1. INTRODUCTION

With reference to the announcement made by the Company on 25 February 2010, on behalf of the Board of Directors of Oriental (“Board”), AmInvestment Bank Berhad (a member of the AmInvestment Bank Group) (“AmInvestment Bank”), wishes to announce that the Company is proposing a bonus issue of 103,393,638 new Stocks, to be credited as fully paid-up on the basis of one (1) new Stock for every five (5) existing Stocks held at an entitlement date to be determined later (“Proposed Bonus Issue”).

2.1 Details of the Proposed Bonus Issue

The Proposed Bonus Issue shall involve the issuance of 103,393,638 new Stocks (“Bonus Stocks”) to be credited as fully paid-up to the existing stockholders of the Company on the basis of one (1) new Stock for every five (5) existing Stocks held in the Company at an entitlement date to be determined later (“Entitlement Date”).
The 103,393,638 Bonus Stocks are based on the issued and paid-up share capital of the Company as at 25 February 2010 of RM516,968,192 comprising 516,968,192 Stocks after deducting 31,808 Stocks retained as treasury stocks. The issued and paid-up share capital of the Company will be increased to RM620,361,830 (excluding treasury stocks) comprising 620,361,830 Stocks upon the completion of the Proposed Bonus Issue.

The Proposed Bonus Issue will be implemented by wholly capitalising RM103,393,638 from the retained earnings of the Company. Based on the latest audited financial statements of Oriental for the financial year ended 31 December 2008, the retained earnings of Oriental stood at approximately RM318.55 million. 

The Board has confirmed that the retained earnings which is required for the capitalisation of the Bonus Stocks is unimpaired by losses on a consolidated basis based on the latest audited consolidated financial statements of Oriental for the financial year ended 31 December 2008 and its latest unaudited quarterly results for the financial year ended 31 December 2009. 

2.2 Ranking of the Bonus Stocks

The Bonus Stocks shall, upon allotment and issue, rank pari passu in all respects with the existing Stocks of the Company upon listing.

2.3 Listing of Bonus Stocks

The Company will make an application to Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the Bonus Stocks.

The Proposed Bonus Issue will increase the capital base of the Company to a level which will better reflect the current scale of operations of Oriental and its subsidiaries (“Oriental Group” or the “Group”). In addition, the Proposed Bonus Issue will also serve to reward the stockholders of the Company for their continuing support, by enabling them to have greater participation in the equity of the Company in terms of the increased number of Stocks held whilst maintaining their equity interests.

The effects of the Proposed Bonus Issue are as follows:-

4.1 Share Capital

The effects of the Proposed Bonus Issue on the issued and paid-up share capital of the Company are set out in Table 1. 

4.2 Earnings

The Proposed Bonus Issue is not expected to have any material effect on the earnings of the Oriental Group for the financial year ending 31 December 2010. However, the earnings per Stock of the Oriental Group will be proportionately diluted as a result of the increase in the number of Oriental Stocks arising from the Proposed Bonus Issue.

4.3 Net Assets and Gearing

The proforma effects of the Proposed Bonus Issue on the net assets and gearing of the Oriental Group (assuming no further stocks buy-back and none of the existing treasury stocks are resold prior to the Entitlement Date) based on the latest consolidated financial statements of Oriental for the financial year ended 31 December 2008 are set out in Table 2.

4.4 Substantial Stockholders’ Interests

The Proposed Bonus Issue will not have any effect on the substantial stockholders’ percentage of stockholdings in the Company as the Bonus Stocks are pro-rated to all stockholders of the Company. Accordingly, the number of Stocks held by each stockholder will be increased proportionately pursuant to the Proposed Bonus Issue. 

4.5 Dividends

The Company has declared an interim dividend of 5% less 25% tax amounting to RM19,386,307 in respect of the financial year ended 31 December 2009, which was paid to the stockholders of Oriental on 18 January 2010.

The Company has also proposed a final dividend of 5% less 25% tax amounting to RM19,386,307 in respect of the financial year ended 31 December 2009. The dividend is subject to stockholders’ approval at the Company’s forthcoming Annual General Meeting and the entitlement date for the dividend has not been determined at this juncture (“Final Dividend”).

In the event that the Proposed Bonus Issue is completed prior to the entitlement date of the Final Dividend, the Bonus Stocks issued pursuant to the Proposed Bonus Issue shall be entitled to the abovementioned dividend.

The level of dividends to be declared for the future financial years would be determined by the Board after taking into consideration the performance and cash flow position of the Group and the prevailing economic conditions.

The Proposed Bonus Issue is subject to the approvals of the following parties:-

(a) Bursa Securities for the listing of and quotation for the Bonus Stocks; 

(b) The stockholders of Oriental at an Extraordinary General Meeting to be convened; and
(c) Any other relevant authorities (where applicable).

None of the Directors and/or major stockholders and/or persons connected to the Directors and/or major stockholders of Oriental have any interest, either direct or indirect, in the Proposed Bonus Issue beyond their respective entitlements as stockholders of Oriental, for which all stockholders of Oriental are also entitled to.

After having considered all aspects of the Proposed Bonus Issue, the Board is of the opinion that the Proposed Bonus Issue is in the best interest of the Company.

An application to the relevant authorities seeking approval for the Proposed Bonus Issue is expected to be made within three (3) months from the date of this announcement.

AmInvestment Bank has been appointed to act as the Adviser to the Company for the Proposed Bonus Issue.

The Proposed Bonus Issue is expected to be completed by the third quarter of the financial year ending 31 December 2010.