THIS INFORMATION CIRCULAR IS FOR THE INFORMATION OF THE SHAREHOLDERS OF AEON CO. (M) BHD..NO ACTION IS REQUIRED TO BE TAKEN. If you are in any doubt about the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your shares in AEON CO. (M) BHD. (“AEON” or the “Company”), you should at once hand this Information Circular to the agent/broker through whom the sale was contracted or effected for transmission to the purchaser or transferee. Bursa Malaysia Securities Berhad (Company No. 635988-W) has not perused the contents of this Information Circular prior to its issuance and takes no responsibility for the contents of this Information Circular, makes no representation as to its accuracy or completeness, and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Information Circular. AEON CO. (M) BHD. (Company No: 126926-H) (Incorporated in Malaysia) INFORMATION CIRCULAR TO SHAREHOLDERS IN RELATION TO THE SALE AND LEASEBACK OF KINTA CITY SHOPPING CENTRE BY AEON CO. (M) BHD. This Information Circular is dated 27 February 2006 1965. SLA : The Conditional Sale and Leaseback Agreement dated 28 December 2005 entered into between ENSB and AEON. ii . Perak (the “Land”). as amended from time to time.(D) 81942) for Lot PT 320549 in the Mukim of Hulu Kinta. AEON or the Company or the Vendor or the Lessee : AEON CO.S. RM and sen : Ringgit Malaysia and sen respectively. machinery. Lease : Means the registrable lease in Form 15A of the National Land Code over the Property to be granted by the Purchaser to the Vendor for a period of nine (9) years commencing on the completion of sale and purchase of the Property with three (3) consecutive options to the Vendor to renew the lease for a period of five (5) years each subject to and upon the terms and conditions contained in Exhibit 3 of the SLA.DEFINITIONS Except where the context requires. the following terms and abbreviations shall apply throughout this Information Circular:Act : Companies Act. AGM : Annual General Meeting Board or Board of Directors : Board of Directors of AEON Bursa Securities : Bursa Malaysia Securities Berhad (635998-W) ENSB or the Purchaser or the Lessor : Equity Nirvana Sdn Bhd (709587-A) FIC Foreign Investment Committee Kinta City Shopping Centre or the Property : Kinta City Shopping Centre comprising all the freehold land held under Geran 72619 (formerly known as H. equipment and mechanical and electrical systems specified in Exhibit 2-1 of the SLA (the “Assets”). (M) BHD. a three (3) storey shopping mall containing two (2) levels of retail floors. District of Kinta. one (1) level of car park bays and tenanted lots and an additional level of car park bays and a bowling alley on the roof top and all improvements thereon (the “Building”) and all the items of the plant. Listing Requirements : The Listing Requirements of Bursa Securities including any amendments therein that may be made from time to time. DETAILS OF THE SALE AND LEASEBACK 2 3. UTILISATION OF PROCEEDS 5 6. FINANCIAL EFFECTS OF THE SALE AND LEASEBACK 6 8. DIRECTORS’ RECOMMENDATION 6 11. APPROVALS REQUIRED 6 9. DIRECTORS’ AND/OR SUBSTANTIAL SHAREHOLDERS’ INTERESTS 6 10. BASIS OF ARRIVING AT THE PURCHASE PRICE 5 4. RISK CONSIDERATION 5 7.TABLE OF CONTENTS PART A LETTER TO THE SHAREHOLDERS OF AEON CONTAINING:- PAGE 1. FURTHER INFORMATION 6 APPENDIX I - FURTHER INFORMATION iii 7 . RATIONALE FOR THE SALE AND LEASEBACK 5 5. INTRODUCTION 1 2. AEON CO. INTRODUCTION On 28 December 2005. Jalan Jejaka Taman Maluri. Jusco Taman Maluri Shopping Centre. Jen. Cheras 55100 Kuala Lumpur 27 February 2006 Board of Directors Dato’ Abdullah bin Mohd Yusof (Non-Independent Non-Executive Chairman) Toshiji Tokiwa (Non-Independent Non-Executive Vice Chairman) Nagahisa Oyama (Managing Director) Masato Yokoyama (Non-Independent Executive Director) Tatsuichi Yamaguchi (Non-Independent Non-Executive Director) Datuk Ramli bin Ibrahim (Non-Independent Non-Executive Director) Brig. SALE AND LEASEBACK OF KINTA CITY SHOPPING CENTRE BY AEON 1. (M) BHD. (M) BHD.0 million (“Purchase Price”) on the express understanding that the Purchaser shall lease the Property to AEON on completion of