berjaya corporation berhad - Bursa Malaysia

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Jun 13, 2016 - conditions and quantum of the BAuto Shares to be acquired by SPV taking into account the borrowings, fund
BERJAYA CORPORATION BERHAD ANNOUNCEMENT TO BURSA MALAYSIA SECURITIES BERHAD DISPOSALS OF THE REMAINING STAKE IN BERJAYA AUTO BERHAD 1.0

INTRODUCTION

1.1

The Board of Directors of Berjaya Corporation Berhad (“BCorporation” or “Company”) wishes to announce that its wholly-owned subsidiary, Berjaya Group Berhad (“BGroup”) had on 13 June 2016 entered into the following transactions in respect of the remaining 9.86% stake comprising 113.00 million ordinary shares of RM0.50 each (“BAuto Shares”) in Berjaya Auto Berhad (“BAuto”): (a)

9.09% stake comprising 104.10 million BAuto Shares will be disposed of to a special purpose vehicle (“SPV”), for a consideration of RM218.61 million or at RM2.10 per BAuto Share to be satisfied by cash and new SPV securities (“Disposal to SPV”); and

(b)

0.77% stake comprising 8.9 million BAuto Shares was disposed of via direct business transactions (“DBT”) for a cash consideration of RM18.69 million or at RM2.10 per BAuto Share (“DBT Disposal”).

The Disposal to SPV and DBT Disposal shall collectively be known as the “Current Disposals”. 1.2

On completion of the Current Disposals, BCorporation Group (via BGroup) will no longer have any direct interest in BAuto but will indirectly hold about 17.11% stake in BAuto through its 33.30%-owned SPV (as set out in paragraph 2.1.10 below).

2.0

THE CURRENT DISPOSALS

2.1

THE DISPOSAL TO SPV

2.1.1

On 12 April 2016, BCorporation had announced the entering into a memorandum of understanding (“MOU”) between BGroup and certain key management of BAuto represented by Dato’ Sri Ben Yeoh Choon San (“Dato’ Sri Ben”) (collectively the “Management”) on the proposed disposal-cum-injection of BAuto shares into the SPV.

2.1.2

Subsequent to the MOU, the Management and BGroup continued to negotiate on the terms, conditions and quantum of the BAuto Shares to be acquired by SPV taking into account the borrowings, funding arrangements and capital structure of SPV and thereafter both parties mutually agreed to transact only a block of 9.09% stake in BAuto comprising 104.10 million BAuto Shares to SPV at a price of RM2.10 per BAuto Share or for a consideration of RM218.61 million to be satisfied partly by cash and new SPV securities.

2.1.3

Hence, BGroup has on 13 June 2016 entered into two share sale agreements (“Agreements”) with SPV, details of which are as follows:(a) A share sale agreement for the first tranche of 25.00 million BAuto Shares representing 2.19% stake in BAuto for a consideration of RM52.50 million or at RM2.10 per BAuto Share to be satisfied by issuing SPV securities only comprising new ordinary shares (“SPV Shares”) and new redeemable convertible preference shares (“SPV RCPS”) (collectively the “SPV Securities”) in SPV (“Agreement I”); and (b) A separate share sale agreement for the second tranche of 76.00 million BAuto Shares representing 6.63% stake in BAuto for a consideration of RM159.60 million (also at RM2.10 per BAuto Share) to be fully settled in cash by SPV (“Agreement II”).

BERJAYA CORPORATION BERHAD ANNOUNCEMENT TO BURSA MALAYSIA SECURITIES BERHAD DISPOSALS OF THE REMAINING STAKE IN BAUTO

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On the same day, the remaining 3.10 million BAuto Shares representing 0.27% stake in BAuto was disposed of by BGroup to SPV via direct business transaction (DBT) for a total cash consideration of RM6.51 million (also at RM2.10 per BAuto Share). 2.1.4

Upon completion of the Disposal to SPV, SPV will have a 9.09% stake in BAuto, details of which are summarised below:No. of BAuto Shares ’million

Equity Interest in BAuto %

Total Consideration RM’million

Agreement I SPV Shares SPV RCPS

25.00

2.19

52.50

Agreement II Cash settlement

76.00

DBT TOTAL

2.1.5

6.63

No. of SPV Securities Units‘000

Issue Price RM

999 51,501

1.00 1.00

1.00 51.50 52.50

-

-

159.60

-

-

6.51

Settlement RM’million

159.60

3.10

0.27

6.51

104.10

9.09

218.61

218.61

The salient terms of the SPV RCPS to be issued to BGroup are as follows: a) b) c) d)

Par value Issue price Maturity date Voting rights

: : : :

e) f) g)

Right to dividend Conversion period Conversion price

: : :

h)

Status of new SPV Shares

:

i)

