Appendix 2(c) lion corporation berhad (12890-A)



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Appendix 2(c)
LION CORPORATION BERHAD (12890-A)

(Incorporated in Malaysia)


STATUS OF ISSUES AFFECTING THE JOINT VENTURE COMPANIES OF SILVERSTONE CORPORATION BERHAD (“SCB”) IN THE PEOPLE’S REPUBLIC OF CHINA (“PRC”)


No.

Issues

Joint-Venture Company (“JV Co”)

Steps taken or to be taken to resolve the Issues

Status as at 11 March 2005

1.

Land Use Right(s) for land(s) (“LUR”) and Property Ownership Right(s) for building(s) (“POR”) to be transferred by the PRC Party to the JV Co as PRC Party’s contribution to the capital of the JV Co, in accordance with the terms of the joint-venture agreement



Hunan Changfa Automobile Engine Co Ltd (SCB Group’s equity holding: 50%)

The Management of the SCB Group had liaised with the PRC Parties to transfer the LUR and/or POR for the following land and/or building to the JV Co:
PRC Party:

Changsha Auto Engine General Factory


Building:

No. 39, Shao Shan Lu, Dong Qu, Changsha, Hunan Province, PRC


Land:

Xian Jia Hu, He Xi, Changsha, Hunan Province, PRC



Despite the Management of SCB Group’s endeavour, this issue could not be resolved as at 11 March 2005.





No.

Issues

Joint-Venture Company (“JV Co”)

Steps taken or to be taken to resolve the Issues

Status as at 11 March 2005

2.

The amount of JV Co’s capital had exceeded the authorised limit of the provincial Ministry of Commerce (formerly known as the Ministry of Foreign Trade and Economic Commission) (“MOC”) amounting to USD30 million (equivalent to approximately RM114 million) and any excess must be approved by the MOC in Beijing, the PRC.

Dong Feng Lion Co Ltd

(SCB Group’s equity holding : 55%)




Dong Feng’s existing total investment is USD63.20 million (equivalent to approximately RM240.16 million). The Management of the SCB Group had liaised with Dong Feng to seek the approval of the MOC in Beijing through the provincial MOC for the excess of USD33.20 million (equivalent to approximately RM126.16 million).

By an agreement dated 2 February 2005, the SCB Group proposes to dispose of its 55% interest n Dong Feng to the PRC Party, Dong Feng Tyre Group Co Ltd (formerly known as Dong Feng Tyre Factory).
The proposed disposal was completed on 2 March 2005 whereupon Dong Feng ceased to be a subsidiary of SCB and SCB is no longer affected by this issue.



Note : Lion Corporation Berhad and its subsidiary and Amsteel Corporation Berhad and certain of its subsidiaries were issued with Silverstone Corporation Berhad shares, to which the abovecaptioned issues relate, pursuant to the Groupwide Debt and Corporate Restructuring Scheme involving Lion Corporation Berhad, Lion Industries Corporation Berhad, Silverstone Corporation Berhad and Amsteel Corporation Berhad which was implemented on 14 March 2003 (“GWRS”). Lion Corporation Berhad and Amsteel Corporation Berhad announced on 14 March 2005 that they did not suffer any loss as a result of the non-resolution of the above issues on the expiry of 24 months from the date of implementation of GWRS for the resolution of issues affecting the joint venture companies of Silverstone Corporation Berhad in the People’s Republic of China.



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