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GRAND-FLO SOLUTION BERHAD (“GRAND-FLO” OR “COMPANY”) PROPOSED LISTING OF SIMAT TECHNOLOGIES PUBLIC COMPANY LIMITED (formerly known as Simat Mobile Computer Co., Ltd.) ("SIMAT") A SUBSIDIARY COMPANY OF GRAND-FLO, ON THE MARKET FOR ALTERNATIVE INVESTMENT IN THAILAND

GRAND-FLO SOLUTION BERHAD

Type

Announcement
SubjectGRAND-FLO SOLUTION BERHAD (“GRAND-FLO” OR “COMPANY”)

PROPOSED LISTING OF SIMAT TECHNOLOGIES PUBLIC COMPANY LIMITED (formerly known as Simat Mobile Computer Co., Ltd.) ("SIMAT") A SUBSIDIARY COMPANY OF GRAND-FLO, ON THE MARKET FOR ALTERNATIVE INVESTMENT IN THAILAND

Contents :

1. INTRODUCTION

      Further to the announcement dated 23 May 2007, on behalf of the Board of Directors of Grand-Flo (“Board”), Kenanga Investment Bank Berhad (formerly known as K & N Kenanga Bhd) wishes to announce that on 27 September 2007, Grand-Flo entered into a Business Cooperation Agreement with Simat (“Business Cooperation Agreement”).

2. DETAILS OF THE BUSINESS COOPERATION AGREEMENT
      As at the date of this announcement, Simat is a 49%-owned subsidiary of Grand-Flo. Upon completion of the initial public offering by Simat on the Market for Alternative Investment in Thailand, Simat will become a 36.75%-owned associate of Grand-Flo as a result of the dilution from the issuance of the public issue of 18,750,000 new ordinary shares of THB1 each.

In relation thereto, Grand-Flo and Simat (“Parties”) are desirous to enter into a business cooperation agreement on an exclusive basis in order to set forth the parties’ respective business expansion plans in an orderly, fair, open and transparent manner.
      In connection therewith, the Parties are also desirous of entering into a reasonable and lawful non-compete agreement with respect to the manner in which the parties shall refrain from competing with each other relating to new business and products, and in the respective Party’s territories as agreed in the Business Cooperation Agreement.


2.1 Salient terms of the Business Cooperation Agreement

          2.1.1 Business
              (i) The Parties agree that they shall have the exclusive and unconditional rights to conduct business in their respective existing territories as follows:-
                  (a) Grand-Flo – Malaysia Singapore and Indonesia
                  (b) Simat – Thailand,

              (“Existing Territories”)
                  unless subsequently modified by the parties by mutual consent in writing.
              (ii) Subject to the terms and conditions of the Business Cooperation Agreement, each Party has the right to engage in business, in any countries, other than the Existing Territories of the other Party, where the commercial activities were originated by the Party’s customers in the Existing Territories. For avoidance of doubt, the commercial activities referred to in the preceding sentence shall include any business conducted through local distributors.
              (iii) Subject to 2.1(ii) below, the Parties agree that, in the event either or both Parties entered into other territories (“Investment Territories”) other than their respective Existing Territories by way of acquisition or joint venture for the purpose of creating new business (“Investment”), as the case may be, shall have the exclusive and unconditional rights to conduct business in such Investment Territory.

          2.1.2 Investment in new countries
              (i) The Parties agree that neither Party shall have the right to make any Investment, whether directly or indirectly, in the Existing Territory of the other Party.

              (ii) Each Party (“Offering Party”) agrees to offer the investment opportunity to the other Party (“Offered Party”) in order to obtain the Offered Party's consent as to the proposed Investment (“Offered Investment”).

              (iii) The Offered Investment shall initially be made to the Offered Party on an equal interest basis. Either Party, however, shall have the right to modify the investment proportion offered by the Offering Party whereby the investment proportion so modified by the Offered Party may become less than 50% of the equity interest in such Investment Territory. In a case that either Party exercises the right to invest in the Investment Territory on a less than equal equity basis, the management authorities and powers shall be in proportion to the equity shareholdings controlled by the parties in such Investment Territory.
              (iv) The Parties agree that in the event the Offered Party, after having been informed as to the Offered Investment, reject such offer and a modified proposal, pursuant to 2.1.2(iii) above, has not been received by the Offering Party in timely manner, the Offering Party shall have the right to enter into such investment by itself or with another third party. In this connection, the new country in which such investment is made shall automatically become the Investment Territory of the Offering Party.

              (v) Subject to 2.1.2(iv) above, in a case that the Party which rejected the Offered Investment subsequently desires to enter into any investment in the Investment Territory of the Offering Party referred to above, such Party agrees that it shall not enter into any investment in such Investment Territory except as an investment in the legal entity of the Offering Party established in such Investment Territory.

              (vi) The Parties further agree that in the event of any joint venture or mergers or acquisition made by either Party with another third party in its Investment Territories or any other country which has branches, subsidiaries or affiliates in the Territories of the other party, such party shall sell or transfer such branches, subsidiaries or affiliates to the other Party.

3. FINANCIAL EFFECTS OF THE BUSINESS COOPERATION AGREEMENT
      The Business Cooperation Agreement is not expected to have any material effect on the share capital, substantial shareholders’ shareholdings, earnings, net assets, gearing and dividends of Grand-Flo.


4. APPROVALS REQUIRED

      The Business Cooperation Agreement is not conditional upon any authorities’ or shareholders’ approvals.


5. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
      None of the directors or major shareholders of Grand-Flo and/or persons connected with them has any interest, direct or indirect in the Business Cooperation Agreement.


6. STATEMENT BY THE DIRECTORS

      The Board having considered all aspects of the Business Cooperation Agreement is of the opinion that the Business Cooperation Agreement is in the best interest of both Grand-Flo and the Simat Group.

7. DOCUMENT AVAILABLE FOR INSPECTION
      The Business Cooperation Agreement shall be made available for inspection at the registered office of Grand-Flo, during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 27 September 2007.


Announcement Info

Company NameGRAND-FLO SOLUTION BERHAD (MESDAQ Market) 
Stock Name GRANFLO    
Date Announced27 Sept 2007  
CategoryGeneral Announcement
Reference NoO&-070927-64905





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