 11

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7. BASIS AND JUSTIFICATIONS IN ARRIVING AT THE ISSUE PRICE OF THE SETTLEMENT SHARES

We noted in Section 2.3 of Part A of the Circular that the issue price of RM0.05 for each Settlement Shares was mutually agreed by the parties to the Settlement Agreement, after taking into consideration the following:-

(i) Issue price of RM0.05 for each Settlement Shares represents a premium of 16.0% over the 5-day VWAP of Tanco shares up to and including the LTD of RM0.0431; and


7.1 Issue price of the Settlement Shares

We have evaluated the issue price of the Settlement Shares based on the historical market prices of Tanco Shares below.

7.1.1 Historical closing market prices of Tanco Shares

We also take into consideration the movement of the market price of Tanco Shares on Bursa Securities. The movement in the closing market price of the Tanco Shares for the past (1) year up to LPD is shown in the chart below:

(Source: Bloomberg)

The above information extracted from Bloomberg has been adjusted for the effects of any dividends and corporate exercises throughout the relevant period.

Throughout the past 1 year up to LPD, the principal activities of Tanco have remained the same.

We are not aware of any particular reasons which might have led to the upward or downward movements of Tanco for the past 1 year up to LPD but we noted the following announcements made to Bursa Securities:

Annotation Date Significant events(1) 30 May 2019 The Company announced its Q3 quarterly report on

consolidated results for the financial period ended 31 Mar 2019.

(2) 31 May 2019 The Company announced that Palm Springs Development Sdn Bhd (a wholly-owned subsidiary of World Vacation Ownership Sdn Bhd which in turn is a wholly-owned

Settlement Shares @ RM0.05

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7. BASIS AND JUSTIFICATIONS IN ARRIVING AT THE ISSUE PRICE OF THE SETTLEMENT SHARES

We noted in Section 2.3 of Part A of the Circular that the issue price of RM0.05 for each Settlement Shares was mutually agreed by the parties to the Settlement Agreement, after taking into consideration the following:-

(i) Issue price of RM0.05 for each Settlement Shares represents a premium of 16.0% over the 5-day VWAP of Tanco shares up to and including the LTD of RM0.0431; and


7.1 Issue price of the Settlement Shares

We have evaluated the issue price of the Settlement Shares based on the historical market prices of Tanco Shares below.

7.1.1 Historical closing market prices of Tanco Shares

We also take into consideration the movement of the market price of Tanco Shares on Bursa Securities. The movement in the closing market price of the Tanco Shares for the past (1) year up to LPD is shown in the chart below:

(Source: Bloomberg)

The above information extracted from Bloomberg has been adjusted for the effects of any dividends and corporate exercises throughout the relevant period.

Throughout the past 1 year up to LPD, the principal activities of Tanco have remained the same.

We are not aware of any particular reasons which might have led to the upward or downward movements of Tanco for the past 1 year up to LPD but we noted the following announcements made to Bursa Securities:

Annotation Date Significant events(1) 30 May 2019 The Company announced its Q3 quarterly report on

consolidated results for the financial period ended 31 Mar 2019.

(2) 31 May 2019 The Company announced that Palm Springs Development Sdn Bhd (a wholly-owned subsidiary of World Vacation Ownership Sdn Bhd which in turn is a wholly-owned

Settlement Shares @ RM0.05

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Annotation Date Significant eventssubsidiary of Tanco) (“Palm Springs” or the “Lessor”) hadon 31 May 2019 entered into a lease agreement (“Lease Agreement”) with Time IT in E (Sabah) Sdn Bhd (“Time IT” or the “Lessee”). Pursuant to and subject to the terms and conditions contained in the Lease Agreement, Palm Springs (Lessor) agrees to lease to Time IT (Lessee) a parcel of freehold commercial land located in Pekan Sungai Menyala, Port Dickson, Negeri Sembilan (“Lease”) for the purpose of constructing, building, completing, commissioning and operating thereon an edutainment theme park. The parties have also agreed that the Lessor shall grant the Lessee an option to purchase the land at an agreed purchase price of RM20 million provided that such call option must be exercised by the Lessee within the first 5 years from the date of commencement of the Lease (“Lease Call Option”).

(3) 31 July 2019 The Company announced that Tanco had on 31 July 2019 entered into a supplemental agreement with Advance Opportunities Fund I, the subscriber of RCN, to amend, modify, substitute, vary and alter the terms, conditions and provisions of the subscription agreement in relation to RCN, where Advance Capital Partners Asset Management Pte Ltd (“ACPAM”) is removed as a party to the subscription agreement of RCN and ACPAM ceased to be the discretionary investment manager of all the investments of Advance Opportunities Fund I.

(4) 22 August 2019

The Company announced that Tanco had on 22 August 2019 entered into a 2nd supplemental agreement with Advance Opportunities Fund I, the subscriber of RCN, to amend, modify, substitute, vary and alter the terms, conditions and provisions of the subscription agreement in relation to RCN:(1) to change the maturity date of RCN from 3 years to 7

years from the closing date of the first subtranche of Tranche 1 Notes; and

(2) to set RM0.05, being the then par value of Tanco Share, as the minimum conversion price of the RCN.

(5) 29 August 2019

The Company announced its Q4 quarterly report on consolidated results for the financial period ended 30 June 2019.

(6) 11 September 2019

The Company announced its circular to shareholders in relation to the announcement made on 22 August 2019 in relation to the RCN.

(7) 31 October 2019

The Company announced its Annual Report for FYE 30 June 2019.

(8) 26 November 2019

The Company announced its Q1 quarterly report on consolidated results for the financial period ended 30 September 2019.

(9) 25 February 2020

The Company announced its Q2 quarterly report on consolidated results for the financial period ended 31 December 2019.

(10) 5 March 2020 The Company announced that it proposes to undertake the Proposed Settlement.

(11) 19 March 2020 The Company announced that the application for the listing and quotation of the Settlement Shares in respect of the Proposed Settlement has been submitted to Bursa Securities.

(12) 9 April 2020 The Company announced that Bursa Securities had, vide its letter dated 9 April 2020, resolved to approve the listing and

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Annotation Date Significant eventsquotation of 341,598,402 new Tanco Shares to be issued pursuant to the Proposed Settlement.

The approval granted by Bursa Securities for the Proposed Settlement is subject to the following conditions:-

(i) Tanco and Mercury Securities must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposed Settlement, including compliance with the public shareholding spread requirements pursuant to Paragraph 8.02 of the Listing Requirements;

(ii) Tanco and Mercury Securities to inform Bursa Securities upon the completion of the Proposed Settlement;

(iii) Tanco and Mercury Securities to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities’ approval once the Proposed Settlement is completed;

(iv) Tanco to furnish Bursa Securities with a certified true copy of the resolution passed by the Shareholders in the EGM approving the Proposed Settlement; and

(v) To incorporate the comments made in the Circular provided in the letter dated 9 April 2020 from Bursa Securities.

(13) 28 April 2020 The Company announced that Bursa Securities has, vide its letter dated 28 April 2020, resolved to grant Tanco an extension of time until 14 market days after the date of the eventual upliftment of the movement control order imposed by the Government of Malaysia to issue the Circular to the shareholders of Tanco.

Comments:

We note that Tanco Shares have not traded above RM0.05 for 63.51% of the total market days over the past 12 months up to the LTD. In addition, the issue price of RM0.05 represents a premium of approximately RM0.0100 or 25.0% over the closing price of Tanco Shares as at the LTD of RM0.0400 as well as a premium of RM0.0069 or 16.0% over the 5-day VWAP of Tanco Shares up to and including LTD of RM0.0431.

Premised on the above, the issue price of RM0.05 is fair.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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Annotation Date Significant eventsquotation of 341,598,402 new Tanco Shares to be issued pursuant to the Proposed Settlement.

The approval granted by Bursa Securities for the Proposed Settlement is subject to the following conditions:-

(i) Tanco and Mercury Securities must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposed Settlement, including compliance with the public shareholding spread requirements pursuant to Paragraph 8.02 of the Listing Requirements;

(ii) Tanco and Mercury Securities to inform Bursa Securities upon the completion of the Proposed Settlement;

(iii) Tanco and Mercury Securities to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities’ approval once the Proposed Settlement is completed;

(iv) Tanco to furnish Bursa Securities with a certified true copy of the resolution passed by the Shareholders in the EGM approving the Proposed Settlement; and

(v) To incorporate the comments made in the Circular provided in the letter dated 9 April 2020 from Bursa Securities.

(13) 28 April 2020 The Company announced that Bursa Securities has, vide its letter dated 28 April 2020, resolved to grant Tanco an extension of time until 14 market days after the date of the eventual upliftment of the movement control order imposed by the Government of Malaysia to issue the Circular to the shareholders of Tanco.

Comments:

We note that Tanco Shares have not traded above RM0.05 for 63.51% of the total market days over the past 12 months up to the LTD. In addition, the issue price of RM0.05 represents a premium of approximately RM0.0100 or 25.0% over the closing price of Tanco Shares as at the LTD of RM0.0400 as well as a premium of RM0.0069 or 16.0% over the 5-day VWAP of Tanco Shares up to and including LTD of RM0.0431.

Premised on the above, the issue price of RM0.05 is fair.


