Contents:

1. INTRODUCTION

The Board of Directors of Asiatic Development Berhad ("Asiatic" or the "Company") is pleased to announce that Tanjung Bahagia Sdn Bhd ("TBSB"), a wholly owned subsidiary of the Company, has entered into a Sale and Purchase Agreement ("SPA") with Hap Seng Consolidated Berhad ("Hap Seng") on 20 June 2001 to acquire an agricultural land measuring approximately 8,830 hectares or 21,819 acres at Sungai Tongod, District of Kinabatangan, Sandakan, Sabah (the "Land") for a total purchase consideration of RM56.73 million plus reimbursement of plantation expenses incurred by Hap Seng ("Proposed Acquisition").

2. INFORMATION ON TBSB

TBSB is a private company incorporated in Malaysia on 14 July 1987. It is principally involved in the cultivation of oil palm. It currently owned a total land bank of approximately 8,094 hectares fully planted with oil palm at prime yielding age.

3. INFORMATION ON HAP SENG

Hap Seng was incorporated in Malaysia on 24 March 1976 with authorised share capital of 1,000,000,000 ordinary shares of RM1.00 each and an issued and paid-up share capital of RM622,660,000 ordinary shares. It is an international Malaysian-controlled company with more than 10,000 employees with its core business in oil palm plantation, distribution and marketing of branded retail packed consumer products as well as investment holding.

The cost of investment of the Land for Hap Seng is RM22.4 million and was acquired on 5 May 1998.

4. INFORMATION ON THE LAND

Situated south of Kota Kinabalu-Telupid-Sandakan highway and southwest of Telupid town, the Land is about 148 km from Sandakan. It is held by Hap Seng under a country lease expiring on 31 December 2096 giving an unexpired lease period of 95 years. Hap Seng has commenced planting activities on about 830 hectares or 2,151 acres of the Land in January 2000 and are expected to be completed by August 2001. The balance of 8,000 hectares or 19,768 acres remain unplanted and substantially covered with secondary jungle.

5. DETAILS OF THE PROPOSED ACQUISITION

5.1 The Purchase Consideration
The total purchase consideration of RM56.73 million plus reimbursement of the plantation expenses incurred by Hap Seng for the Land was arrived at on a "willing-buyer willing-seller" basis. Based on Hap Seng's management accounts, it has incurred an amount of approximately RM3.1 million on plantation expenses up to 30 April 2001, which is subject to verification by an independent audit. 

The total purchase consideration is to be satisfied wholly in cash and to be financed through internally generated funds.

5.2 Timing of Payment
The purchase consideration is to be paid in the following manner:

• 10% of the purchase consideration in the sum of RM5.67 million shall be paid to a solicitor as stakeholder within 14 days of the execution of the SPA as deposit ("Deposit"), which Deposit shall be released to Hap Seng within 3 days of the SPA becoming unconditional;
• The balance of the purchase consideration in the sum of RM51.06 million ("Balance Sum") shall be paid to a solicitor as stakeholder upon receipt of the notice of adjudication in respect of the memorandum of transfer of the Land, which Balance Sum shall be released to Hap Seng within 3 days of the presentation of the transfer of the Land;
• The reimbursement of the actual plantation expenses shall be paid to Hap Seng simultaneously with the payment of the Balance Sum.

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6. CONDITIONS OF THE PROPOSED ACQUISITION

The Proposed Acquisition is subject to and conditional upon the following approvals being obtained within a period of 6 months from the date of the SPA or such extended period as mutually agreed by Hap Seng and Asiatic:

• the approval from Foreign Investment Committee;
• the consent and permission from the Director of Lands and Surveys for the transfer of the Land to Asiatic; and
• any other approvals from the relevant authorities as may be required.

7. RATIONALE OF THE PROPOSED ACQUISTION

The Proposed Acquisition is in line with Asiatic's long term strategy in furthering its plantation interest given its continued faith in oil palm business and represents a positive step towards realising the Group's vision of establishing itself as a major player in the industry. Accordingly, the Proposed Acquisition will expand Asiatic's land bank by 8,830 hectares to over 49,800 hectares or 123,000 acres, an increase of nearly 22%, hence enlarging the existing operation to benefit from economics of scale whilst widening Asiatic's earning base to improve profitability.

8. EFFECTS OF THE PROPOSED ACQUISITION

The Proposed Acquisition will not have any material impact on the net tangible assets of the Group based on its audited accounts for the financial year ended 31 December 2000 and is not expected to have any material effect on the earnings of the Group for the current year ending 31 December 2001. However, given the Company's continued faith in the long term viability of the oil palm business through greater awareness of the products' intrinsic properties and price competitiveness, the Proposed Acquisition is expected to contribute positively towards the earnings of the Group in the future.

9. DIRECTORS' AND/OR SUBSTANTIAL SHAREHOLDERS' INTERESTS

None of the directors or persons connected to the directors of the Company has any interest, direct or indirect, in the Proposed Acquisition. To the best of the knowledge of the directors, none of the substantial shareholders or persons connected to the substantial shareholders of the Company has any interest, direct or indirect, in the Proposed Acquisition.

10. DIRECTORS' RECOMMENDATION

Your Directors, after careful deliberation, are of the opinion that the Proposed Acquisition is in the best interest of the Company.

11. DOCUMENTS FOR INSPECTION

The SPA will be available for inspection at the registered office of the Company during normal office hours on any working day for a period of one month commencing on the date of this announcement.

TAN SRI MOHD AMIN BIN OSMAN
Chairman
Asiatic Development Berhad