WAH SEONG CORPORATION BERHAD ("WSC" OR THE COMPANY) PROPOSED DEMERGER OF THE OIL & GAS BUSINESSES HELD

UNDER WASCO ENERGY LTD (WEL), A COMPANY INCORPORATED IN BERMUDA FROM WSC (PROPOSED DEMERGER) 1. INTRODUCTION On behalf of the Board of Directors of WSC (Board), AmInvestment Bank Berhad, a member of AmInvestment Bank Group (AmInvestment Bank), is pleased to announce that the Board has today approved a proposed demerger of the oil and gas businesses of WSC, which are currently held under its wholly-owned subsidiary, WEL from WSC to enable WEL and its subsidiaries (WEL Group) to operate as a separate and fast growing public listed entity. A proposed listing of WEL on the Main Market of Bursa Securities will be sought in conjunction with the Proposed Demerger. After the Proposed Demerger, WSC will remain listed on the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities) and will be principally engaged in industrial services activities such as trading of building materials, renewable energy and pipe manufacturing for water and structural purposes (Industrial Services). The Proposed Demerger will enable both entities to have a better focus on their respective businesses and growth opportunities as well as allowing them to improve competencies and deployment of resources in their respective areas of businesses. The Proposed Demerger is expected to involve the following:(a) proposed internal restructuring in WSC and its subsidiaries (WSC Group) as follows:(i) proposed subdivision of one (1) ordinary share in WEL of USD1.00 each into ten (10) ordinary shares of USD0.10 each (WEL Shares) (Proposed Share Split); (ii) proposed disposal by PPSC (Malaysia) Sdn Bhd and PPSC Industries Sdn Bhd, both wholly owned indirect subsidiaries of WEL holding 699,997 and 3 shares of RM1.00 each (1) in PPS Property Sdn Bhd (PPSP) respectively, representing in aggregate 70% of the equity interest in PPSP to WSC or its subsidiaries for a sale consideration of RM17.5 (2) million based on the adjusted net assets of PPSP as at 31 December 2010 and the (1) estimated market valuation of a commercial office property of approximately RM25 million (subject to valuation by an independent property valuer). The sale consideration by WSC shall be satisfied by setting off part of the intercompany debt owed by WEL to WSC (Proposed Internal Disposal); (iii) proposed settlement of the amount owing by WEL Group to WSC as at 31 December 2010 of approximately RM145.5 million (Proposed Intercompany Settlement) to be satisfied in the following manner:(aa) (bb) (cc) proposed set-off against the sale consideration of RM17.5 million from the Proposed Internal Disposal; cash settlement of RM45.7 million; and (3) proposed debt capitalisation of RM82.3 million via the issuance of 274.35 million new WEL Shares at an issue price of USD0.10 each to WSC;

Notes: (1) PPSP is a property investment holding company which owns a commercial office property at No.59, The Boulevard, Mid Valley City, Lingkaran Syed Putra, 59200, Kuala Lumpur with an approximate built-up area of 32,574 sq ft. The exact amount is subject to finalisation and is pending market valuation on the said property by an independent market valuer. The exact number of WEL Shares to be issued is subject to change; depending on amongst others, the outstanding intercompany balance and the exchange rate of Ringgit Malaysia (RM) to United States Dollar (USD) to be determined after obtaining all the relevant approvals for the Proposed Demerger. For illustration purposes, the issuance of WEL Shares is based on the exchange rate of USD1.00:RM3.00.

(2) (3)

(b)

proposed distribution in-specie of up to the entire WSCs shareholding in WEL on a pro-rata basis to the existing shareholders of WSC on a basis to be determined later (Proposed Distribution); proposed public issue of new WEL Shares in conjunction with the listing of WEL on the Main Market of Bursa Securities (Proposed Public Issue), the size and allocation of the issuance shall be determined later; and proposed listing of the entire share capital of WEL on the Main Market of Bursa Securities (Proposed Listing).

(c)

(d)

The full details of the Proposed Demerger will be announced upon the finalisation of the terms and structure of the proposal.

2. CORPORATE STRUCTURE The corporate structure of WSC Group before the Proposed Demerger based on the shareholdings as at 11 May 2011 is as follows:WSC

100% Industrial Services Division

100% WEL

Pipe Manufacturing(1)

Trading - building materials(2)

(3) Renewable Energy

Pipe Coating(4)

Engineering(5)

Exploration and Production Services (6)

Oil & Gas- Pipe Manufacturing(7)

The corporate structure of WSC Group after the Proposed Demerger is envisaged to be as follows:WSC 100% 100% Industrial Services Division WEL

Pipe Manufacturing(1)

Trading - building materials(2)

(3) Renewable Energy

Pipe Coating(4)

Engineering(5)

Exploration and Production Services (6)

Oil & Gas- Pipe Manufacturing(7)

Notes:Description of businesses Industrial Services businesses (1) Manufacturing of large diameter steel pipes for the water industry and structural pipes for the construction industry. (2) (3) Involved in building materials trading including reinforcement bars, cement products, roof tiles, ceramic tiles, sanitary wares and specialised paints/coatings. Supplies and manufacture of specialised equipment for biomass power plants such as industrial fans, boilers and turbines that run primarily on biomass fuels.

