Sep 10, 2015 - Other salient terms of the SPA include, amongst others, the following: 2.2.1 ... which is in line with th
ASIAN PAC HOLDINGS BERHAD (‘APHB’ OR ‘COMPANY’) PROPOSED ACQUISITION BY TAMAN BESTARI SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF AGB PROPERTIES SDN BHD, WHICH IN TURN A WHOLLY-OWNED SUBSIDIARY OF ASIAN PAC HOLDINGS BERHAD OF A PARCEL OF LEASEHOLD LAND HELD UNDER COUNTRY LEASE 025314096 IN THE LOCALITY OF M.14 P’PANG - PAPAR RD, DISTRICT OF PAPAR, STATE OF SABAH MEASURING APPROXIMATELY 16.57 ACRES FROM LEE WAT LAN FOR A TOTAL CASH CONSIDERATION OF RM21,800,000.00 ONLY (‘PROPOSED ACQUISITION’)
1.
INTRODUCTION The Board of Directors of Asian Pac Holdings Berhad (‘Board of Directors’) wishes to announce that Taman Bestari Sdn Bhd (Company No. 548245-X) (‘TBSB’), ultimately a wholly-owned subsidiary of APHB had on 10 September 2015 entered into a conditional Sale and Purchase Agreement (‘SPA’) with Lee Wat Lan (‘LWL’) for the Proposed Acquisition.
2.
THE PROPOSED ACQUISITION The Proposed Acquisition involves the acquisition by TBSB of a parcel of leasehold land held under Country Lease 025314096 in the Locality of M.14 P’Pang - Papar Rd, District of Papar, State of Sabah (‘Land’) measuring approximately 16.57 acres with an unexpired lease term of 909 years expiring on 28 June 2924 for a total cash consideration of RM21,800,000.00 only or approximately RM30.20 per square foot (‘Purchase Consideration’). 2.1
Basis of Consideration The Purchase Consideration was arrived on a ‘willing-buyer willing-seller’ basis after taking into consideration the development potential of the Land, assessment on the location, accessibility, suitability of the site, development and the demand and price of the properties in the vicinity of the Land.
2.2.
Other Salient Terms of the SPA Other salient terms of the SPA include, amongst others, the following: 2.2.1
Payment Terms The Purchase Consideration shall be paid by TBSB to LWL in the following manner:(i)
As at the date of the SPA, a sum of RM2,180,000.00 which is equivalent to 10% of the Purchase Consideration (‘Deposit’) has been paid by TBSB to TBSB’s solicitors as stakeholders;
(ii)
The balance Purchase Consideration of RM19,620,000.00 (‘Balance Consideration’) shall be paid by TBSB to LWL’s solicitors as stakeholders for LWL within 3 months from the date of all the conditions precedent stated at item 2.2.2 below (‘Conditions Precedent’) are fulfilled and/or waived (‘Completion Period’) with an automatic extension of 1 month from the 1
expiry of the Completion Period subject to TBSB’s payment of interest at the rate of 8% per annum on the outstanding sum calculated on daily basis commencing from the expiry of the Completion Period until the date of full payment of the Balance Consideration (‘Interest’). (iii)
(iv)
2.2.2
The Deposit shall be released to LWL’s solicitors to be released to LWL upon: (a)
the successful lodgement of private caveat against the Land by TBSB; and
(b)
Conditions Precedent being fulfilled and/or waived.
The Balance Consideration (less any unpaid quit rent, assessments or utilities charges (if any) payable by LWL in respect of the Land) shall be released to LWL provided that vacant possession of the Land has been delivered to TBSB as stated at item 2.2.4 below and the Memorandum of Transfer for the transfer of the Land in favour of TBSB has been successfully registered.
Conditions Precedent The SPA shall be conditional upon:
2.2.3
(i)
the removal/ clearance without any dispute of the squatters, tenants, occupants, licensees and places of worship on the Land by LWL at her own costs and expenses within 3 months from the date of the SPA or any such extended period granted at the sole discretion of TBSB; and
(ii)
any necessary approvals required by TBSB for the completion of the SPA being duly obtained by TBSB within 3 months from the date of the SPA at its own cost and expenses.
Land Area In the event that the total area of the Land as measured by the appointed TBSB’s surveyor shall be different from 16.57 acres more or less in total gross land area as represented by LWL (‘Land Area’) the Purchase Consideration shall be adjusted accordingly based on RM30.20 per square foot.
2.2.4
Delivery of Vacant Possession LWL shall deliver vacant possession of the Land upon full payment of the Purchase Consideration free from squatters, tenants, occupants, licensees and places of worship on the Land and in accordance with the terms of the SPA.
2.2.5
Limited Power of Attorney Upon the request from TBSB, LWL shall grant a Limited Power of Attorney in favour of TBSB so as to enable and empower TBSB to deal with the relevant matters relating to the Land including TBSB’s proposed development of the Land.