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7.1.2 VWAP analysis of Tanco Shares

Based on the issue price of RM0.05 per Settlement Share, this yields the following premiums/(discounts) to the closing market prices and VWAPs of the Tanco Shares:

Closing market price or VWAP

Premium/(Discount) of the Issue Price over the closing market price

or VWAP

RM RM %

Up to the LTD:

Last closing market price 0.0400 0.0100 25.0

Five (5)-day VWAP 0.0431 0.0069 16.0

One (1)-month VWAP 0.0444 0.0056 12.6

Three (3)-month VWAP 0.0464 0.0036 7.8

Six (6)-month VWAP 0.0646 (0.0146) (22.6)

One (1)-year VWAP 0.0620 (0.0120) (19.4)

Up to the LPD:

Last closing market price 0.0400 0.0100 25.0

Five (5)-day VWAP 0.0440 0.0060 13.6

(Source: Bloomberg)

Comments:

Based on the table above, we noted that the Issue Price represents the following:




In view of the premiums of the issue price of RM0.05 over the last closing price as at LTD, five (5)-day, one (1)-month and three (3)-month VWAPs up to LTD, this means a lower number ofTanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of Tanco.


Hence, we are of the view that the issue price of RM0.05 is fair.

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7.1.3 Net asset per Tanco Share

We noted that Tanco Shares have never traded above the net asset per Tanco Share of RM0.20 based on the audited consolidated financial statements of Tanco as at 30 June 2019 in the last one (1) year up to LPD.

Although the issue price of RM0.05 per Settlement Share is at a 75% discount to the net asset per Tanco Share of RM0.20 as at 30 June 2019, the issue price of RM0.05 per Settlement Share is reasonable as there is no assurance that Tanco may be able to realise the net asset per Tanco Share at its full value, taking into consideration various factors, such as the nature of the assets of Tanco Group which comprise mainly property that are illiquid and cannot be readily converted to cash or cash equivalents.

8. RATIONALE FOR THE PROPOSED SETTLEMENT

We take cognisance of the following rationale to be derived from the Proposed Settlement as outlined in Section 3 of Part A of the Circular.

We noted from the Circular that the Tan Family has been extending financial support to the Group for its business operations since FYE 30 June 2012, such amounts are unsecured, interest free and mostly repayable on demand in cash. Most of the financial support had been provided for a period of more than 1 year and the Creditor had expressed his intention to capitalise the Debts into equity of Tanco as full satisfaction of the Debts.

We further noted that the Proposed Settlement allows the settlement of the Debts via the issuance of Settlement Shares in an expedient manner, without involving any cash consideration. This enables the Group to reduce its total liabilities whilst maintaining its cash reserves. For information purposes, the Group’s cash and cash equivalents stand at RM2.60 million based on the unaudited consolidated financial statements of Tanco for the 6-month FPE 31 December 2019.

Upon completion of the Proposed Settlement, the Group will be able to reduce its total liabilities of approximately RM132.66 million as at 31 December 2019 to approximately RM115.58 million. In addition, the Proposed Settlement will also enhance the Group’s financial position and reduce gearing ratio as a result of the enlarged share capital from the issuance of Settlement Shares. In turn, these will enhance the Group’s credibility with bankers, customers, suppliers, investors and other stakeholders.

We also noted that the Settlement Shares will be issued at an issue price of RM0.05 per Settlement Share which represents a premium of 16.0% over the 5-day VWAP of Tanco Shares of RM0.0431 and a premium of 12.6% over the 1-month VWAP of Tanco Shares of RM0.0444 up to and including the LTD. Further, the issue price represents a premium of 13.64% over the 5-day VWAP of Tanco Shares up to and including the LPD of RM0.0440.

In view that the Settlement Shares are issued at a premium over the prevailing market prices, a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of the Company.

We also noted from the Circular that prior to entering into the Settlement Agreement, the Group had considered other forms of repayment such as rights issue or bank borrowings and that a debt capitalisation seems to be more beneficial and advantageous to the Group in view that:-

(i) an equity fund raising exercise such as rights issue is usually implemented with a discount to the prevailing market prices of Tanco Shares (as opposed to the issue price of RM0.05 for each Settlement Share which is at a premium over prevailing market prices). The issuance of new Tanco Shares at a discount to the prevailing market prices will entail issuance of a larger number of Tanco Shares. Accordingly, this may result in a

29

7.1.3 Net asset per Tanco Share

We noted that Tanco Shares have never traded above the net asset per Tanco Share of RM0.20 based on the audited consolidated financial statements of Tanco as at 30 June 2019 in the last one (1) year up to LPD.

Although the issue price of RM0.05 per Settlement Share is at a 75% discount to the net asset per Tanco Share of RM0.20 as at 30 June 2019, the issue price of RM0.05 per Settlement Share is reasonable as there is no assurance that Tanco may be able to realise the net asset per Tanco Share at its full value, taking into consideration various factors, such as the nature of the assets of Tanco Group which comprise mainly property that are illiquid and cannot be readily converted to cash or cash equivalents.

8. RATIONALE FOR THE PROPOSED SETTLEMENT

We take cognisance of the following rationale to be derived from the Proposed Settlement as outlined in Section 3 of Part A of the Circular.

We noted from the Circular that the Tan Family has been extending financial support to the Group for its business operations since FYE 30 June 2012, such amounts are unsecured, interest free and mostly repayable on demand in cash. Most of the financial support had been provided for a period of more than 1 year and the Creditor had expressed his intention to capitalise the Debts into equity of Tanco as full satisfaction of the Debts.

We further noted that the Proposed Settlement allows the settlement of the Debts via the issuance of Settlement Shares in an expedient manner, without involving any cash consideration. This enables the Group to reduce its total liabilities whilst maintaining its cash reserves. For information purposes, the Group’s cash and cash equivalents stand at RM2.60 million based on the unaudited consolidated financial statements of Tanco for the 6-month FPE 31 December 2019.

Upon completion of the Proposed Settlement, the Group will be able to reduce its total liabilities of approximately RM132.66 million as at 31 December 2019 to approximately RM115.58 million. In addition, the Proposed Settlement will also enhance the Group’s financial position and reduce gearing ratio as a result of the enlarged share capital from the issuance of Settlement Shares. In turn, these will enhance the Group’s credibility with bankers, customers, suppliers, investors and other stakeholders.

We also noted that the Settlement Shares will be issued at an issue price of RM0.05 per Settlement Share which represents a premium of 16.0% over the 5-day VWAP of Tanco Shares of RM0.0431 and a premium of 12.6% over the 1-month VWAP of Tanco Shares of RM0.0444 up to and including the LTD. Further, the issue price represents a premium of 13.64% over the 5-day VWAP of Tanco Shares up to and including the LPD of RM0.0440.

In view that the Settlement Shares are issued at a premium over the prevailing market prices, a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of the Company.

We also noted from the Circular that prior to entering into the Settlement Agreement, the Group had considered other forms of repayment such as rights issue or bank borrowings and that a debt capitalisation seems to be more beneficial and advantageous to the Group in view that:-

(i) an equity fund raising exercise such as rights issue is usually implemented with a discount to the prevailing market prices of Tanco Shares (as opposed to the issue price of RM0.05 for each Settlement Share which is at a premium over prevailing market prices). The issuance of new Tanco Shares at a discount to the prevailing market prices will entail issuance of a larger number of Tanco Shares. Accordingly, this may result in a

29

30

greater dilution in the existing shareholdings of the non-interested Shareholders in Tanco who do not participate in such issuance of new Tanco Shares; and

(ii) additional borrowings will place more constraints on cash flows of the Group due to the debt servicing obligations in respect of payments of interest and principal repayments. Further, assuming the Debts are repaid using bank borrowings, the gearing of the Group will increase from 0.31 times (as at 31 December 2019 and after adjusting for subsequent events as set out in Section 5.2, Part A of the Circular) to 0.42 times.

Comments:

We noted the views of the Board that the Proposed Settlement is an opportunity for the Tanco Group to enhance the financial position and reduce its gearing ratio upon the settlement of the Group’s debts owing to the Creditor. Consequently, the reduction in gearing ratio is a result of the increase in share capital arising from the issuance of Settlement Shares.

We also noted that management had represented that based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, 90.8% of the borrowings of the Group are long term in nature and are not current and are not due for payment. Meanwhile, the short term borrowings comprise mainly of banking facilities such as bank overdraft which are revolving in nature.

Therefore, the Proposed Settlement will help to reduce the liabilities of Tanco, as the advances owing to Creditor which constitute part of its liabilities will be repaid, without incurring additional debt while helping conserve the Group’s cash reserve, which then helps Tanco to improve its gearing ratio on pro forma basis. We also noted that the Creditor is ready to accept the Settlement Shares to settle the advances extended to the Group since the FYE 30 June 2012.


Based on the audited consolidated financial statements of the Group for the FYE 30 June 2019,the Group’s cash and cash equivalents stood at RM0.20 million, which is insufficient to fund the Proposed Settlement. The Group recorded net cash outflow from operating activities of RM5.71 million for FYE 30 June 2019.


Arising from the Proposed Settlement only, we noted that the shareholding of Non-Interested Shareholders will be diluted from 46.82% to 33.18%. Given that TJN Capital has statutory control over Tanco before the Proposed Settlement, i.e. holding of more than 50% of the voting shares in Tanco, we noted that the statutory control of Tanco will still remain with the same shareholder after the Proposed Settlement. We also noted that Tanco will still comply with the public shareholding spread requirement at the completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders. Notwithstanding this, we noted that the dilution in shareholding of the Non-Interested Shareholders is aconsequence of settlement of the amount owing to the Creditor.

