1. INTRODUCTION

IOI Corporation Berhad ("IOI") had on 8 August 2008 entered into a conditional joint venture agreement (“JV Agreement”) to subscribe for the equity of a joint venture company to be incorporated and named IOI Pelita Kanowit Sdn Bhd (“JV Co”) for the purpose of acquiring and developing approximately 7,000 hectares (“ha”) of land situated at Block E (Lesih) Kanowit, Sibu, Sarawak (“the Land”) into oil palm estates.


2. INFORMATION ON THE PROPOSED JV

2.1 Information on JV Co

The JV Co shall be incorporated in Malaysia under the Companies Act, 1965 (the “Act”) with an initial authorised share capital is RM100,000 and issued and paid-up share capital of RM2 comprising of two (2) ordinary shares of RM1.00 each to be subscribed by IOI and Pelita Holdings Sdn Bhd (“Pelita Holdings”) respectively.

The eventual issued and paid-up share capital shall be increased in accordance with the provision in the JV Agreement (as disclosed in Section 3 (ii) and (iii) of this Announcement) and to be held in the proportions of 10%, 60% and 30% by Pelita Holdings, IOI and Pelita Holdings holding in trust for the natives who are in occupation of and having native customary rights over the Land (“NCR Owners”) respectively.

2.2 Information on Pelita Holdings

Pelita Holdings is a company incorporated under the Act and having its registered address at Level 5, 8 & 12, Wisma Satok, Jalan Satok, 93400 Kuching, Sarawak.

Pelita Holdings is principally engaged in investment holding and the provision of management services. Pelita Holdings is a wholly-owned subsidiary of Pelita Establishment Sdn Bhd which in-turn is a wholly-owned subsidiary of the Land Custody and Development Authority of Sarawak (“LCDA”). LCDA is a body corporate established under the Land Custody and Development Ordinance 1981 and controlled by the Sarawak State Government.


3. SALIENT TERMS OF THE JV AGREEMENT

The salient terms of the JV Agreement are as follows:-

(i) Incorporation of JV Co

The acquisition and development of the Land into oil palm estates shall be undertaken by the JV Co, to be or caused to be incorporated by IOI and Pelita Holdings under the Act and jointly owned by the parties with an initial authorised share capital of RM100,000 and with a paid-up share capital of RM2 comprising of two (2) ordinary shares of RM1.00 each to be subscribed by IOI and Pelita Holdings respectively.

(ii) Eventual authorised and paid-up share capital

The eventual authorised and paid-up share capital of the JV Co shall be increased to RM10,080,000 comprising 10,080,000 ordinary shares of RM1.00 each and shall progressively be subscribed, allotted and issued in accordance with the following proportions:-

(iii) Purchase consideration and mode of settlement for the Land

In consideration of Pelita Holdings procuring the alienation of the Land to the JV Co for a period of 60 years, the value of the Land being valued at RM5,040,000 (based on RM1,200 per ha of estimated plantable area) shall be paid or treated in the following manner:-

(a) 60% of the value of the plantable area of the Land to be payable in the form of 3,024,000 shares to Pelita Holdings as trustee for the NCR Owners; and

(b) The balance 40% of the value of the plantable area of the Land shall be paid in cash by the JV Co to Pelita Holdings as trustee for the NCR Owners subject to the manner as prescribed in the JV Agreement.

(iv) Board representation

Subject to such increase in the number of Directors as the JV Co may from time to time agree, the JV Co shall have five (5) directors of which three (3) Directors shall be nominated by IOI and two (2) directors shall be nominated by Pelita Holdings.

The Chairman who shall be a non-executive director shall be nominated by Pelita Holdings from amongst its nominees and the Managing Director shall be nominated by IOI from amongst its nominees. The Chairman shall not have a casting vote.

(v) Majority votes

All matters at the meetings of directors or members of the JV Co shall be decided by a majority of votes except for certain policy matters as set out in the JV Agreement.

(vi) Distribution or Dividend Policy

Unless the shareholders otherwise agree in writing, 65% of the profits earned by the JV Co shall be distributed (subject to the availability of sufficient fund including funds for future expansion, loan repayments and capital investment requirements and of the credits under Section 108 of the Income Tax Act 1967 and deductions required by applicable law) to the shareholders in proportion to their shareholdings.

(vii) Applicable Law

The validity, construction and performance of this JV Agreement shall be governed by and interpreted in accordance with the Laws of Malaysia.

4. RATIONALE FOR THE PROPOSED JV

The Proposed JV will enable IOI to continue expanding its core palm oil business and increase its oil palm plantation holdings in Malaysia. Upon completion of the Proposed JV, the Group will add another 7,000 ha of plantation land to its existing total plantation holdings of about 170,000 ha in Malaysia.

The Proposed JV will be synergistic to the Group’s plantation operation in Sarawak where it already has an existing 9,000 ha of plantation land. The ownership structure of the JV Co
will enable IOI to lead and manage the plantation business and at the same time, the State and the local natives to share in the success of the business, thereby providing long term benefits to the local community and allowing them to share in the success of the palm oil industry in Sarawak.


5. SOURCE OF FUNDS

IOI will finance its obligation using its internally generated funds.


6. APPROVALS REQUIRED

The Proposed JV is not subject to the approval of its shareholders but is conditional upon the following:-

(i) subject to the approval of Foreign Investment Committee; and

(ii) any other relevant authority(ies) if required.


7. DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED

None of the Directors and/or Major Shareholders and/or persons connected with them have any interests, direct or indirect, in the Proposed JV.


8. DOCUMENTS AVAILABLE FOR INSPECTION

The JV Agreement and all references therein will be available for inspection at the Registered Office of the Company at Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 8 August 2008.