EA HOLDINGS BERHAD ("EAH" OR THE "COMPANY") I. PROPOSED BONUS ISSUE OF UP TO 267,356,264 NEW ORDINARY SHARES OF RM0.10 EACH IN EAH ("EAH SHARE(S)") ("BONUS SHARE(S)") TO BE CREDITED AS FULLY PAID-UP ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY FIVE (5) EXISTING EAH SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ("PROPOSED BONUS ISSUE"); II. PROPOSED ACQUISITION BY EAH OF 800,000 ORDINARY SHARES OF RM1.00 EACH IN CEKAP AIR SDN BHD ("CEKAP"), REPRESENTING 20% OF THE EQUITY INTEREST IN CEKAP FOR A PURCHASE CONSIDERATION OF RM47.04 MILLION, TO BE FULLY SATISFIED VIA THE ISSUANCE OF NEW EAH SHARES AT THE ISSUE PRICE OF RM0.10 PER EAH SHARE ("PROPOSED ACQUISITION"); AND III. PROPOSED DIVERSIFICATION OF THE EXISTING PRINCIPAL ACTIVITIES OF EAH AND ITS SUBSIDIARY COMPANIES TO INCLUDE MECHANICAL AND ELECTRICAL ENGINEERING BUSINESS AND CONSTRUCTION PROJECT MANAGEMENT CONSULTANCY BUSINESS ("PROPOSED DIVERSIFICATION") (COLLECTIVELY REFERRED TO AS THE "PROPOSALS") 1. INTRODUCTION On behalf of the Board of Directors of EA Holdings Berhad ("EAH" or the "Company") ("Board"), RHB Investment Bank Berhad ("RHBIB") wishes to announce that the Company proposes to undertake the following:- i. bonus issue of up to 267,356,264 new ordinary shares of RM0.10 each in EAH ("EAH Shares" or "Shares") ("Bonus Shares"), to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) existing EAH Shares held on an entitlement date to be determined later ("Entitlement Date") ("Proposed Bonus Issue"); ii. acquisition by EAH from Chong Mui Fun, Shankar a/l Muniandy, Yong Chee Hon, Dr. Yeoh Seong Mok, Yong Zhen Wei and Yeoh William (collectively referred to as the "Vendors"), for the proposed acquisition of 800,000 ordinary shares of RM1.00 each in Cekap ("Cekap Shares"), representing 20% of the equity interest in Cekap ("Sale Shares") for a purchase consideration of RM47,040,000 ("Purchase Consideration"), which will be fully satisfied by the issuance of 470,400,000 EAH Shares ("Consideration Shares") at an issue price of RM0.10 per EAH Share ("Proposed Acquisition"); and iii. diversification of the existing principal activities of EAH and its subsidiary companies ("EAH Group" or "Group") to include mechanical and electrical ("M&E") engineering business and construction project management consultancy business ("Proposed Diversification"). (The Proposed Bonus Issue, the Proposed Acquisition and the Proposed Diversification are collectively referred to as the "Proposals"). For the avoidance of doubt, the Proposed Acquisition is intended to be implemented after the Entitlement Date of the Proposed Bonus Issue. 1 For illustrative purposes throughout this announcement, the effects of the Proposals shall be based on the following two (2) scenarios:- Minimum Scenario : § Assuming none of the outstanding 151,063,248 warrants 2010/ 2015 in EAH ("Warrants A") are exercised prior to the Entitlement Date; and § Assuming none of the outstanding 122,776,822 warrants 2014/ 2019 in EAH ("Warrants B") are exercised prior to the Entitlement Date; and § Assuming none of the outstanding 212,588,250 warrants 2014/ 2019 in EAH ("Warrants C") are exercised prior to the Entitlement Date Maximum Scenario : § Assuming all the outstanding 151,063,248 Warrants A are exercised prior to the Entitlement Date; and § Assuming all the outstanding 122,776,822 Warrants B are exercised prior to the Entitlement Date; and § Assuming all the outstanding 212,588,250 Warrants C are exercised prior to the Entitlement Date Further details on the Proposals are set out in the ensuing sections. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Bonus Issue 2.1.1 Basis and number of Bonus Shares to be issued The Proposed Bonus Issue will entail an issuance of up to 267,356,264 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) existing EAH Shares held by the shareholders of EAH whose names appear in the Record of Depositors on the Entitlement Date. The Entitlement Date will be determined and announced at a later date after all the relevant approvals for the Proposed Bonus Issue have been obtained. The actual number of Bonus Shares to be issued pursuant to the Proposed Bonus Issue shall be determined on the Entitlement Date, after taking into consideration of the following:- i. the issued and paid-up share capital of EAH as at 6 March 2015, being the latest practicable date of this announcement ("LPD"), of RM85,035,300 comprising 850,353,000 EAH Shares; and ii. any new EAH Shares that may be issued on or prior to the Entitlement Date pursuant to the exercise of the outstanding 151,063,248 Warrants A, 122,776,822 Warrants B and 212,588,250 Warrants C. Based on the issued and paid-up share capital of EAH as at the LPD of RM85,035,300 comprising 850,353,000 EAH Shares and assuming the full exercise of all the outstanding Warrants A, Warrants B and Warrants C on or prior to the Entitlement Date, a maximum of 267,356,264 Bonus Shares will be issued pursuant to the Proposed Bonus Issue. 