We also noted from the Circular that the Group had considered other forms of repayment such as rights issue or bank borrowings and its impact to the shareholders and their shareholdings.We further take note that repayment of the Debts through additional borrowings may place more constraints on the Group’s cash flows due to the debt servicing obligations arising from the payments of interest and principal repayments.

30

31

Premised on this, we are of the view that the rationale for the Proposed Settlement is reasonable and not detrimental to the interests of the Non-Interested Shareholders of Tanco. Nevertheless, the Non-Interested Shareholders of Tanco should note that the potential benefits arising from the Proposed Settlement are subject to certain risk factors as disclosed in Section 11 of this IAL.


31

32

9.

EVA

LUA

TIO

N O

F TH

E SA

LIEN

T TE

RM

S O

F TH

E SE

TTLE

MEN

T A

GR

EEM

ENT

As e

xtra

cted

from

Sec

tion

2.2

of P

art A

of t

he C

ircul

ar, t

he s

alie

nt te

rms

of th

e Se

ttlem

ent A

gree

men

t and

our

com

men

ts a

re a

s fo

llow

s:

Sa

lient

term

s of

the

Settl

emen

t Agr

eem

ent

BD

O’s

com

men

ts9.

1C

ondi

tions

Pre

cede

nt

The

oblig

atio

ns o

f Ta

nco,

And

rew

Tan

and

TJN

Cap

ital

that

are

set

out

in

the

Settl

emen

t Ag

reem

ent a

re c

ondi

tiona

l upo

n th

e fo

llow

ing

bein

g fu

lfille

d or

obt

aine

d w

ithin

120

day

s fro

m th

e da

te o

f the

Set

tlem

ent A

gree

men

t or s

uch

othe

r ext

ende

d da

te th

e pa

rties

may

mut

ually

agr

ee in

w

ritin

g (“C

ondi

tiona

l Per

iod”

):-

(a)

the

appr

oval

fro

m B

ursa

Sec

uriti

es f

or t

he l

istin

g an

d qu

otat

ion

of t

he S

ettle

men

t Sh

ares

on

the

Mai

n M

arke

t of B

ursa

Sec

uriti

es; a

nd

(b)

the

appr

oval

of

the

shar

ehol

ders

of

Tanc

o at

an

EGM

to

be c

onve

ned

for

the

Prop

osed

Set

tlem

ent a

nd th

e al

lotm

ent a

nd is

suan

ce o

f the

Set

tlem

ent S

hare

s.

Thes

e co

nditi

ons

are

reas

onab

le

as

the

appr

oval

from

rel

evan

t par

ties

is n

eces

sary

fo

r Tan

coto

be

in c

ompl

ianc

e w

ith th

e ru

les

and

regu

latio

ns

set

out

by

the

rele

vant

au

thor

ities

.

9.2

Settl

emen

t of i

ndeb

tedn

ess

Subj

ect t

o th

e fu

lfilm

ent o

f the

con

ditio

ns p

rece

dent

, Tan

co s

hall

settl

e th

e D

ebts

to th

e C

redi

tor

by is

suin

g th

e Se

ttlem

ent S

hare

s to

TJN

Cap

ital o

n a

date

no

late

r tha

n 8

mar

ket d

ays

from

the

fulfi

lmen

t of a

ll th

e co

nditi

ons

prec

eden

t or

such

oth

er e

xten

ded

date

mut

ually

agr

eed

in w

ritin

g by

the

parti

es.

The

Settl

emen

t Sha

res

shal

l, up

on is

suan

ce a

nd a

llotm

ent,

rank

equ

ally

in a

ll re

spec

ts w

ith th

en

exis

ting

Tanc

o Sh

ares

.

It is

rea

sona

ble

for

the

Set

tlem

ent

Shar

es

to b

e is

sued

to

settl

e th

e D

ebts

with

in 8

m

arke

t day

s fro

m th

e da

te o

f ful

fillin

g al

l the

co

nditi

ons

prec

eden

t.

It is

als

o re

ason

able

tha

t th

e Se

ttlem

ent

Shar

es i

s to

be

rank

par

i pa

ssu

with

the

ex

istin

g Ta

nco

Shar

es.

32

33

Salie

nt te

rms

of th

eSe

ttlem

ent A

gree

men

tB

DO

’s c

omm

ents

9.3

Term

inat

ion

The

Settl

emen

t Agr

eem

ent s

hall

be te

rmin

ated

in th

e ev

ent t

hat:-

(a)

the

cond

ition

s pr

eced

ent a

re n

ot m

et w

ithin

the

Con

ditio

nal P

erio

d; o

r

(b)

a br

each

by

Tanc

o of

any

of

its r

epre

sent

atio

ns a

nd

war

rant

ies

or a

ny

othe

r ob

ligat

ions

und

er th

e Se

ttlem

ent A

gree

men

t has

occ

urre

d at

any

tim

e an

d th

e C

redi

tor

has

not a

gree

d in

writ

ing

to w

aive

suc

h br

each

.

(c)

a br

each

by

the

Cre

dito

r of

any

of

its r

epre

sent

atio

ns a

nd w

arra

ntie

s or

any

oth

er

oblig

atio

ns u

nder

the

Settl

emen

t Agr

eem

ent h

as o

ccur

red

at a

ny ti

me

and

Tanc

o ha

s no

t agr

eed

in w

ritin

g to

wai

ve s

uch

brea

ch.

Upo

n th

e te

rmin

atio

n of

the

Settl

emen

t Agr

eem

ent,

the

Deb

tssh

all i

mm

edia

tely

bec

ome

due

and

paya

ble

by T

anco

to th

e C

redi

tor

in a

ny m

anne

r to

be

agre

ed b

y th

e pa

rties

mut

ually

at a

late

r da

te.

Thes

e te

rms

are

deem

ed re

ason

able

whi

ch

serv

e to

saf

egua

rd th

e in

tere

sts

of T

anco

in

the

even

t of d

efau

lt by

eith

er p

arty

or i

n an

y gi

ven

circ

umst

ance

s as

stip

ulat

ed i

n th

e Se

ttlem

ent A

gree

men

t.

Com

men

ts:

We

note

that

the

salie

nt te

rms

of th

e Se

ttlem

ent A

gree

men

t hav

e be

en m

utua

lly a

gree

d up

on b

y th

e pa

rties

pur

suan

t to

the

Prop

osed

Set

tlem

enta

nd

are

com

mon

com

mer

cial

ter

m in

tra

nsac

tion

of s

uch

natu

re.

We

also

not

e th

at it

is r

easo

nabl

e fo

r th

e am

ount

of

settl

emen

t to

be

fixed

base

d on

am

ount

ow

ing

to A

ndre

w T

an in

Tan

co’s

boo

ksan

d to

be

settl

ed v

ia i

ssua

nce

of a

fix

ed n

umbe

r of

inst

rum

ents

at

a fix

ed is

sue

pric

e. I

t is

als

o re

ason

able

that

the

341,

598,

402

Settl

emen

t Sha

res

at a

n is

sue

pric

e of

RM

0.05

per

Set

tlem

ent S

hare

are

to b

e al

lotte

d to

And

rew

Tan

’s n

omin

ee, T

JN

Cap

ital,

for t

he P

ropo

sed

Set

tlem

ent a

s th

is d

oes

not a

ffect

the

tota

l ind

ebte

dnes

s,TJ

N C

apita

l is

a co

mpa

ny c

ontro

lled

by A

ndre

w T

anan

d th

at T

JN

Cap

ital h

as s

tatu

tory

con

trol o

ver T

anco

, i.e

. hol

ding

of m

ore

than

50%

of t

he v

otin

g sh

ares

in T

anco

.Pre

mis

ed o

n th

e ab

ove,

we

are

of th

e vi

ew th

at

the

salie

nt te

rms

and

cond

ition

s of

the

Settl

emen

t Agr

eem

ent a

re c

onsi

dere

d re

ason

able

and

are

not d

etrim

enta

l to

the

Non

-Inte

rest

ed S

hare

hold

ers

of

Tanc

o.

[TH

E R

EST

OF

THIS

PAG

E IS

INTE

NTI

ON

ALL

Y LE

FT B

LAN

K]

33

34

10. FINANCIAL EFFECTS OF THE PROPOSED SETTLEMENT

In evaluating the Proposed Settlement, we have taken note of the effects of the Proposed Settlement as set out in Section 5 of Part A of the Circular.

10.1 Share capital

As set out in Section 5 of Part A of the Circular, the Proposed Settlement will have an effect on the share capital of Tanco as the Proposed Settlement involves the issuance of new Tanco Shares:

No. of Shares Share capital(RM’000)

Issued share capital as at the LPD 830,432,452 56,827

Settlement Shares to be issued arising from the Proposed Settlement(1)

341,598,402 17,080

Enlarged issued share capital 1,172,030,854 73,907

Notes:- (1) Based on the issue price of RM0.05 per Settlement Share.


