Expansion Plan in Thailand

The Board of Directors of Evergreen Fibreboard Berhad wish to announce that they are embarking on an expansion plan for a new Super Thin High Density Fibreboard plant in Thailand.

Information on Expansion Plan

The Expansion plan investment is approximately RM120 million that will be through Siam Fibreboard Co. Ltd. and will be situated in the same location occupying 20 hectares of land area.

Evergreen Fibreboard Berhad will sign a Memorandum Of Understanding with Dieffenbacher GmbH of Germany on behalf of its subsidiary and subsequently will sign a Sales & Purchase Agreement for the supply and commissioning on the major part of the complete turn-key line.

The new plant with a designed capacity of 800m3 per day or 268,000m3 per year is a fully automated state-of-the-art plant, with the latest technology of world's fastest speed at over 100m per minute and world's 1st Super Thin 1.5mm High Density Fibreboard of up to 1100kg/m3.(Normal high density fibreboard is 900kg/m3) It is also capable of producing normal medium density fibreboard with thickness ranging from 2.5mm to 25mm. This expansion will put the group's combined medium density fibreboard capacity to 828,000m3 per year.

The new plant is expected to commission in the 1st quarter of 2007 and is mainly for the export market.
Rationale

The expansion will further increase the production capacity, operational efficiency as well as broaden the product range of the Evergreen Group. The new line will also enable the Group to produce higher value added zero formaldehyde products such as high moisture resistant and fire retardant fibreboard more efficiently. In essence ,the expansion will augur well with the Group's objective of becoming one of the most competitive and comprehensive producers of medium density fibreboard products in the region.

Effect of Transaction

1. Earning and NTA

The Expansion Plan is not expected to have any effect on the net tangible assets of the group for the financial year ending 31st December 2005. However it is expected to contribute significantly to the profitability of the group when it is fully commissioned.

2. Share Capital
The Expansion Plan has no effect on the issued and paid up share capital of the Group.

3. Source of Funding
Funding of the expansion plan is by way of internal generated fund of the group and bank borrowings.

Director's and Substantial Shareholder's Interest

None of the Directors and/or substantial shareholders of the group and/or persons connected to them have any direct/indirect interest in the Expansion Plan.

Approvals Required

The expansion plan is not subjected to the approval of shareholders but is subjected to approvals of license from the authorities in Thailand.