the sale and purchase of the Property upon the terms and subject to the terms contained in the SLA. (Company No: 126926-H) (Incorporated in Malaysia) Registered Office 3rd Floor. the Company announced to Bursa Securities that the Company had on the same date entered into a SLA with ENSB for the sale of Kinta City Shopping Centre for a total cash consideration of RM121. Dear Sir/Madam. NO ACTION IS REQUIRED TO BE TAKEN BY THE SHAREHOLDERS OF AEON 1 . The purpose of this Information Circular is to set out the relevant details of the Sale and Leaseback and is intended for your information only. (B) Dato’ Mohd Idris bin Saman (Independent Non-Executive Director) Datuk Zawawi Bin Mahmuddin (Independent Non-Executive Director) Dato’ Chew Kong Seng (Independent Non-Executive Director) To : The Shareholders of AEON CO. Upon execution of the SLA:(i) the Purchaser has paid a deposit of sum of RM12. one (1) level of car park bays and tenanted lots and an additional level of car park bays and a bowling alley on the roof top. and (iii) the Purchaser has delivered to AEON a lease in favour of AEON duly executed by the Purchaser in-escrow in Form 15A of the NLC over the Property together with the lease annexure.8 million. caveats and other restraints. AEON completed the purchase of the Land in April 1996 at a total costs of RM20. liens. AEON currently also operates a departmental store cum supermarket together with a food court in Kinta City. For the financial year ended 28 February 2005. charges.1 million to AEON’s solicitors and the Purchaser’s solicitors as joint stakeholders. 2. but subject to all conditions express or implied in the document of title to the Land and subsisting tenancies upon the terms and conditions therein contained. whether equitable or legal. approximately five (5) kilometres due north east of the Ipoh City center and approximately one (1) kilometre from North-South Highway Ipoh Selatan’s toll.1 Information on Kinta City Shopping Centre Kinta City Shopping Centre is a shopping centre erected on the the Land measuring in total area approximately 60. It has an approximate gross floor area (“GFA”) of 844.998 square feet comprising two (2) levels of retail floors. the Purchaser has agreed to grant a lease over the Property and AEON has agreed to take the lease for a period of nine (9) years commencing on the completion of the sale and purchase of the Property with three (3) consecutive options to AEON to renew the lease for a period of five (5) years each upon the terms and subject to the conditions contained in the SLA and the Lease (as defined herein).230 square metres and located at the intersection of Jalan Sultan Azlan Shah Utara and Jalan Teh Lean Swee.7 million.2 Sale and Leaseback By the SLA. 2 . Kinta City is currently enjoying an occupancy rate of about 99%. The Sale and Leaseback is expected to give rise to a gain on disposal of approximately RM31. AEON has agreed to sell and the Purchaser has agreed to purchase the Property free from all encumbrances.2. DETAILS OF THE SALE AND LEASEBACK 2. (ii) AEON has delivered to the Purchaser a valid and registrable but unstamped memorandum of transfer in the form prescribed under the National Land Code (“NLC”) in respect of the Land. the net book value of Property is RM87.135 square feet and an approximate net lettable area (“NLA”) of 470. Subject to the completion of the sale and purchase of the Property in accordance with the terms and conditions of the SLA.9 million. after accounting for the net book value of the Property as at 28 February 2005 and incidental costs of disposal. The construction of the shopping centre was at an initial total construction costs of approximately RM79.5 million and the shopping centre was completed and opened for business on 30 July 1997. 3 Salient terms of the SLA The salient terms of the SLA are as follows:2. charges.3. (c) the Purchaser.3 The completion of the sale and purchase of the Property is subject to the following conditions precedent (“Conditions Precedent”) being fulfilled within five (5) months from the date of the SLA (“Cut-Off Date”):- 2. liens. (e) if necessary. 