34

10.2

N

A a

nd g

earin

g

As s

et o

ut in

Sec

tion

5 of

Par

t A o

f the

Circ

ular

, the

pro

form

a ef

fect

s of

the

Prop

osed

Set

tlem

ent o

n th

e N

A an

d ge

arin

g of

Tan

co a

re a

s fo

llow

s:-

Gro

up le

vel

Aud

ited

as a

t30

Jun

e 20

19(I)

(II)

Afte

r Sub

sequ

ent E

vent

s(1)

Afte

r (I)

and

Prop

osed

Set

tlem

ent

(RM

‘000

)(R

M‘0

00)

(RM

‘000

)S

hare

cap

ital

51,8

7756

,827

73,9

07C

apita

l res

erve

50,2

3350

,233

50,2

33R

CN

–eq

uity

com

pone

nt95

528

528

Ret

aine

d pr

ofits

45,5

6345

,563

45,0

83(2

)

Tota

l equ

ity14

7,76

815

3,15

116

9,75

1

No.

of T

anco

Sha

res

in is

sue

(‘000

)73

1,43

383

0,43

21,

172,

031

NA

per

Tan

co S

hare

(RM

)(3)

0.20

0.18

0.14

Tota

l bor

row

ings

(incl

udin

g ou

tsta

ndin

g R

CN

)(R

M‘0

00)

48,0

3646

,844

(4)

46,8

44G

earin

g ra

tio (t

imes

)(5)

0.33

0.31

0.28

Not

es:-

(1)

Afte

r the

reco

gniti

on o

f the

follo

win

g su

bseq

uent

eve

nts:

- (i)

co

nver

sion

of R

CN

am

ount

ing

to R

M2,

750,

000

to 5

5,00

0,00

0 ne

w T

anco

Sha

res

at a

con

vers

ion

pric

e of

RM

0.05

per

RC

N in

Aug

ust a

nd O

ctob

er 2

019;

(ii

) ex

erci

se o

f 44,

000,

000

War

rant

s B

at a

n ex

erci

se p

rice

of R

M0.

05 p

er W

arra

nt B

in O

ctob

er 2

019;

(ii

i) is

suan

ce o

f new

RC

N a

mou

ntin

g to

RM

2,00

0,00

0 in

Aug

ust,

Sep

tem

ber a

nd O

ctob

er 2

019;

and

(iv

) ex

tens

ion

of t

he m

atur

ity d

ate

of R

CN

to

7 ye

ars

(inst

ead

of 3

yea

rs)

from

29

Sept

embe

r 20

19 p

ursu

ant

to t

he 2

nd s

uppl

emen

tal a

gree

men

t da

ted

22

Aug

ust 2

019

ente

red

into

bet

wee

n Ta

nco

and

Adv

ance

d O

ppor

tuni

ties

Fund

I.

(col

lect

ivel

y kn

own

as “S

ubse

quen

t Eve

nts”

)(2

) A

fter d

educ

ting

the

estim

ated

cos

ts o

f the

Pro

pose

d S

ettle

men

t of R

M48

0,00

0.

(3)

Com

pute

d ba

sed

on to

tal e

quity

div

ided

by

num

ber o

f sha

res

in is

sue.

(4

) Th

e lo

wer

tota

l bor

row

ings

of t

he G

roup

is d

ue to

the

net r

educ

tion

in th

e lia

bilit

y co

mpo

nent

of R

CN

pur

suan

t to

subs

eque

nt e

vent

s in

Not

e (1

)(i),

(1)(

iii) a

nd (1

)(iv

) ab

ove,

(5

) C

ompu

ted

base

d on

tota

l bor

row

ings

div

ided

by

tota

l equ

ity.

35

36

10.3

Su

bsta

ntia

l Sha

reho

lder

s’ s

hare

hold

ings

As s

et o

ut in

Sec

tion

5 of

Par

t A o

f the

Circ

ular

,the

sub

stan

tial S

hare

hold

ers

of th

e C

ompa

ny b

ased

on

the

regi

ster

of s

ubst

antia

l Sha

reho

lder

s of

the

Com

pany

as

at th

e LP

D a

nd th

e pr

o fo

rma

effe

cts

of th

e Pr

opos

ed S

ettle

men

t on

thei

r sha

reho

ldin

gs a

re a

s fo

llow

s:-

Subs

tant

ial S

hare

hold

ers

As

at th

e LP

DA

fter t

he P

ropo

sed

Settl

emen

t

Dire

ctIn

dire

ctD

irect

Indi

rect

No.

of S

hare

s(1

) %N

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36

37

10.4 Earnings and earnings per Tanco Share (“EPS”)

The Proposed Settlement is not expected to have any material effect on the earnings of the Group for the FYE 30 June 2020. However, the EPS for the FYE 30 June 2020 is expected to be diluted as a result of the increase in the number of Tanco Shares in issue pursuant to the issuance of the Settlement Shares.

10.5 Convertible securities

Save for the outstanding RCN amounting to RM2.35 million and 271,684,240 Warrants B, the Company does not have any other existing convertible securities as at the LPD. The Proposed Settlement will not result in any adjustment to the exercise price and number of the outstanding RCN and Warrants B.

Comments:

Arising from the Proposed Settlement only, we noted that the pro forma net assets of Tanco are expected to increase with the issuance of Settlement Shares from RM153.15 million (after Subsequent Events) to RM169.75 million.

Furthermore, based on the Proposed Settlement only, the pro forma gearing is expected to decrease from 0.31 times (after Subsequent Events) to 0.28 times, as a result of increase in share capital arising from issuance of Settlement Shares and with borrowings remaining unchanged (after Subsequent Events).

Arising from the Proposed Settlement only, the EPS is expected to be diluted as a result of the increase in the number of Tanco shares in issue.

As for the effects on substantial shareholders’ shareholdings, arising from the Proposed Settlement only, the interests of TJN Capital (being a major shareholder of the Company and the nominee of Andrew Tan pursuant to the Proposed Settlement) in Tanco is expected to increase from 51.49% to 65.63% whereas the interests of Andrew Tan in Tanco is expected to bediluted from 1.69% to 1.19%. Given that TJN Capital has statutory control over Tanco, i.e. holding of more than 50% of the voting shares in Tanco, this will not trigger an obligation to undertake a mandatory takeover offer to acquire the remaining Tanco Shares not held by him under the Rules on Take-Overs, Mergers and Compulsory Acquisitions. We also noted that Tanco will comply with the public shareholding spread requirement at the completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders.

Nonetheless, based on the above, we are of the view that the financial effects of the Proposed Settlement on a pro forma basis are fair and reasonable and are not detrimental to the interests of the Non-Interested Shareholders of Tanco.

11. RISK FACTORS ASSOCIATED WITH THE PROPOSED SETTLEMENT

In Section 4 of Part A of the Circular, the Board had identified risk factor (which may not be exhaustive) relating to the Proposed Settlement which may have an impact on Tanco in the future. The risk factor identified together with our views is as follows:

11.1 Non-completion risks of the Proposed Settlement

The completion of the Proposed Settlement is subject to, amongst others, the fulfilment of the conditions precedent within the Conditional Period, failing which may result in termination of the Settlement Agreement. As a result of such termination, the Debts shall immediately become

37

38

due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date. In this respect, Tanco will take reasonable steps that are within its control to ensure completion of the Proposed Settlement, including but not limited to closely monitoring the progress of the Proposed Settlement and ensuring timely fulfilment of the conditions precedent within the Conditional Period.

Comments:

We noted the risks factor identified and we are of the opinion that the risk is reasonable and the Board of Tanco and the management of Tanco are expected to take steps to mitigate the risk to the extent possible.


You should carefully consider the terms of the Proposed Settlement based on all relevant and pertinent factors including those which are set out above, and other considerations as set out in this IAL, the Circular and any other publicly available information.

In arriving at our conclusion and recommendation, we have taken into account the various consideration factors which are summarised as follows:

Assessment Our evaluation(i) Basis and

justification in arriving at the issue price of Settlement Shares


(i) A premium ranging from RM0.0036 (7.8%) to RM0.0100(25.0%) over the last closing price as at the LTD, five (5)-day,one (1)-month and three (3)-month VWAPs up to LTD.

(ii) A discount ranging from RM0.0120 (19.4%) to RM0.0146(22.6%) for the six (6)-month and one (1)-year VWAPs up to LTD.

(iii) A premium ranging from RM0.0060 (13.6%) to RM0.0100(25.0%) over the last closing price as at the LPD and five (5)-day VWAP up to LPD.

In view of the premiums of the issue price of RM0.05 over the last closing price as at LTD, five (5)-day, one (1)-month and three (3)-month VWAPs up to LTD, this means a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of Tanco.



(ii) Rationale for the Proposed Settlement

We noted the views of the Board that the Proposed Settlement is an opportunity for the Tanco Group to enhance its financial position and to its gearing ratio upon the settlement of the Group’s debts

38

due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date. In this respect, Tanco will take reasonable steps that are within its control to ensure completion of the Proposed Settlement, including but not limited to closely monitoring the progress of the Proposed Settlement and ensuring timely fulfilment of the conditions precedent within the Conditional Period.

Comments:

We noted the risks factor identified and we are of the opinion that the risk is reasonable and the Board of Tanco and the management of Tanco are expected to take steps to mitigate the risk to the extent possible.


You should carefully consider the terms of the Proposed Settlement based on all relevant and pertinent factors including those which are set out above, and other considerations as set out in this IAL, the Circular and any other publicly available information.