Oil and Gas businesses (4) Purchasing, manufacturing and distributing pipe coating solutions for the oil, gas and water industries (5) Building and operating facilities for both offshore and onshore field developments. Its services include the conceptual, through detailed process engineering designs, fabrication, installation, operation and maintenance services. It also provides highly specialised equipment and services to the power generation, water treatment, oleochemical and petrochemical industries. Provides support and consultancy services to the exploration industry and supplies products and equipment to brine filtration, inspection services and drilling support services. Manufacturing and sales of spiral welded pipes for oil & gas transmission.

(6) (7)

The corporate structures illustrated above are subject to finalisation of the terms for the Proposed Demerger which will be announced in due course.

3. RATIONALE FOR THE PROPOSED DEMERGER The Proposed Demerger will provide a platform for the respective entities to pursue different and a more tailored business strategy for each division. This in return will allow the respective entities to accelerate its growth through explicit management directions and accountability for each individual entity. WEL Group can fully focus on creating an international oil and gas service provider. On the other hand, WSC can similarly focus on transforming its core businesses in the Industrial Services sectors into major regional players by moving up in the value chain. The Proposed Demerger is also expected to improve the execution capability of the respective businesses through better scope for focused talent management and people development. The Proposed Demerger is also expected to result in greater visibility on the performance of the respective business entities enabling the capital market and shareholders to better ascertain the respective merits and prospects of each entity. This will facilitate a business-centric valuation of the separate entities and potentially unlock value to shareholders in the medium to long term after implementation of the growth strategies by the respective entities post Proposed Demerger. The Proposed Demerger will provide the respective entities, which are involved in two (2) distinct areas of business, the opportunity for a more tailored capital management initiative. This will allow each business to design optimum capital structures through differentiated gearing levels as well as enable better capital allocation processes for more effective capital spending. Each entity will also be able to pursue specific dividend policies and investor relations strategies. The Proposed Listing will also allow WEL Group to raise equity funding via a proposed public issue. The Proposed Listing will provide WEL with greater access to equity markets in the future and increased flexibility in funding. This will allow WEL to be better positioned to pursue its own growth strategies.

4. EFFECTS OF THE PROPOSED DEMERGER 4.1 Issued and paid-up share capital and shareholdings of WSCs substantial shareholders The effects of the Proposed Demerger on the issued and paid-up share capital and shareholdings of WSCs shareholders would depend on the final terms of the Proposed Demerger. The Proposed Demerger is not expected to have any effect on the issued and paid-up share capital of WSC as well as on the shareholdings of WSCs shareholders.

In addition, upon immediate completion of the Proposed Demerger, shareholders of WSC will have direct shareholdings in WEL pursuant to the Proposed Distribution. The effective shareholdings of WSCs shareholders in WSC and WEL before and after the Proposed Demerger is subject to the basis of the distribution to be determined later. Nevertheless, pursuant to the Proposed Public Issue, it is expected that there will be a dilution in the percentage shareholdings of the shareholders in WEL.

4.2

Net assets and gearing The effects of the Proposed Demerger on the net assets and gearing of WSC and WEL are dependent on the final terms of the Proposed Demerger. However, for illustrative purposes only, the indicative proforma effects of the Proposed Demerger on the consolidated net assets of the WSC Group and WEL Group, based on the audited consolidated financial statements of WSC for the financial year ended 31 December 2010 and assuming the entire shareholdings in WEL is distributed to WSCs shareholders are as set out below:(a) WSC Group Audited as at 31 December 2010 RM000 Share capital Equity component of Irredeemable Convertible Unsecured Loan Stocks (ICULS) Share premium Reserves Net assets No. of ordinary shares of RM0.50 each (000) Net asset per WSC share (RM) Borrowings (interest bearing debt) (RM000) Cash and cash equivalents (RM000) Gearing (times) Net Gearing (times)
Notes: (1) Based on the assumption that the Proposed Distribution which will be implemented via the utilisation of RM361.0 million from retained earnings and the entire share premium reserves of RM165.3 million. Based on total number of shares issued as at 31 December 2010.
(2)

After Proposed Demerger RM000 361,971 11,701 25,199 398,871 723,941 0.55 40,602 183,788 0.10 (1) (1)

