Telekom Malaysia Berhad Proposes $320 Million Islamic Sale Leaseback Transaction of Four Office Buildings

Bursa Malaysia Web Site - May 25, 2007

Telekom Malaysia Berhad wishes to announce a proposed Islamic Sale and Leaseback ransaction involving the issuance of up to RM1,100 million ($320 Million) Islamic Trust Certificates ('Sukuk'), details of which are set out below.

The Proposed Transaction involves the sale of four (4) of its property assets at a total value of up to RM1,100 million to Menara ABS Berhad, a special purpose vehicle. The Properties identified are known as Menara TM, Menara Celcom, Cyberjaya Complex and Wisma TM Taman Desa. Subsequent to the sale, the Properties will then be leased back to TM on a portfolio basis, under the Ijarah principle, for a lease term of up to fifteen (15) years.

The Proposed Transaction will involve a true sale transaction with respect to the Properties and an operating lease treatment with respect to the lease arrangement while allowing TM and its group of companies ("TM Group") uninterrupted occupation of its existing premises.

The Proposed Transaction, which will be implemented under the Securities Commission's Guidelines on the Offering of Asset-Backed Securities read together with the Guidelines on the Offering of Islamic Securities, will facilitate the issuance of three (3) different classes of Sukuk in tranches by Menara ABS Berhad. The funds to be raised from the issuance of such Sukuk shall be utilized by Menara ABS Berhad to pay TM for the purchase of the Properties.

The Proposed Transaction will facilitate TM's implementation of its strategy to monetize its non-core assets with a view to further improving operating financial ratios while focusing on its core business of providing telecommunication services.

TM will have the right of first refusal to either re-purchase the Properties or continue with the lease on new terms to be negotiated. Citibank Berhad has been appointed as the Principal Adviser/Lead Arranger for the Proposed Transaction.

An application has been submitted to the Securities Commission for approval of the Proposed Transaction. The Proposal is expected to be completed within six (6) months from the date of the Securities Commission's approval for the Proposed Transaction. Sphere: Related Content