In arriving at our conclusion and recommendation, we have taken into account the various consideration factors which are summarised as follows:

Assessment Our evaluation(i) Basis and

justification in arriving at the issue price of Settlement Shares


(i) A premium ranging from RM0.0036 (7.8%) to RM0.0100(25.0%) over the last closing price as at the LTD, five (5)-day,one (1)-month and three (3)-month VWAPs up to LTD.

(ii) A discount ranging from RM0.0120 (19.4%) to RM0.0146(22.6%) for the six (6)-month and one (1)-year VWAPs up to LTD.

(iii) A premium ranging from RM0.0060 (13.6%) to RM0.0100(25.0%) over the last closing price as at the LPD and five (5)-day VWAP up to LPD.

In view of the premiums of the issue price of RM0.05 over the last closing price as at LTD, five (5)-day, one (1)-month and three (3)-month VWAPs up to LTD, this means a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of Tanco.



(ii) Rationale for the Proposed Settlement

We noted the views of the Board that the Proposed Settlement is an opportunity for the Tanco Group to enhance its financial position and to its gearing ratio upon the settlement of the Group’s debts

38

39

Assessment Our evaluationowing to the Creditor. Consequently, the reduction in gearing ratio is a result of the increase in share capital arising from the issuance of Settlement Shares.

We also noted that management had represented that based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, 90.8% of the borrowings of the Group are long term in nature and are not current and are not due for payment.Meanwhile, the short term borrowings comprise mainly of banking facilities such as bank overdraft which are revolving in nature.



Based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, the Group’s cash and cash equivalents stood at RM0.20 million, which is insufficient to fund the Proposed Settlement. The Group recorded net cash outflow from operating activities of RM5.71 million for FYE 30 June 2019.


Arising from the Proposed Settlement only, we noted that the shareholding of Non-Interested Shareholders will be diluted from 46.82% to 33.18%. Given that TJN Capital has statutory control over Tanco before the Proposed Settlement, i.e. holding of more than 50% of the voting shares in Tanco, we noted that the statutory control of Tanco will still remain with the same shareholder after the Proposed Settlement. We also noted that Tanco will still comply with the public shareholding spread requirement at the completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders. Notwithstanding this, we noted that the dilution in shareholding of the Non-Interested Shareholders is a consequence of settlement of the amount owing to the Creditor.


39

Assessment Our evaluationowing to the Creditor. Consequently, the reduction in gearing ratio is a result of the increase in share capital arising from the issuance of Settlement Shares.

We also noted that management had represented that based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, 90.8% of the borrowings of the Group are long term in nature and are not current and are not due for payment.Meanwhile, the short term borrowings comprise mainly of banking facilities such as bank overdraft which are revolving in nature.



Based on the audited consolidated financial statements of the Group for the FYE 30 June 2019, the Group’s cash and cash equivalents stood at RM0.20 million, which is insufficient to fund the Proposed Settlement. The Group recorded net cash outflow from operating activities of RM5.71 million for FYE 30 June 2019.


Arising from the Proposed Settlement only, we noted that the shareholding of Non-Interested Shareholders will be diluted from 46.82% to 33.18%. Given that TJN Capital has statutory control over Tanco before the Proposed Settlement, i.e. holding of more than 50% of the voting shares in Tanco, we noted that the statutory control of Tanco will still remain with the same shareholder after the Proposed Settlement. We also noted that Tanco will still comply with the public shareholding spread requirement at the completion of Proposed Settlement, where at least 25% of Tanco’s total listed shares are in the hands of public shareholders. Notwithstanding this, we noted that the dilution in shareholding of the Non-Interested Shareholders is a consequence of settlement of the amount owing to the Creditor.


39

40

Assessment Our evaluation In view of this, BDO is of the view that the rationale of the Proposed

Settlement is reasonable and not detrimental to the interests of the Non-Interested Shareholders.

(iii) Evaluation of the salient terms of the Settlement Agreement

The salient terms of the Settlement Agreement have been mutually agreed upon by the parties pursuant to the Proposed Settlement and are common commercial term in transaction of such natureand are considered reasonable and not detrimental to the interests of the Non-Interested Shareholders of Tanco

We note that it is reasonable for the amount of settlement to befixed based on amount owing to the Creditor in the books and to be settled via issuance of a fixed number of instruments at a fixed issue price.


(iv) Financial effects of the Proposed Settlement

Arising from the Proposed Settlement only, we noted that the proforma net assets of Tanco are expected to increase with the issuance of Settlement Shares from RM153.15 million (after Subsequent Events) to RM169.75 million.

Arising from the Proposed Settlement only, the pro forma gearing is expected to decrease from 0.31 times (after Subsequent Events) to 0.28 times, as a result of increase in share capital arising from issuance of Settlement Shares and with borrowings remaining unchanged (after Subsequent Events).


As for the effects on substantial shareholders’ shareholdings, arising from the Proposed Settlement only, the interests of TJN Capital (being a major shareholder of the Company and the nominee of Andrew Tan pursuant to the Proposed Settlement) in Tanco is expected to increase from 51.49% to 65.63% whereas the interests of Andrew Tan in Tanco is expected to be diluted from 1.69% to 1.19%. Given that TJN Capital has statutory control over Tanco, i.e. holding of more than 50% of the voting shares in Tanco, this will not trigger an obligation to undertake a mandatory takeover offer to acquire the remaining Tanco Shares not held by him under the Rules on Take-Overs, Mergers and Compulsory Acquisitions.We also noted that Tanco will comply with the public shareholding spread requirement at the completion of Proposed Settlement,where at least 25% of Tanco’s total listed shares are in the hands of public shareholders.

Based on the above, the financial effects of the Proposed Settlement are fair and reasonable and are not detrimental to the interests of the Non-Interested Shareholders.

40

Assessment Our evaluation In view of this, BDO is of the view that the rationale of the Proposed

Settlement is reasonable and not detrimental to the interests of the Non-Interested Shareholders.

(iii) Evaluation of the salient terms of the Settlement Agreement

The salient terms of the Settlement Agreement have been mutually agreed upon by the parties pursuant to the Proposed Settlement and are common commercial term in transaction of such natureand are considered reasonable and not detrimental to the interests of the Non-Interested Shareholders of Tanco

We note that it is reasonable for the amount of settlement to befixed based on amount owing to the Creditor in the books and to be settled via issuance of a fixed number of instruments at a fixed issue price.


(iv) Financial effects of the Proposed Settlement

Arising from the Proposed Settlement only, we noted that the proforma net assets of Tanco are expected to increase with the issuance of Settlement Shares from RM153.15 million (after Subsequent Events) to RM169.75 million.

Arising from the Proposed Settlement only, the pro forma gearing is expected to decrease from 0.31 times (after Subsequent Events) to 0.28 times, as a result of increase in share capital arising from issuance of Settlement Shares and with borrowings remaining unchanged (after Subsequent Events).


As for the effects on substantial shareholders’ shareholdings, arising from the Proposed Settlement only, the interests of TJN Capital (being a major shareholder of the Company and the nominee of Andrew Tan pursuant to the Proposed Settlement) in Tanco is expected to increase from 51.49% to 65.63% whereas the interests of Andrew Tan in Tanco is expected to be diluted from 1.69% to 1.19%. Given that TJN Capital has statutory control over Tanco, i.e. holding of more than 50% of the voting shares in Tanco, this will not trigger an obligation to undertake a mandatory takeover offer to acquire the remaining Tanco Shares not held by him under the Rules on Take-Overs, Mergers and Compulsory Acquisitions.We also noted that Tanco will comply with the public shareholding spread requirement at the completion of Proposed Settlement,where at least 25% of Tanco’s total listed shares are in the hands of public shareholders.

Based on the above, the financial effects of the Proposed Settlement are fair and reasonable and are not detrimental to the interests of the Non-Interested Shareholders.

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41

Assessment Our evaluation(v) Risk factors

associated with the Proposed Settlement

We note that the completion of the Proposed Settlement is subject to the fulfilment of the conditions precedent within the Conditional Period, failing which may result in termination of the Settlement Agreement. As a result of such termination, the Debts shall immediately become due and payable by Tanco to the Creditor in any manner to be agreed by the parties mutually at a later date. In this respect, Tanco will take reasonable steps that are within its control to ensure completion of the Proposed Settlement.

We noted the risk factor identified and we are of the opinion that the risk is reasonable and the Board of Tanco and the management of Tanco are expected to take steps to mitigate the risk to the extent possible.

The Non-Interested Shareholders should consider the merits and demerits of the Proposed Settlement carefully based on all relevant and pertinent factors as set out in this IAL, the Circular and other publicly available information prior to making a decision to vote on the resolution pertaining to the Proposed Settlement.

Premised on our overall evaluation and assessment of the Proposed Settlement based on information available to us up to the LPD, we are of the opinion that the Proposed Settlement is fair and reasonable and not detrimental to the Non-Interested Shareholders of Tanco.

Accordingly, we recommend that the Non-Interested Shareholders of Tanco vote in favour ofthe resolution pertaining to the Proposed Settlement to be tabled at the forthcoming EGM.