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3.
INFORMATION ON THE LAND Information of the Land is set out below: Country Lease 025314096
Location
Locality of M.14 P’Pang – Papar Rd, District of Papar, State of Sabah
Land area
16.57 acres (approximate)
Registered owner
Lee Wat Lan
Tenure
Leasehold of 999 years commencing 29 June 1925 and expiring on 28 June 2924
Market value
RM30 per square foot *
*
Title number
Based on the certificate of valuation preceding valuation report dated 8 September 2015 issued by Messrs Rahim & Co (Sabah) Sdn Bhd, an independent firm of registered valuers appointed by TBSB.
Presently, the Land is unencumbered save and except for the existing squatters, tenants, occupants, licensees, structure and/or places of worship on the Land which will be removed/ cleared by LWL as stated above.
4.
INFORMATION ON LWL LWL, aged 58, is a Malaysian citizen and is the legal and registered owner of the Land.
5.
SOURCE OF FUNDING The Purchase Consideration of RM 21,800,000.00 will be funded through internal generated funds and/ or bank borrowings, quantum of which has yet to be ascertained at this juncture.
6.
ASSUMPTION OF LIABILITIES There are no other liabilities including contingent liability and guarantee to be assumed by the Company arising from the Proposed Acquisition.
7.
RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition enables the Company to continue undertaking property development in Sabah which is in line with the Company’s business plan to strengthen its visibility in East Malaysia. The Company is currently in a preliminary stage of development planning of a mixed development comprising
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commercial and landed residential units. Detailed development plan including total development cost and expected profits is pending finalization.
8.
ESTIMATED TIME FRAME TO COMPLETE THE PROPOSED ACQUISITION Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed during the fourth quarter of the financial year ending 31 March 2016.
9.
PROSPECT AND RISK FACTORS 9.1
Prospects of the Land The Company is optimistic that the prospect of the Land is positive due to its strategic location along Jalan Lama Penampang - Kinarut/ Papar in the rapidly rising town of Kinarut (which is accessible via Pan-Borneo Highway) with increasing population and established amenities and infrastructure. Accordingly, the Company is confident that the proposed development on the Land will be well received and will contribute positively to the future growth and earnings to the Company.
9.2.
Risks Factors The risk in relation to the Proposed Acquisition and economic value of the Land is primarily premised in risks inherent in the business and property market relating to property development. These include, inter-alia changes in general economic, business and credit conditions and demand for properties and changes in fiscal policies and governmental regulations. However, the Company shall undertake market studies, employ appropriate business strategies and undertake project management strategies to mitigate these risks. The Board of Directors does not foresee any other significant risks arising from the Proposed Acquisition.
10.
FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION 10.1
Share Capital and Shareholdings of Substantial Shareholders The Proposed Acquisition does not involve any issuance of new shares in APHB and therefore, will not have any effect on the share capital and substantial shareholders’ shareholding of APHB.
10.2
Earnings The Proposed Acquisition is not expected to have a material impact on the earnings of the APHB group of companies (‘Group’) for the financial year ending 31 March 2016 as the proposed development of the Land is expected to be undertaken thereafter which is expected to enhance the future earnings of the Group.
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10.3
Net Assets and Gearing The proforma effect on the consolidated gearing of APHB can only be determined upon ascertainment of the quantum of internally-generated funds and/ or bank borrowings to fund the Purchase Consideration. The Proposed Acquisition is not expected to have a material impact on the net assets of the Group for the financial year ending 31 March 2016 as the proposed development of the Land is expected to be undertaken thereafter. However, the Proposed Acquisition is expected to enhance the net assets of the Group in the future in view of the potential future profit contribution arising from the proposed development on the Land.
11.
STATEMENT BY THE BOARD OF DIRECTORS The Board of Directors, having considered all aspect of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is in the best interest of APHB.
12.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS None of the directors and/or major shareholders of APHB and/or persons connected with them have any interest, direct or indirect, in the Proposed Acquisition.
13.
HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Transaction pursuant to paragraph 10.02(g) of the Main Market Listing Requirements is 2.8% based on the latest auditors’ financial statement of the Company for the financial year ended 31 March 2015. This announcement is made voluntarily pursuant to paragraph 10.05(2) of the Main Market Listing Requirements.
14.
APPROVAL REQUIRED The Proposed Acquisition does not require the approval of the shareholders of APHB and regulatory authorities.
15.
DOCUMENTS AVAILABLE FOR INSPECTION The SPA is available for inspection at the registered office of APHB at 12th Floor, Menara SMI, No. 6 , Lorong P.Ramlee, 50250 Kuala Lumpur, Wilayah Persekutuan, during the normal business hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement.
Dated this 10 September 2015.
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