2. caveats and other restraints. the Purchaser agrees to grant a lease over the Property and AEON agrees to take the lease subject to the terms and conditions contained in the SLA and in the Lease. 2.3.3. AEON obtaining approval from its shareholders in general meeting for the disposal of the Property in accordance with the terms of the SLA (“Shareholders’ Approval”). as a foreign-owned company.1 AEON agrees to sell and the Purchaser agrees to purchase the Property free from all encumbrances. and (g) the Purchaser obtaining the approval of the State Authority arising from the restriction-in-interest contained in the document of title to the Land (“State Authority Restriction Lease Approval”) allowing the Purchaser after becoming the beneficial owner of the Property to grant the Lease in favour of AEON in accordance with the terms of the Lease. whether equitable or legal. but subject to all conditions express or implied in the document of title to the Property and subject to the subsisting tenancies on the terms and conditions contained in the SLA.2.3.2 Subject to the completion of the sale and purchase of the Property. (d) AEON obtaining the approval of the State Authority for the transfer of the Property by AEON in accordance with the terms of the SLA arising from the restriction-in-interest contained in the document of title to the Land (“State Authority Restriction Transfer Approval”).4 (a) the Purchaser obtaining the approval (“FIC Transfer Approval”) of the FIC for the acquisition of the Property by the Purchaser in accordance with the terms of the SLA. (b) AEON obtaining the approval (“FIC Lease Approval”) of the FIC for the lease of the Property from the Purchaser in accordance with the terms of the SLA and the Lease. obtaining the approval of the State Authority for the acquisition of the Property by the Purchaser in accordance with the terms of the SLA under Section 433B of the NLC (“State Authority 433B Transfer Approval”). (f) AEON obtaining the approval of the State Authority for the lease of the Property by AEON in accordance with the terms of the Lease under Section 433B of the NLC (“State Authority 433B Lease Approval”). 3 . the SLA shall be deemed terminated forthwith. In the event any or all of the Conditions Precedent is/are not satisfied or are deemed not to have been satisfied by the Cut-Off Date or such extended period pursuant to the terms and conditions of the SLA. 3 above. (“Pramerica”) or a Pramerica-related entity or an affiliate of Pramerica.3.4.2 Provided that the Lessee shall not be in breach of any of the covenants and conditions contained in the Lease and on the part of the Lessee to be observed or performed at the relevant time. and 2.4 2. 2. the Sale and Leaseback is expected to be completed within six (6) months from the date of the SLA. save and except for the rent payable during the First Extended Term.4. the Lessee shall have: (i) the option to extend the duration of the Lease for a period of five (5) years from the expiration of the Initial Term (“First Extended Term”) on the terms and conditions contained in the Lease.5 The Lessor agrees and undertakes that it will not sell. (ii) the option to extend the duration of the Lease for a further period of five (5) years from the expiration of the First Extended Term (“Second Extended Term”) on the terms and conditions contained in the Lease. the Second Extended Term and the Third Extended Term.4 The Lessee shall be entitled to grant tenancies and sub-leases in respect of the Property or any part thereof to such persons and upon such terms and for such rent as the Lessee may deem fit. the Lease shall commence and the rights and obligations of AEON and the Purchaser thereunder shall immediately become effective and enforceable and AEON shall commence with the payment of the rentals thereunder.4. Estimated time frame for completion Barring any unforeseen circumstances. and (iii) the option to extend the duration of the Lease for a further period of five (5) years from the expiration of the Second Extended Term (“Third Extended Term”) on the terms and conditions contained in the Lease.9 million shall be paid by the Purchaser within one (1) month after the date on which all the Conditions Precedent have been fulfilled.3. transfer or otherwise dispose of the Property without first making an offer in writing to sell the same to the Lessee save and except for sale of the Property to a fund or real estate investment trust managed by the Lessor or by Pramerica Real Estate Investors (Asia) Pte.4. 