Yours faithfully for and on behalf of BDO CAPITAL CONSULTANTS SDN BHD

WONG WING SEONG PAM LEE WEN AIExecutive Director – Advisory Executive Director – Advisory

41

APPENDIX I – FURTHER INFORMATION

42

1. DIRECTORS’ RESPONSIBILITY STATEMENT Our Board has seen and approved this Circular and they collectively and individually accept full responsibility for the accuracy of the information contained in this Circular. They confirm, after making all reasonable enquiries, that to the best of their knowledge and belief, there are no false or misleading statements or other facts which, if omitted, would make any statement in this Circular false or misleading.

2. CONSENT AND CONFLICT OF INTEREST Mercury Securities Mercury Securities, being the Principal Adviser to our Company for the Proposed Settlement, has given and has not subsequently withdrawn its written consent to the inclusion of its name in this Circular and all references thereto, in the form and context in which they appear. As at the LPD, Mercury Securities is not aware of any possible conflict of interest which exists or is likely to exist in its capacity as the Principal Adviser to our Company for the Proposed Settlement. BDO BDO, being the Independent Adviser to our Company for the Proposed Settlement, has given and has not subsequently withdrawn its written consent to the inclusion of its name in this Circular and all references thereto, in the form and context in which they appear. As at the LPD, BDO is not aware of any possible conflict of interest which exists or is likely to exist in its capacity as the Independent Adviser to our Company for the Proposed Settlement.

3. HISTORICAL SHARE PRICES The monthly highest and lowest trading market prices of Tanco Shares for the 12 months preceding the date of this Circular, as at the LTD and as at the LPD are shown below:- High Low Month (RM) (RM)

2020

April 0.055 0.025

March 0.045 0.020

February 0.050 0.040

January 0.050 0.040

2019

December 0.060 0.045

November 0.080 0.050

October 0.060 0.050

September 0.060 0.045

August 0.050 0.040

July 0.055 0.045

June 0.050 0.040

May 0.055 0.040

Last transacted market price as at the LTD (RM) 0.040

Last transacted market price as at the LPD (RM) 0.040

(Source: Bloomberg)

42

APPENDIX I – FURTHER INFORMATION (cont’d)

43

4. ADDITIONAL INFORMATION 4.1 Financial information of our Group

The historical financial information of our Group for the FYE 30 June 2017, FYE 30 June 2018, FYE 30 June 2019 and 6-month FPE 31 December 2019 are as follows:-

Audited Unaudited Restated FYE 30

June 2017

Restated FYE 30

June 2018 FYE 30

June 2019

6-month FPE 31 December

2019 (RM’000) (RM’000) (RM’000) (RM’000)

Revenue 10,395 15,724 3,044 2,126

Cost of sales (6,755) (3,931) (2,180) (7)

Gross profit 3,640 11,793 864 2,119 Other income 1,397 7,759 1,653 74

Net reversal / (allowance) of impairment

losses on receivables

- (1,123) 401 200

Administrative expenses (14,322) (15,481) (14,139) (6,673)

Finance income - 92 337 101

Finance costs (2,083) (4,143) (5,102) (1,858)

Loss before tax (11,368) (1,103) (15,986) (6,037) Tax (expense) / credit (119) 508 442 -

Loss after tax (“LAT”) (11,487) (595) (15,544) (6,037)

LAT attributable to:-

- owners of the Company (11,481) (595) (15,544) (6,037)

- non-controlling interests (6) - - -

GP margin (%) 35.02 75.00 28.38 99.67

LAT margin (%) (110.51) (3.78) (510.64) (283.96)

Weighted average number of Shares in

issue (‘000)

566,292 664,196 691,871 805,669

Basic loss per share (2.03) (0.09) (2.25) (0.75)

Dividend (sen) - - - -

Share capital 47,977 48,877 51,877 56,827

NA 159,931 160,227 147,768 147,114

Number of Shares in issue (‘000) 661,650 671,433 731,433 830,432

NA per Share (RM) 0.24 0.24 0.20 0.18

Current assets 104,396 96,251 91,751 90,578

Current liabilities 85,060 79,821 91,256 93,125

Current ratio (times) 1.23 1.21 1.01 0.97

Total equity 160,012 160,227 147,768 147,114

Borrowings (including outstanding RCN) 46,603 45,610 48,036 46,400

Gearing ratio (times) 0.29 0.28 0.33 0.32

43


44

(i) 6-month FPE 31 December 2019 vs 6-month FPE 31 December 2018 Our Group’s revenue for the 6-month FPE 31 December 2019 decreased by RM0.75 million or 25.97% as compared to the 6-month FPE 31 December 2018. The decrease in revenue was mainly due to lower revenue contribution from our Group’s property development segment. Our Group’s LAT for the 6-month FPE 31 December 2019 was lower than the LAT for the 6-month FPE 31 December 2018 by RM0.76 million, mainly due to higher gross profit resulted from lease income for the 6-month FPE 31 December 2019. Our consolidated NA decreased by RM8.34 million from RM155.45 million as at 31 December 2018 to RM147.11 million as at 31 December 2019, mainly as a result of our Group’s loss recorded during the said financial period. Our gearing ratio increased from 0.29 times as at 31 December 2018 to 0.32 times as at 31 December 2019, mainly as a result of the decrease in the total equity by RM8.34 million from RM155.45 million as at 31 December 2018 to RM147.11 million as at 31 December 2019 as a result of our Group’s loss during the said financial period.

(ii) FYE 30 June 2019 vs FYE 30 June 2018 Our Group’s revenue for the FYE 30 June 2019 decreased by RM12.68 million or 80.64% as compared to the FYE 30 June 2018. The lower revenue was mainly due to lower income from our Group’s resorts and timeshare business following the completion of our Group’s obligations on the dissolution of the Duta Vista Vacation Ownership (“DVVO”) Scheme and Vacation SuperClub Scheme during FYE 30 June 2018 as well as lower sales of development properties during the current financial year. Our Group’s LAT for the FYE 30 June 2019 was higher than the LAT for the FYE 30 June 2018 by RM14.95 million, mainly due to the decrease in revenue during the current financial year and the recognition of a one-off net gain on disposal of Duta Vista Executive Suites and the surrender of memberships arising from the dissolution of the DVVO Scheme of RM4.69 million during the FYE 30 June 2018. Our consolidated NA decreased by RM12.46 million from RM160.23 million as at 30 June 2018 to RM147.77 million as at 30 June 2019, mainly as a result of losses recorded during the FYE 30 June 2019. Our gearing ratio increased from 0.28 times as at 30 June 2018 to 0.33 times as at 30 June 2019, mainly attributable to the decrease in the total equity from RM160.23 million as at 30 June 2018 to RM147.77 million as at 30 June 2019, mainly as a result of our Group’s LAT of RM15.54 million during the FYE 30 June 2019.

(iii) FYE 30 June 2018 vs FYE 30 June 2017 Our Group’s revenue for the FYE 30 June 2018 increased by RM5.33 million or 51.27% as compared to the FYE 30 June 2017. The higher revenue was mainly contributed by the prior year billings of maintenance charges totalling to about RM6.90 million as well as an increase in sales from Tower 2 of Splash Park Service Suites in line with the progress of the project.

44


45

Our Group’s LAT for the FYE 30 June 2018 was lower than the LAT for the FYE 30 June 2017 by RM10.89 million, mainly due to the increase in revenue during the current financial year and the recognition of a one-off net gain on disposal of Duta Vista Executive Suites and the surrender of memberships arising from the dissolution of the DVVO Scheme of RM4.69 million during the FYE 30 June 2018. Our consolidated NA increased slightly by RM0.30 million from RM159.93 million as at 30 June 2017 to RM160.23 million as at 30 June 2018, mainly as a result of issuance of Shares pursuant to conversion of RCN as well as movement in foreign currency reserve arising from liquidation of subsidiaries during the current financial year. Our gearing ratio decreased slightly from 0.29 times as at 30 June 2017 to 0.28 times as at 30 June 2018, mainly as a result of a decrease in total borrowings from RM46.60 million as at 30 June 2017 to RM45.61 million as at 30 June 2018.

(iv) FYE 30 June 2017 vs FYE 30 June 2016 Our Group’s revenue for the FYE 30 June 2017 decreased slightly by RM0.32 million or 3.01% as compared to the FYE 30 June 2016. The lower revenue was mainly attributable to lower revenue contribution from our Group’s resorts and timeshare business resulted from lower collection of annual maintenance fees from the members of DVVO Scheme. Our Group’s LAT for the FYE 30 June 2017 was higher than the LAT for the FYE 30 June 2016 by RM2.67 million, mainly due to the higher gross profit and other income (including a reversal of accruals of RM1.75 million) for the FYE 30 June 2016. Our consolidated NA increased by RM2.04 million from RM157.89 million as at 30 June 2016 to RM159.93 million as at 30 June 2017, mainly as a result of issuance and conversion of RCN during the current financial year. Our gearing ratio decreased from 0.34 times as at 30 June 2016 to 0.29 times as at 30 June 2017, mainly as a result of a decrease in total borrowings from RM53.39 million as at 30 June 2016 to RM46.60 million as at 30 June 2017.

