NOVA MSC BERHAD (“NMSC” OR THE “COMPANY”) – Proposed private placement of up to 29,428,500 new ordinary shares of RM0.10 each in NMSC, representing not more than ten percent (10%) of the issued and paid-up share capital of the Company, to investors to be identified (“Proposed Private Placement”)

NOVA MSC BERHAD
27 May 2005

Contents :

1. INTRODUCTION

On behalf of the Board of Directors of NMSC, OSK Securities Berhad (“OSK”) wishes to announce that the Company proposes to implement a private placement of up to 29,428,500 new ordinary shares of RM0.10 each in NMSC (“Placement Shares”), representing not more than ten percent (10%) of the issued and paid-up share capital of the Company, to investors to be identified (“Proposed Private Placement”). Further details on the Proposed Private Placement are set out in the following sections.

2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT

The Proposed Private Placement will involve the issue of a maximum of 29,428,500 Placement Shares to investors that will be identified at a later stage. This figure was arrived at based on ten percent (10%) of the issued and paid-up share capital of NMSC as at 16 May 2005, and assuming the full exercise of options to subscribe for up to 38,385,000 new ordinary shares of RM0.10 each in NMSC (“Shares”) (“ESOS Options”) pursuant to an employee share option scheme (“ESOS”), prior to the price-fixing date of the Proposed Private Placement. The exact number of Placement Shares to be issued will depend on the share capital of NMSC as at the price-fixing date, which shall be determined after receipt of the approval of the Securities Commission (“SC”) on the Proposed Private Placement. The Placement Shares are proposed to be placed out to independent third parties who do not have any relationship with any of the directors or major shareholders of NMSC.

2.1 Basis of arriving at the issue price of the Placement Shares

The issue price of the Placement Shares will be determined and fixed by the Board of Directors of NMSC at a future date, which shall be determined after the receipt of the approval of the SC on the Proposed Private Placement. The Placement Shares will be issued at a discount of not more than five percent (5%) from the five (5) day weighted average market price of NMSC Shares immediately preceding the price-fixing date. In any case, the issue price of the Placement Shares will not be lower than the par value of NMSC Shares. For the purposes of this announcement, the issue price of the Placement Shares is indicatively fixed at RM0.10 per Share. The indicative issue price of RM0.10 is equivalent to the par value of NMSC Shares and represents a premium of approximately 55.5% from the five (5) day weighted average market price of NMSC Shares as at 26 May 2005 of RM0.0643.

2.2 Ranking of the Placement Shares

The Placement Shares shall, upon allotment and issue, rank pari passu in all respects with the existing Shares of the Company, save and except that the Placement Shares will not be entitled to any dividend, right, allotment and/or other distribution that may be declared, made or paid prior to the date of allotment of the said Placement Shares.

2.3 Utilisation of proceeds

Based on the indicative issue price of RM0.10 for each Placement Share, the Company is expected to raise up to RM2,942,850 from the Proposed Private Placement. The proceeds will be used to fund the NMSC Group’s working capital requirements in the manner set out in Table 1

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3. RATIONALE

The Proposed Private Placement will enable NMSC to raise funds without recurring interest costs, compared to bank borrowings. The funds raised will be utilised to fund the Group’s working capital requirements.

4. FINANCIAL EFFECTS OF THE PROPOSALS

4.1 Share Capital

The pro forma effects of the Proposed Private Placement on the issued and paid-up share capital of NMSC are set out in Table.

4.2 Net Tangible Assets (“NTA”) and Gearing

Based on the unaudited consolidated balance sheets of the NMSC Group as at 31 December 2004, and on the assumption that the Proposed Private Placement had been effected as at that date, the pro forma effects of the Proposed Private Placement on the NTA and gearing of the NMSC Group are out in Table 3.

4.3 Earnings

The Proposed Private Placement is not expected to have any material effect on the earnings of the NMSC Group for the financial year ending 31 March 2005. Nevertheless, an increase in the issued and paid-up share capital will serve to dilute the Company’s earnings per share in the future.

4.4 Major Shareholders’ Shareholdings

The effects of the Proposed Private Placement on the shareholdings of the major shareholders of NMSC as at 16 May 2005 are set out in Table 4 attached herewith.

4.5 Dividends

The Board of NMSC does not expect to declare any dividends for the financial year ended 31 March 2005. Barring any unforeseen circumstances, any dividend to be declared by NMSC for the financial year ending 31 March 2006 will depend on, amongst others, the profitability and cashflow position of the NMSC Group. The Proposed Private Placement is not expected to have any material effect on the dividend policies of the Company.

5. APPROVALS REQUIRED

The Proposals require the following approvals:-

(a) Securities Commission, for the Proposed Private Placement and for the Placement Shares to be issued pursuant to the Proposed Private Placement;

(b) Bursa Malaysia Securities Berhad, for the listing of and quotation for the Placement Shares to be issued pursuant to the Proposed Private Placement; and

(c) Any other relevant authority, if required.

6. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

None of the Directors or major shareholders of NMSC, and/or persons connected to them has any interest, whether direct or indirect, in the Proposed Private Placement.

7. DIRECTORS’ RECOMMENDATION

After considering all aspects of the Proposed Private Placement, the Board of Directors of NMSC is of the opinion that the Proposed Private Placement is in the best interests of the NMSC Group.

8. ADVISER

OSK has been appointed by NMSC to act as Adviser for the Proposed Private Placement.

9. DEPARTURE FROM THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD FOR THE MESDAQ MARKET

The Board of NMSC is not aware of any departure from the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market in relation to the Proposed Private Placement.

10. APPLICATION TO THE AUTHORITIES

Barring unforeseen circumstances, the application to the SC on the Proposed Private Placement is expected to be made within a period of two (2) months from the date of this announcement.

This announcement is dated 27 May 2005.