361,971 11,701 165,348 386,166 925,186 723,941 1.28 620,097 365,422 0.67 0.28

(2)

(b) WEL Group Audited as at 31 December 2010 RM000 311,365 116,470 427,835 91,915 1.00 4.65 579,495 222,688 1.35 0.83

Share capital Share premium Reserves Net assets No. of ordinary shares (000) Par Value (USD) Net asset per share (RM) Borrowings (interest bearing debt) (RM000) Cash and cash equivalents (RM000) Gearing (times) Net Gearing (times)
Notes: (1)

After Proposed (1) Demerger RM000 393,670 132,645 526,315 1,193,500 0.10 0.44 579,495 181,634 1.10 0.76

Prior to the Proposed Public Issue, the issue size of which will be determined and announced later.

The effects shown above was after accounting for the proposed steps set out in Section 1 of this announcement and the following assumptions:(a) The Proposed Demerger is completed on 31 December 2010; (b) For illustration purposes, the issuance of WEL Shares is based on the exchange rate of USD1.00:RM3.00; (c) The Proposed Intercompany Settlement which involves the amount to be set-off against the sale consideration of RM17.5 million pursuant to the Proposed Internal Disposal, cash settlement of RM45.7 million and the remaining RM82.3 million via the issuance of 274.35 million new WEL Shares to WSC; and (d) Includes the estimated gain on Proposed Internal Disposal of RM16.2 million.

4.3

Earnings For illustrative purposes only, based on the audited consolidated financial statements of WSC for the financial year ended 31 December 2010 and assuming the entire shareholdings in WEL is distributed to WSCs shareholders, the proforma revenue and profit attributable to ordinary shareholders of WSC Group and WEL Group after the Proposed Demerger are as follows:WSC Group (Audited as at 31 December 2010) RM000 1,523,356 55,981

WSC Group RM000 Revenue

(1)

WEL Group RM000 793,634

52.1%

729,722
47.9%

Proportion (%)

Net profits attributable ordinary shareholders

Proportion (%)

to

19,340
34.5%

36,641
65.5%

Notes: The above are based on the assumption that the Proposed Demerger was completed on 1 January 2010 and transaction costs for the Proposed Demerger have not been taken into consideration. (1) Excluding revenue between WSC Group and WEL Group

4.4

Convertibles As at 29 April 2011, being the latest practicable date prior to this announcement, WSC has 15,177,390 outstanding ICULS and 135,962,320 outstanding warrants. The indicative adjustments to the terms of the ICULS and warrants will be announced in due course.

5. CASH COMPANY OR PN 17 COMPANY The Proposed Demerger is not expected to result in WSC becoming a Cash Company or a PN17 Company pursuant to the Main Market Listing Requirements of Bursa Securities.

6.

APPROVALS REQUIRED The Proposed Demerger as contemplated in Section 1 of this announcement is subject to, inter-alia, the following:(a) (b) (c) the approval of the Securities Commission (SC) and Equity Compliance Unit of the SC; the approval of Ministry of International Trade and Industry; the approval of Bursa Securities for the admission, listing of and quotation for new WEL Shares pursuant to the Proposed Listing; the sanction from the High Court of Malaya in respect of the utilisation of the share premium reserves for the Proposed Distribution, if required; the approval of the shareholders of WSC for the Proposed Demerger at an extraordinary general meeting to be convened; the approvals of creditors or lenders, where applicable; the approval or consent from the relevant Bermuda authorities, where applicable; approvals, waivers and/or consents from any other relevant authorities and/or persons in Malaysia and Bermuda, if required.

(d)

(e)

(f) (g) (h)

7.

IMPLEMENTATION AND INDICATIVE TIMELINE The Proposed Demerger will be implemented along the existing legal and business entities of the WSC Group. Hence, the Proposed Demerger is not expected to result in any major disruption to the WSC Groups existing operations as each business unit will continue in its day to day operations.

The indicative timeline for the implementation of the Proposed Demerger are as follows:Key milestones Announcement of the final terms of the Proposed Demerger Submission to the relevant authorities Approval obtained from the relevant authorities and shareholders Completion of the Proposed Demerger and Proposed Listing Indicative timeline Mid August 2011 August 2011 4th quarter of 2011 st 1 quarter of 2012

The Company will make further appropriate announcements of the progress of the Proposed Demerger to Bursa Securities in due course in accordance with the Main Market Listing Requirements of Bursa Securities. The terms, structure and effects of the Proposed Demerger is still subject to finalisation. As such, the disclosure set out in this announcement may be subject to change. The full announcement in respect of the Proposed Demerger is expected to be announced by mid August 2011.

This announcement is dated 11 May 2011.