4.2 Expected value to be created from the Proposed Settlement and the impact of the Proposed Settlement to our Group and Shareholders Despite the expected dilution in the earnings per Share and NA per Share of Tanco, the Proposed Settlement is expected to generate the benefits as disclosed in Section 3, Part A of this Circular. The Proposed Settlement allows the settlement of the Debts via the issuance of Settlement Shares in an expedient manner, without involving any cash consideration and without incurring additional interest costs as compared to bank borrowings. In view thereof, satisfaction of the Debts via the issuance of Settlement Shares will not only reduce our Group’s total liabilities but also minimise any potential cash outflow in respect of interest servicing, which may erode our Group’s profitability. Furthermore, in view that the Settlement Shares are issued at a premium over the prevailing market prices, a lower number of Tanco Shares will be issued for the purposes of full settlement of the Debts and accordingly, there will be less dilution impact to the existing shareholders of our Company.

45


46

Upon completion of the Proposed Settlement, our Group will be able to reduce its total liabilities and also enhance our Group’s financial position and reduce gearing ratio as a result of the enlarged share capital from the issuance of Settlement Shares. In turn, these will enhance our Group’s credibility with bankers, customers, suppliers, investors and other stakeholders. Please refer to Section 5, Part A of this Circular for the financial effects of the Proposed Settlement on our Group.

4.3 Adequacy of the Proposed Settlement in addressing our Group’s financial concerns Based on the historical financial information of our Group as set out in Section 4.1 of this Appendix I, and taking into consideration our funding requirements for our property development expenditure, expected cash flows to be generated from operations as well as our existing level of cash and cash equivalents and available credit sources, our Board is of the view that the Proposed Settlement shall be sufficient to address our Group’s financial concerns in the near term as it will enable our Group to reduce its total liabilities without stressing our cash reserves or gearing position. Further, the gearing ratio of our Group will be improved as a result of the increase in our Group’s NA due to the enlarged share capital from the issuance of Settlement Shares. The satisfaction of the Debts via the issuance of Settlement Shares will also allow us to focus the management’s time and efforts on strengthening our businesses that would improve our financial performance instead of sourcing for funds for the repayment of the Debts. Moving forward, our Group will continue to focus on our current development projects in Port Dickson whilst concurrently taking the needful actions to adapt to the new economic climate brought on by the coronavirus disease 2019 (Covid-19) pandemic, and identifying business opportunities thereform, as well as implementing additional measures to improve performance and cost efficiencies of our business operations. In the long-term, we will continue to evolve and adjust our business strategies and funding requirements accordingly which may include plans to monetise our Group’s development lands as well as other fund-raising corporate proposals (if required), taking into consideration our capital structure and cost of funds. Based on the reasons set out above and taking into consideration the current financial condition of Tanco, our Board is of the view that the Proposed Settlement will greatly benefit and support ongoing efforts to sustain our Group’s financials during this very extraordinary and uncertain time.

5. MATERIAL COMMITMENTS AND CONTINGENT LIABILITIES Material commitments Our Board confirmed that as at the LPD, there are no material commitments incurred or known to be incurred by our Group which may, upon being enforceable, have a material adverse effect on our Group’s profits or NA. Contingent liabilities Our Board confirmed that as at the LPD, there are no contingent liabilities incurred or known to be incurred by our Group which may, upon being enforceable, have a material adverse effect on our Group’s profits or NA.

46


47

6. MATERIAL LITIGATION Save as disclosed below, as at the LPD, our Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and our Board is not aware of any proceedings, pending or threatened or of any facts likely to give rise to any proceedings, which might have a material adverse effect on the financial position and/or businesses of the Tanco Group:- On 18 June 2018, Tanco Resorts Bhd (“Tanco Resorts”) (a wholly-owned subsidiary of our Company) via its solicitors has, as directed by the Court, re-filed and initiated a Writ action against Pacific Trustees Bhd (“PTB”) (i.e. the trustee of the DVVO Scheme undertaken by Tanco Resorts) for declaratory relief to amongst others, dispute and challenge the validity and legality of:- (i) the RM120,000 fees for extraordinary services purportedly carried out by PTB in

relation to the dissolution of the DVVO Scheme (“Dissolution Fee”); and

(ii) the RM900,000 fees for extraordinary services purportedly carried out by PTB in relation to Tanco Resorts' disposal of the 41 DVVO units in Duta Vista Executive Suites,

being unilaterally imposed and claimed by PTB respectively, with an alternate prayer for the Court to assess a fair and reasonable sum for the Dissolution Fee should the Court decide that a fee is due for PTB's works per the dissolution of the DVVO Scheme. PTB in turn is counterclaiming for RM920,000.00 being the balance of (i) above and for (ii) above. The trial dates for the Writ action earlier set for 27 to 29 April 2020 (after being adjourned during the earlier trial date on 18 July 2019) had been deferred due to the Movement Control Order and the new trial dates may only be confirmed after the Courts re-open again. No provision has been made for the disputed amounts as the solicitors acting for Tanco Resorts in the above matter are of the view that the outcome of the abovementioned Writ action would be in favour of Tanco Resorts based on the facts and documents relied on by Tanco Resorts.

7. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the registered office of our Company at No. 1, Jalan Bandar 1, Pusat Bandar Puchong, 47160 Puchong, Selangor Darul Ehsan during normal office hours from 9:00 a.m. to 6:00 p.m. (Malaysian time) on Mondays to Fridays (except for public holidays) from the date of this Circular up to and including the date of the forthcoming EGM:- (i) Constitution of our Company;

(ii) audited consolidated financial statements of Tanco for the FYE 30 June 2018 and 30

June 2019 as well as the latest unaudited consolidated financial statements of Tanco for the 6-month FPE 31 December 2019;

(iii) letters of consent referred to in Section 2 of this Appendix I;

(iv) Settlement Agreement; and

(v) relevant cause papers in respect of the material litigation as referred to in Section 6 of this Appendix I.

47

APPENDIX II – ADMINISTRATIVE GUIDE FOR THE EGM

48

The Company's forthcoming EGM will be conducted on a fully virtual basis through live streaming and online remote voting via Remote Participation and Voting facilities which are available on Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my. Hence, no shareholders / proxy(ies) from the public shall be physically present at nor admitted to the Broadcast Venue. Entitlement to participate, speak and vote Only members whose names appear in the Record of Depositors on 22 May 2020 (General Meeting Record of Depositors) shall be eligible to participate, speak and vote in the EGM or appoint proxy(ies) to participate, speak and/or vote on his/her behalf. Please take note that you must complete the Proxy Form for the EGM should you wish to appoint a proxy(ies). Your may download the Proxy Form for the EGM from the Company’s website at https://www.tancoholdings.com/ and Bursa Securities website at https://www.bursamalaysia.com. Please ensure the original form is deposited at the Share Registrar's office of the Company, at 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia not less than 48 hours before the time set for holding the EGM or any adjournment thereof. Alternately, the Proxy Form can be deposited electronically through the Share Registrar’s website, Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my before the Proxy Form lodgement cut-off time as mentioned above. Revocation of proxy If you decide to change your proxy or wish to participate, speak and vote in the EGM by yourself after deposited the Proxy Form, please write in to [email protected] to revoke the earlier appointed proxy 48 hours before the EGM. Voting procedures 1. The voting will be conducted by poll in accordance with Paragraph 8.29A of the Listing

Requirements. The Company has appointed Boardroom Share Registrars Sdn Bhd ("Boardroom") as Poll Administrator to conduct the poll by way of electronic voting (e-Voting) and Quantegic Services Sdn Bhd as Scrutineers to verify the poll results.

2. During the EGM, the Chairman will invite the Poll Administrator to brief on the e-Voting

housekeeping rules. The voting session will commence as soon as the Chairman calls for the poll to be opened and until such time when the Chairman announces the closure of the poll.

3. For the purposes of this EGM, e-voting will be carried out via the following voting devices:-

a. Personal smart mobile phones; b. Tablets; or c. Laptops;

4. There are 3 methods for members and proxies who wish to use their personal voting device to vote. The methods are:- a. Download the free Lumi AGM from Apple App Store or Google Play Store prior to the

meeting OR b. Using QR Scanner Code given in the email to you OR c. Using website URL: https://web.lumiagm.com

5. The Scrutineers will verify the poll result reports upon closing of the poll session by the

Chairman. The Scrutineers will announce the results thereafter, and the Chairman will declare whether the resolution put to vote were successfully carried or not.

48

APPENDIX II – ADMINISTRATIVE GUIDE FOR THE EGM (cont’d)

49

6. In accordance with the Company’s Constitution, members are entitled to vote at the EGM either personally or by proxy, based on the General Meeting Record of Depositors. Any eligible voting member unable to participate electronically is entitled to appoint a proxy to participate in the EGM instead.

Remote participation and electronic voting 1. Please note that the remote participation and electronic voting is available to

(i) Individual members; (ii) Corporate shareholder; (iii) Authorised Nominee; and (iv) Exempt Authorised Nominee.

2. You will be able to view a live web cast of the EGM proceeding, pose question to the Board and submit your votes in real time whilst the meeting is in progress.

