By Boardroom Comms

Singapore – After four consecutive years of losses from its existing business operations, Ban Joo is taking concrete steps to claw its way back into the black by exiting the textile industry and venturing into the fibre-optic cable business. The Company today signed a conditional sale and purchase agreement with Telemedia Pacific Group Limited (“TPG”) to acquire its fibre-optic cable business for S$376.15 million.

Under the terms of the agreement, Ban Joo will acquire the entire issued share capital of Telemedia Pacific Inc. (“TPI”) and Telemedia Pacific Incorporation Limited (“TPIHK”). Via these entities, Ban Joo will own and operate the first direct submarine fibre optic cable linking Hong Kong and the Indonesian cities of Jakarta and Surabaya upon its completion.

The acquisition will not only allow the Company to work towards a turnaround, but will also enable it to address the growing bandwidth demand for broadband transmission between Indonesia and Hong Kong, as well as international transmissions passing through both territories. According to Spectrum Value Partners, which conducted an independent valuation of the business to be acquired, bandwidth demand for broadband transmission between Indonesia and Hong Kong is set to grow from about 22 Gbps in 2008 to 909 Gbps in 2020, representing a compounded annual growth rate of about 36% from 2008 to 2020. In addition, the number of broadband subscribers in Indonesia is estimated to rise from 0.3 million in 2007 to 7 million in 2020, with the average bandwidth consumption growing from 451 Kbps to nearly 5,000 Kbps in the same period.

Ban Joo will acquire the business from TPG at a 25% discount to the lower end of Spectrum's valuation range of between S$501.54 million and S$563.51 million, and will pay for the acquisition via the issue of 3,582,380,952 new Ban Joo shares at an issue price of S$0.105.

Mr. Hady Hartanto, Executive Deputy Chairman of Ban Joo, said, “This change of focus from the textile business to fibre optics will provide Ban Joo with a viable path towards sustainable long-term growth. By creating this direct link between Hong Kong and Indonesia, we will be able to offer our clients an alternative that is both efficient and attractive in terms of speed and cost.”

The submarine fibre-optic cable project involves leading industry players. Fabrication of the submarine cables is currently in progress, and the laying of the submarine cable network is expected to commence in 2010 and be completed by end of 2011. The cable network will span 4,200 km and have a capacity of up to 3.84 Tbps, and will be leased to telecommunications operators, media-related companies and all other businesses that are dependent on bandwidth for their communications. These entities will then use the leased capacity to provide voice, data and other services to their own customers.

Ban Joo will convene an EGM to seek shareholders' approval for the transaction. As a controlling shareholder with 49.23% ownership of Ban Joo, TPG and its associates will abstain from voting at the EGM. Upon completion of the acquisition, TPG will own about 71.16% of the enlarged share capital of Ban Joo.

DBS Bank is the Financial Adviser for the transaction.

About Ban Joo & Company Limited

Established in 1953 as a textile partnership, Ban Joo is engaged in the business of supplying or trading in a wide range of textiles and the raw materials used in the production of the textiles. The Company is on the SGX watchlist and is currently finalizing steps to acquire the fibre-optic cable business, as part of its new strategic business direction.