Optional Redemption Redemption upon maturity

:

j)

:

RM0.01 each RM1.00 each 10 years from date of issuance No right to attend and vote at general meeting unless the resolution affects the rights and privileges of such SPV RCPS Rank in priority to the ordinary shares of SPV Any time after date of issue up to and including Maturity Date One (1) SPV RCPS to one (1) new ordinary share of RM1.00 each in SPV The new SPV Shares to be issued from the conversion of the SPV RCPS shall upon issue and allotment, rank pari passu to the existing SPV Shares except that they shall not carry the right to receive all dividends and other distributions declared before the date of conversion SPV shall have the option to redeem the SPV RCPS at any time for cash at RM1.00 per SPV RCPS Upon maturity, all outstanding SPV RCPS will be redeemed in cash and/or through any other class of securities acceptable to the holders

2.1.6

The Disposal to SPV shall be completed within thirty (30) days from the date of Agreements and all BAuto Shares will be transferred to SPV in accordance with the settlement rules and regulations of Bursa Malaysia Securities Berhad (“Bursa Securities”).

2.1.7

The BAuto Shares disposed of/to be disposed of pursuant to the Disposal to SPV was/shall be disposed of free from all encumbrances of any nature whatsoever and with all rights and benefits of whatsoever nature attaching thereto.

2.1.8

The new SPV Shares shall upon issue and allotment, rank pari passu in all respects with the existing SPV Shares. The new SPV RCPS shall upon issue and allotment, rank pari passu in all respects and without discrimination or preference between the SPV RCPS holders.

BERJAYA CORPORATION BERHAD ANNOUNCEMENT TO BURSA MALAYSIA SECURITIES BERHAD DISPOSALS OF THE REMAINING STAKE IN BAUTO 2.1.9

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Agreement II is conditional upon the completion of Agreement I and the Management Sale Agreements (as defined in Note 1 below) relating to their sale of 8.02% stake in BAuto to SPV to be satisfied by the issuance of new SPV Securities.

2.1.10 The shareholding structures of SPV upon completion of the Disposal to SPV and Management Sale Agreements are as follows: SPV

SPV Shares Units %

SPV RCPS Units %

BGroup

999,000

33.30

51,501,000

20.68

Dato’ Sri Ben (Note 1) Dato’ Lee Kok Chuan (“Dato’ Francis”) (Note 1) Dato’ Amer Hamzah bin Ahmad (“Dato’ Amer”) (Note 1) Total to be held by Management

667,070 667,070

22.24 22.24

65,833,000 65,833,000

26.44 26.44

666,860

22.22

65,833,000

26,44

2,001,000

66.70

197,499,000

79.32

Total

3,000,000

100.00

249,000,000

100.00

Note 1 - Management Sale Agreements as set below: The Management namely Dato’ Sri Ben and Dato’ Francis as well as three other BAuto shareholders namely, Podium Success Sdn Bhd, BHJ Marketing Sdn Bhd and Prima Merdu Sdn Bhd (“Prima Merdu”) will dispose their total 91.90 million Shares representing 8.02% stake in BAuto to SPV at the same price i.e. RM2.10 per BAuto Share for a total consideration of RM192.99 million to be satisfied by the issuance of new SPV Shares and SPV RCPS to the Management and Dato’ Amer (as set out above) as full and final settlement of the sale consideration. Dato’ Amer is a director of Prima Merdu, the sole approved permit (AP) holder for the importation of Mazda completely built-up (CBU) vehicles in Malaysia

Upon completion of the Disposal to SPV (9.09% BAuto stake) and Management Sale Agreements (8.02% BAuto stake), SPV will own 17.11% stake in BAuto comprising 196.00 million BAuto Shares. 2.1.11 BGroup will also enter into a Shareholders’ Agreement (“SHA”) with the Management to regulate the management, rights and obligations of the shareholders of the SPV. 2.2

The DBT Disposal

2.2.1

The DBT Disposal was undertaken on 13 June 2016 at RM2.10 per BAuto Share via DBT in accordance with the settlement rules and regulations of Bursa Securities.

2.2.2

The DBT Disposal was disposed of free from all encumbrances of any nature whatsoever and with all rights and benefits of whatsoever nature attaching thereto.