3. Kindly follow the steps below on how to request for user ID and password. Step 1 – Register online with Boardroom Smart Investor Online Portal (for first time registration only) Note: If you have already signed up with Boardroom Smart Investor Online Portal, you are not required to register again. You may proceed to Step 2. Submit request for Remote Participation user ID and password. a. Access website https://boardroomlimited.my. b. Click <<Login>> and click <<Register>> to sign up as a user. c. Complete registration and upload softcopy of MyKad (front and back) or passport. d. Please enter a valid email address and wait for Boardroom’s email verification. e. Your registration will be verified and approved within one business day and an email

notification will be provided. Step 2 – Submit request for Remote Participation user ID and password Note: The registration for remote access will be opened on 22 May 2020. Individual members - Login to https://boardroomlimited.my using your user ID and password above. - Select "Virtual Meeting" from the main menu and select the correct Corporate Event "Tanco

Holdings Berhad's EGM". - Enter your CDS account. - Read and agree to the terms & condition and thereafter submit your request. Corporate shareholders - Write in to [email protected] by providing the name of member, CDS

account number accompanied with the Certificate of Appointment of Corporate Representative or Proxy Form to submit the request.

49

APPENDIX II – ADMINISTRATIVE GUIDE FOR THE EGM (cont’d)

50

Authorised Nominee and Exempt Authorised Nominee - Write in to [email protected] by providing the name of member, CDS

account number accompanied with the Proxy Form to submit the request. a. Upon system verification against the General Meeting Record of Depositors, you will receive

an email from Boardroom either approving or rejecting your registration for remote participation.

b. You will also receive your remote access user ID and password along with the email from Boardroom if your registration is approved.

c. Please note that the closing time to submit your request is at 10.30 a.m. on 1 June 2020 (48 hours before the commencement of EGM).

Step 3 – Login to Virtual Meeting Portal Please note that the quality of the connectivity to Virtual Meeting Portal for live web cast as well as for remote online voting is highly dependent on the bandwidth and the stability of the internet connectivity available at the location of the remote users. a. The Virtual Meeting portal will be open for login starting from 9.30 a.m. on 3 June 2020. b. Follow the steps given to you in the email along with your remote access user ID and

password to login to the Virtual Meeting portal. (Refer to Step 2(c) above) c. The steps will also guide you how to view live web cast, ask questions and vote. d. The live web cast will end and the messaging window will be disabled the moment the

Chairman announces the closure of the EGM. e. You can now logout from Virtual Meeting Portal. 4. Shareholders who are unable to participate in the EGM are encouraged to appoint proxy or

the Chairman of the EGM to vote on their behalf. You may use Boardroom Smart Investor Online Portal proxy appointment service to submit your proxy appointment.

Participation at EGM The Chairman and the Directors will endeavour their best to respond to the questions submitted by shareholders which are related to the resolution to be tabled at the EGM. Shareholders may proceed to cast votes on the proposed resolution, to be tabled at the EGM after the Chairman has opened the poll on the resolution. Shareholders are reminded to cast their votes before the poll is closed.


50




NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting of Tanco Holdings Berhad (“Tanco” or

the “Company”) will be conducted fully virtual at the Broadcast Venue to be held at Auditorium, 3A Floor,

Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia on

Wednesday, 3 June 2020 at 10.30 a.m. or at any adjournment thereof for the purpose of considering and, if

thought fit, passing the following resolution, with or without modifications by way of poll:-

ORDINARY RESOLUTION

PROPOSED SETTLEMENT OF DEBTS OWING TO A DIRECTOR OF THE COMPANY, NAMELY ANDREW TAN JUN SUAN (THE GROUP MANAGING DIRECTOR OF TANCO) (“ANDREW TAN”) AMOUNTING TO RM17,079,920 TO BE FULLY SATISFIED VIA THE ISSUANCE OF 341,598,402 NEW ORDINARY SHARES IN TANCO (“SETTLEMENT SHARES”) AT AN ISSUE PRICE OF RM0.05 PER SETTLEMENT SHARE (“PROPOSED SETTLEMENT”) “THAT subject to all the requisite approvals of the relevant authorities and/or parties being obtained, approval be

and is hereby given to the Board of Directors of the Company (“Board”) for the following:-

(i) to allot and issue 341,598,402 Settlement Shares to the nominee of Andrew Tan, TJN Capital Sdn Bhd

(a major shareholder of Tanco and a company controlled by Andrew Tan), for the full settlement of debts

owing by Tanco and its subsidiaries to Andrew Tan as at 31 January 2020 amounting to RM17,079,920,

subject to the terms and conditions as set out in the settlement agreement dated 5 March 2020 entered

into between Andrew Tan, TJN Capital Sdn Bhd and Tanco for the Proposed Settlement; and

(ii) such Settlement Shares shall, upon allotment and issuance, be listed on the Main Market of Bursa

Malaysia Securities Berhad and rank equally in all respects with then existing ordinary shares in Tanco;

AND THAT the Board be and is hereby authorised and empowered to do all acts, deeds and things and to

execute, sign, deliver and cause to be delivered on behalf of the Company all such documents and/or

agreements as may be necessary to give effect and complete the Proposed Settlement and to assent to any

conditions, variations, modifications and/or amendments in any manner as may be required by the relevant

authorities or as the Board may deem necessary in the best interest of the Company and to take such steps as

they may deem necessary or expedient to implement, finalise, and give full effect and to complete the Proposed

Settlement.”

By Order of the Board


CHOI SIEW FUN (MAICSA 0877848) Company Secretary

Puchong

Selangor Darul Ehsan

19 May 2020

Notes:- (1) The meeting will be conducted on a fully virtual basis through live streaming and online remote voting via Remote

Participation and Voting ("RPV") facilities which are available on Boardroom Smart Investor Online Portal at https://www.boardroomlimited.my. Please follow the procedures as set out in Appendix II of the circular to shareholders of the Company dated 19 May 2020 in order to register, participate and vote remotely via the RPV facilities.

A copy of the said circular is available for download at the Company’s website at https://www.tancoholdings.com/ and Bursa Securities website at https://www.bursamalaysia.com. Should you require a printed copy of the circular, please forward your request to the Share Registrar’s office at Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia or emailing them at [email protected] or calling their general line at +603 7890 4700.

(2) The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act, 2016 which requires the Chairman of the meeting to be present at the main venue. No shareholders / proxy(ies) from the public shall be physically present at nor admitted to the Broadcast Venue.

(3) Only members whose names appear on the Record of Depositors as at 22 May 2020 shall be eligible to participate, speak and vote at the meeting or to appoint proxy(ies) in his/her stead or in the case of a corporation, a duly authorised representative to participate, speak and/or vote in its stead.

(4) A member entitled to participate, speak and vote at the meeting is entitled to appoint a proxy or proxies to participate, speak and vote in his/her stead. A proxy may, but need not, be a member of the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to participate, speak and vote at the meeting shall have the same rights as the member to speak at the meeting.

(5) A member may appoint up to two (2) proxies to participate, speak and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

(6) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. In such instance, the member shall specify the securities account number for each appointment.

(7) Where a member of the Company is an exempt authorised nominee as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect to the omnibus account.

(8) The instrument appointing a proxy or proxies shall be signed by the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(9) For a proxy to be valid, the Form of Proxy duly completed must be deposited at the Share Registrar’s office at Boardroom Share Registrars Sdn Bhd, 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia, not less than 48 hours before the time set for holding the EGM or any adjournment thereof.

✄



FORM OF PROXY

I/We, ………………………………………………………………………..……………………..……………………..…… [FULL NAME IN BLOCK LETTERS]

(NRIC/Passport/Company Registration No. …………………..……………………..…………………………………..)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS] being a member/members of TANCO HOLDINGS BERHAD, do hereby appoint

………………………………………………………………………………..……………………..……………………..…… [FULL NAME IN BLOCK LETTERS]

(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]

*,and/*or failing him/her, …………………………………………………..……………………..……………………..……

[FULL NAME IN BLOCK LETTERS]

(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]

or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to participate, speak and vote for me/us

on my/our behalf at the Extraordinary General Meeting of the Company to be conducted fully virtual at the

Broadcast Venue to be held at Auditorium, 3A Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim,

Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia on Wednesday, 3 June 2020 at 10.30 a.m. or at any

adjournment thereof.

Please indicate with an “X” in the appropriate spaces as to how you wish your vote to be cast. If you do not

indicate how you wish your proxy to vote on the resolution, the proxy shall vote as he/she thinks fit, or at his/her

discretion, abstain from voting.

Item Resolution Agenda FOR AGAINST 1. Ordinary Resolution Proposed Settlement

For appointment of two (2) proxies, no. of

shares and percentage of shareholdings to

be represented by the proxies:-

No. of shares Percentage Proxy 1

Proxy 2

Total 100% Dated this ………………. day of ……………….2020 …………………………………………… Signature(s) of Member(s) /

* strike out whichever not applicable Common Seal

No. of Shares held CDS Account No. Member’s Contact No.



FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2




























FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2






FORM OF PROXY



of …………………………………………………………………………………………………………………………………



(NRIC/Passport No. …………………..……………………..……………………..………….…………………………….)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]



(NRIC/Passport No. …………………..……………………..……………………..………….……………………………)

of …………………………………………………………………………………………………………………………………

[FULL ADDRESS]














Proxy 2




AFFIXSTAMP

Fold this flap for sealing

Then fold here

1st fold here












TANCO HOLDINGS BERHAD (195801000190 (3326-K))

C/O Boardroom Share Registrars Sdn Bhd

11th Floor, Menara SymphonyNo. 5, Jalan Prof. Khoo Kay KimSeksyen 1346200 Petaling JayaSelangor Darul Ehsan

this circular is important and requires … - circular dated 19.05.2020...this circular is important...

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