2 The Proposed Bonus Issue is undertaken entirely and only for the existing shareholders of EAH, and the Vendors will not be entitled to the Bonus Shares. For the avoidance of doubt, the Proposed Acquisition is intended to be implemented after the Entitlement Date of the Proposed Bonus Issue whereby the Consideration Shares pursuant to the Proposed Acquisition will only be issued and allotted after the Entitlement Date for the Proposed Bonus Issue. Fractional entitlements arising from the Proposed Bonus Issue, if any, shall be disregarded and dealt with by the Board in such manner at its absolute discretion as it may deem fit and expedient and in the best interest of the Company. The Proposed Bonus Issue will not be implemented on a staggered basis. 2.1.2 Capitalisation of reserves The Proposed Bonus Issue shall be capitalised from the share premium and retained earnings accounts of the Company. An illustration of the proposed capitalisation for the Proposed Bonus Issue based on the latest audited financial statements of EAH for the FYE 31 December 2013 at the Company level, after adjusting for subsequent events up to the LPD, is set out as follows:- Minimum Scenario Maximum Scenario Share Retained Share Retained EAH (Company level) premium earnings Total premium earnings Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Audited as at 31 December 2013 9,312 1,293 10,605 9,312 1,293 10,605 Add: § Dividend declared and paid by EAH's - 9,951 9,951 - 9,951 9,951 subsidiary companies to EAH on 1 March 2014 § Dividend declared and paid by EAH's - 9,500 9,500 - 9,500 9,500 subsidiary companies to EAH on 1 March 2015 § Assuming all outstanding Warrants A - - - 30,213 - 30,213 are exercised § Assuming all outstanding Warrants B - - - 4,912 - 4,912 are exercised § Assuming all outstanding Warrants C - - - 4,252 - 4,252 are exercised § Transfer from warrants reserve - - - 6,120 - 6,120 account upon exercise of Warrants A § Transfer from warrants reserve - - - 9,503 - 9,503 account upon exercise of Warrants C Less: § Transfer to warrants reserve account - (9,503) (9,503) - (9,503) (9,503) upon recognition of fair value of Warrants C § Expenses incurred for the previous (258) - (258) (258) - (258) bonus issue of warrants exercise*1 3 Minimum Scenario Maximum Scenario Share Retained Share Retained EAH (Company level) premium earnings Total premium earnings Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 § Expenses incurred for the previous (982) - (982) (982) - (982) rights issue with warrants exercise*2 Adjusted reserves 8,072 11,241 19,313 63,072 11,241 74,313 Amount to be capitalised pursuant to the (8,072) (8,935) (17,007) (26,736) - (26,736) Proposed Bonus Issue Estimated expenses in relation to the - (550) (550) - (550) (550) Proposals After the Proposed Bonus Issue - 1,756 1,756 36,336 10,691 47,027 Notes:- *1 EAH had undertaken a bonus issue of warrants exercise on the basis of two (2) free Warrants B for every nine (9) existing EAH Shares held ("Bonus Issue of Warrants"), which was completed on 3 March 2014 *2 EAH had undertaken a rights issue with warrants exercise on the basis of one (1) EAH Share ("Rights Share") for every one (1) existing EAH Share held, together with free detachable Warrants C on the basis of one (1) free Warrant C for every two (2) Rights Shares subscribed for ("Rights Issue with Warrants"), which was completed on 24 June 2014 An illustration of the proposed capitalisation for the Proposed Bonus Issue based on the latest unaudited quarterly report of EAH for the FYE 31 December 2014 at the Company level, after adjusting for subsequent events up to the LPD, is set out below:- Minimum Scenario Maximum Scenario Share Retained Share Retained EAH (Company level) premium earnings Total premium earnings Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Unaudited as at 31 December 2014 8,072 228 8,300 8,072 228 8,300 Add: § Dividend declared and paid by EAH's - 9,500 9,500 - 9,500 9,500 subsidiary companies to EAH on 1 March 2015 § Assuming all outstanding Warrants A - - - 30,213 - 30,213 are exercised § Assuming all outstanding Warrants B - - - 4,912 - 4,912 are exercised § Assuming all outstanding Warrants C - - - 4,252 - 4,252 are exercised § Transfer from warrants reserve - - - 6,120 - 6,120 account upon exercise of Warrants A § Transfer from warrants reserve - - - 9,503 - 9,503 account upon exercise of Warrants C Adjusted reserves 8,072 9,728 17,800 63,072 9,728 72,800 Amount to be capitalised pursuant to the (8,072) (8,935) (17,007) (26,736)