2. 2.2. the Second Extended Term and the Third Extended Term. Salient terms of the Lease The salient terms of the Lease are as follows:- 2. 4 .6 Upon completion of the sale and purchase of the Property. Ltd. and subject to the approvals as stated in Section 2.3.5 The balance of the Purchase Price of RM108.1 the Lessor leases to the Lessee the Property to hold the same unto the Lessee for the initial period of nine (9) years (“Initial Term”) commencing from the completion of the sale and purchase of the Property envisaged in the SLA. and 2.4.5.3. 2. The terms and conditions of the Lease shall remain unchanged during the First Extended Term. RISKS CONSIDERATION To the best knowledge and belief of our Board.0 million was arrived at on a willing buyer-willing seller basis after taking into consideration:- 4.5 The location of the Property in the suburb of Ipoh city where the retail market size is smaller than in Klang Valley and other major cities in Malaysia. 5. UTILISATION ON PROCEEDS The Sale and Leaseback will result in a cash inflow to AEON of RM121.3 the physical state. there are no risk factors relating to the Sale and Leaseback which could have a material adverse effect on the business or financial position of the Company.0 20. 3.4 the sale and leaseback nature of the transaction which take into consideration the lease in entirety of the Property and the Purchaser’s investment criteria of an acceptable yield.6 1. working capital purposes and incidental costs.4 121. 3. The long term Lease will ensure that AEON maintains its presence and continues to operate the retail and shopping centre management business on the Property as before. The Sale and Leaseback will unlock the value of AEON’s existing fixed assets and provide funds for its expansion plans.0 6. 5 .3. of RM124. refurbishment of its existing stores. BASIS OF ARRIVING AT THE PURCHASE PRICE The Purchase Price of RM121. and 3. RM’mil Development of its new outlets Refurbishment of its existing stores Working Capital Incidental expenses. taxes and duties 90.0 9. condition and age of the Building which was built in 1997.1 the market value of the Property.0 million. 3. which will be utilised for development of its new outlets in line with its expansion strategy.2 the net lettable area of the Property. an independent professional valuer in their certificates of valuations dated 30 December 2004 and 13 December 2005.6 million as opined by Messrs Henry Butcher & Long. 3. RATIONALE FOR THE SALE AND LEASEBACK The Sale and Leaseback is in line with AEON’s corporate strategy of accelerating the expansion of its retail business through opening of new outlets and shopping centres. direct or indirect.0 sen for the financial year ending 28 February 2007.3 Earnings The Sale and Leaseback is not expected to have any impact on the earnings of AEON for the financial year ending 28 February 2006 as the Sale and Leaseback is expected to be completed after 28 February 2006.7. DIRECTORS’ RECOMMENDATION The Board of AEON. in the Sale and Leaseback.3. the impact of the Sale and Leaseback including the proposed gain on disposal is expected to increase earnings per share by approximately 17. 7. and is in the best interest of AEON and its shareholders. Yours faithfully For and on behalf of the Board of Directors of AEON CO. having taken into consideration all aspects of the Sale and Leaseback. FINANCIAL EFFECTS OF THE SALE AND LEASEBACK 7. 7. However. 7.0 sen based on the audited balance sheet as at 28 February 2005.1 Share Capital The Sale and Leaseback will not have any effect on the issued and paid-up share capital of AEON as the Sale and Leaseback do not involve issuance of shares. none of the Directors and substantial shareholders of AEON or persons connected with them has any interest. 