2.3

Summary of the Current Disposals A summary of the Current Disposals is tabulated below: BAuto Shares disposed of/ to be disposed of Units

Disposal to SPV DBT Disposal

104,100,000 8,900,000

Consideration (RM) 218,610,000 18,690,000

Total

113,000,000

237,300,000

Satisfied/To be satisfied by SPV via New SPV New SPV Shares RCPS Cash (RM) (RM) (RM) 999,000 51,501,000 166,110,000 18,690,000 999,000

51,501,000

184,800,000

BERJAYA CORPORATION BERHAD ANNOUNCEMENT TO BURSA MALAYSIA SECURITIES BERHAD DISPOSALS OF THE REMAINING STAKE IN BAUTO 3.0

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INFORMATION ON BAUTO BAuto was incorporated on 11 May 2010 under the Companies Act 1965 and subsequently listed on the Main Market of Bursa Securities on 18 November 2013. The principal activities of the BAuto Group are investment holding and distribution & retailing of Mazda vehicles as well as provision of after-sales services for Mazda vehicles in Malaysia and the Philippines. As at 8 June 2016, BAuto has an issued and paid-up share capital of about RM572.78 million comprising 1,145.56 million BAuto Shares, excluding 1.40 million treasury shares whilst the total employees’ share options granted but unexercised is about 20.37 million BAuto Shares.

4.0

INFORMATION ON SPV The SPV is Dynamic Milestone Sdn Bhd (“Dynamic”), a company incorporated on 28 April 2016 in Malaysia under the Companies Act, 1965. The principal activity of Dynamic is investment holding. Dynamic does not have any subsidiary or associated company. Currently, Dynamic has an issued share capital of RM2 comprising of 2 ordinary shares of RM1.00 each held by Ms Lee Shuh Fang (50%) and Ms Lai Wai Sum (50%). The existing directors of Dynamic are Dato’ Sri Ben, Dato’ Francis and Dato’ Amer. Upon the completion of the Disposal to SPV and Management Sale Agreements, the issued and paidup share capital of Dynamic (SPV) will increase to RM252.00 million comprising 252.00 million shares comprising 3.00 million SPV Shares and 249.00 million SPV RCPS.

5.0

UTILISATION OF CASH PROCEEDS FROM THE PAST DISPOSALS AND CURRENT DISPOSALS (COLLECTIVELY KNOWN AS THE “DISPOSALS”) Prior to the Current Disposals, the Group had from 14 April 2016 to 10 June 2016 disposed of a total of 137.60 million BAuto Shares via DBT for a total cash consideration of RM288.96 million or at RM2.10 per BAuto Shares (“Past Disposals”). The gross cash proceeds from the Past Disposals and Current Disposals totalling RM473.76 million were/will be utilised for working capital and repayment of borrowings of the BCorporation Group.

6.0

RATIONALE FOR THE DISPOSALS The Disposals provide an opportunity for the BCorporation Group to realise its remaining minority stake in BAuto for cash totalling RM473.76 million and at the same time, will own a 33.30% stake in SPV, which will have a 17.11% stake in BAuto.

7.0

BASIS OF ARRIVING AT THE CONSIDERATIONS FOR THE DISPOSALS The prices for the Past Disposals was arrived at on a willing buyer willing seller after taking into consideration the then market prices of the BAuto Shares. On the Current Disposals, the price was arrived at based on market prices prior to the signing of the MOU.

8.0

EFFECTS OF THE DISPOSALS

8.1

The Disposals did/do not have any effect on the issued share capital and substantial shareholders’ shareholdings in BCorporation.

BERJAYA CORPORATION BERHAD ANNOUNCEMENT TO BURSA MALAYSIA SECURITIES BERHAD DISPOSALS OF THE REMAINING STAKE IN BAUTO

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8.2

The total carrying value for the 250.60 million BAuto Shares pursuant to the Disposals is RM547.74 million or about RM2.19 per BAuto Share which had already incorporated a remeasurement gain of about RM504.76 million recognised in the previous financial year ended 30 April 2015. Hence, the Disposals now resulted in a net loss of about RM15.62 million to the BCorporation Group.

9.0

CONDITIONS The Disposals were/are not subject to the approvals of the shareholders of BCorporation or any relevant authority.

10.0

DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS None of the Directors and major shareholders of BCorporation and/or persons connected to them has any interest, direct or indirect, in the Disposals.

11.0

DIRECTORS' RECOMMENDATION The Board of Directors of BCorporation having considered all aspects of the Disposals, is of the opinion that the Disposals were/are in the best interest of the BCorporation Group.

12.0

HIGHEST PERCENTAGE RATIO The highest percentage ratios pursuant to Chapter 10, Paragraph 10.2(g) of the Main Market Listing Requirements of Bursa Securities that is applicable to the Disposals is 8.32%. The cumulative highest percentage ratio for the past 12-months pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Securities is 12.96%.

13.0

DOCUMENTS AVAILABLE FOR INSPECTION The Agreements and the SHA are available for inspection at the Registered Office of BCorporation at Lot 13-01A, Level 13 (East Wing), Berjaya Times Square, No.1, Jalan Imbi, 55100 Kuala Lumpur, during normal office hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement.

This Announcement is dated 13 June 2016.