Packaging

ACQUISITION OF 50% OF THE ISSUED AND PAID-UP SHARE CAPITAL IN GMMI TEXCHEM SDN. BHD.

Monday 03. January 2011 - The Board of Directors of Texchem-Pack Holdings (S) Ltd (the "Company" or "TXPHS") wishes to announce that the Company has entered into a share sale agreement dated 3 January 2011 (the "SSA") with its holding company, Texchem Resources Bhd. ("TRB") to acquire from TRB 50% of the total issued and paid-up share capital in GMMI Texchem Sdn. Bhd. ("GMMI Texchem") comprising a total of 100,000 ordinary shares of RM1.00 each (the "Purchase Shares") for an aggregate cash consideration of RM100,000 only (the "Acquisition").

A. Introduction
The Board of Directors of Texchem-Pack Holdings (S) Ltd (the “Company” or “TXPHS”) wishes to announce that the Company has entered into a share sale agreement dated 3 January 2011 (the “SSA”) with its holding company, Texchem Resources Bhd. (“TRB”) to acquire from TRB 50% of the total issued and paid-up share capital in GMMI Texchem Sdn. Bhd. (“GMMI Texchem”) comprising a total of 100,000 ordinary shares of RM1.00 each (the “Purchase Shares”) for an aggregate cash consideration of RM100,000 only (the “Acquisition”).
B. Information on GMMI Texchem
GMMI Texchem is a private limited company incorporated in Malaysia on 5 July 2010 with an authorised share capital of RM500,000 divided into 500,000 ordinary shares of RM1.00 each and issued and paid-up share capital of RM200,000 divided into 200,000 ordinary shares of RM1.00 each. GMMI Texchem is principally engaged in the research and development, marketing, sales, trading and distribution of medical products and acting as an outsourced manufacturing services agent. Prior to the Acquisition, the shares of GMMI Texchem were jointly and equally held by TRB and GMMI Sdn. Bhd. (“GMMI”). Following the acquisition, GMMI Texchem will become a jointly controlled entity of the Company and GMMI.
C. Salient terms of the Share Sale Agreement
The consideration for the Purchase Shares of RM100,000 (the “Consideration”) was derived based on a willing buyer and willing seller basis, taking into consideration GMMI Texchem’s issued and paid-up share capital of RM200,000. Based on the management accounts of GMMI Texchem as at 30 November 2010, the net asset value of GMMI Texchem is negative RM346,394.81 as a result of net accumulated losses incurred due to setting up and pre-commencement business expenses.
The salient terms of the Acquisition as set out in the SSA are as follows:
a) The Purchase Shares are purchased free from all liens, charges and encumbrances and with full legal and beneficial title with effect from the completion of the Acquisition.
b) The Consideration is derived based on a willing-buyer-willing-seller basis after taking into consideration of GMMI Texchem’s issued and paid-up share capital of RM200,000.00.
c) The Consideration is satisfied by cash and is paid upon the execution of the SSA on even date.
d) Neither TRB nor TXPHS is obliged to complete the sale and purchase of any of the Shares unless the sale and purchase of all the Shares is completed simultaneously.
e) TRB shall, at any time while such default subsists, be at liberty to give a notice of termination of the SSA to the Company in the event that the Company defaults in the satisfaction of the Consideration or any part thereof in accordance with the provisions of the SSA or is otherwise in fundamental breach of its obligations under the SSA.
f) The Company shall, at any time while such default subsists, be at liberty to give a notice of termination of the SSA to TRB in the event that:
(i) TRB fails, neglects or refuses to complete the sale in accordance with the provisions of the SSA; or
(ii) TRB fails, neglects or refuses to perform or comply with any of its undertakings and covenants on its part therein to be performed.
There are no liabilities including contingent liabilities and guarantees to be assumed by TRB and/or the Company arising from the Acquisition.
D. Rationale
The Acquisition is in line with TXPHS Group’s corporate restructuring strategies. The Acquisition constitutes an interested person transaction. The Consideration constitutes less than 3% of TXPHS Group’s audited net tangible assets as at 31 December 2009.
E. Consideration
The Acquisition was financed through internally generated resources and is not expected to have any material impact on TXPHS Group’s earnings per share and consolidated net tangible assets per share for the financial year ended 31 December 2010.
F. Interests of Directors and Substantial Shareholders
None of the Directors or substantial shareholders of the Company have any interest, directly or indirectly, in the said transaction save for their interests arising by way of their shareholdings and/or directorships, as the case may be, in the above transaction.