8. (M) BHD. 11.2 Shareholding Structure The Sale and Leaseback will not have any effect on the substantial shareholders’ shareholdings as the Sales and Leaseback do not involve any issuance of shares. APPROVALS REQURIED The Sale and Leaseback are subject to the approvals specified under section 2. is of the opinion that the Sale and Leaseback is fair and reasonable. DIRECTORS’ AND/OR SUBSTANTIAL SHAREHOLDERS’ INTERESTS To the best knowledge of the Board.3 sub-sections (a) to (g).4 Net Assets On a proforma basis. 9. Nagahisa Oyama Managing Director 6 . 10. FURTHER INFORMATION Shareholders are advised to refer to the attached appendix for further information. the Sale and Leaseback is expected to increase the net assets per share of AEON by approximately 17. 00) only upon the terms and conditions therein contained. Bhd. DIRECTORS’ RESPONSIBILITY STATEMENT The Information Circular has been seen and approved by the Board and they collectively and individually accept full responsibility for the accuracy of the information given herein and confirm that after making all reasonable enquiries and to the best of their knowledge and belief.308. the omission of which would make any statement in this information Circular misleading. (“Vendor”) (Company No. (i) On 3 March 2004. The abovementioned purchase price is paid by cash. MATERIAL CONTRACTS Save as disclosed below. 304105-P) for the acquisition of a piece of freehold land held under GRN 28484. Lot No.054 hectares (“said land”) at a purchase price of Ringgit Malaysia Ten Million and Five Hundred Thousand (RM10. claims or arbitration. The said land shall be developed to be part of the development of a shopping centre to be constructed on the part of the land held under Mukim of Cheras. 3144. MATERIAL LITIGATIONS AEON is not involved in any material litigation. or of any facts likely to give rise to any proceedings which might materially or adversely affect the financial position or business of the Company. District of Ulu Langat.500. The abovementioned purchase price is paid by cash. and the Board is not aware and does not have any knowledge of any proceedings. H.035 square feet at a purchase price of Ringgit Malaysia Thirty Nine Million Two Hundred Forty One Thousand and Fifty (RM39. Johor for the acquisition of part of the land held under No. 7 .APPENDIX I FURTHER INFORMATION 1.241. State of Selangor measuring approximately 1. pending or threatened.S. District of Hulu Langat.050. 81100 Johor Bahru. AEON entered into a conditional SPA with Mujur Harta Sdn. District of Johor Bahru. 120951-T) of No. 2. within the two (2) years immediately preceding the date of this Information Circular:- 3. AEON has not entered into any other contracts which are or may be material (not being contracts entered into in the ordinary course of business). Taman Desa Tebrau.00) only subject to the terms and conditions therein contained. there are no other material facts and information. 1. State of Johor Darul Takzim measuring approximately 1.000. (D) 286621. PTD 84471. AEON entered into a conditional Sale and Purchase (“SPA”) with Plenitude Holdings Bhd (“Vendor”) (Company No. Jalan Harmonium. Mukim Tebrau. Mukim Cheras. (ii) On 31 May 2004. either as plaintiff or defendant as at the date hereof. The acquisition of the said land is for the construction of a shopping centre which has since been opened for business. 8 . (iv) the SLA. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the Registered Office of the Company during normal business hours between Monday and Fridays (except public holidays) for a period of two (2) weeks from the date of this Information Circular: (i) the Memorandum and Articles of Association of the Company.4. (iii) the material contracts referred to in Section (2) above. and (v) the certificates of valuation dated 30 December 2004 and 13 December 2005. (ii) the audited financial statements of AEON for the past two (2) financial years ended 29 February 2004 and 28 February 2005 and the unaudited financial results for the period ended 30 November 2005.