Jun 23, 2015 - that its wholly owned subsidiary, Destini Aviation Sdn Bhd (formerly known ... Aviation Sdn Bhd) (âDASBâ) has on 22 June 2015 entered into a ...
DESTINI BERHAD ("DESTINI" or "THE COMPANY") - Joint Venture Agreement
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Introduction The Board of Directors of Destini Berhad (“Destini” or “the Company”) wishes to announce that its wholly owned subsidiary, Destini Aviation Sdn Bhd (formerly known as Satang Aviation Sdn Bhd) (“DASB”) has on 22 June 2015 entered into a Joint Venture Agreement (“JVA”) with Avia Technique Limited (“Avia”) to establish a new joint venture company (“JVCO”) to carry on the business of provision of inspection, repair and overhaul services of aircraft components including but not limited to oxygen equipment, survival equipment, fire suppression, air conditioning, electrical equipment and fuel and hydraulic equipment for commercial aviation and/or civil airline (non-military) customers (“Joint Venture”).
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Information on the Avia and DASB Avia is a private limited liability company incorporated and registered in England and Wales with company number 04494889, whose registered office is at Unit 1 Fishponds Estate, Fishponds Road, Wokingham, Berkshire, RG 41 2QJ United Kingdom. The principal business of Avia is the provision of inspection, repair and overhaul services of aircraft components for the commercial aviation sector. DASB is a private limited company incorporated in Malaysia on 20 November 1995. DASB is principally engaged in maintenance, repairs and overhaul of aviation ground support safety equipments and survival equipment. As at todate, the authorised share capital of DASB is RM500,000.00 divided into 500,000 ordinary shares of RM1.00 each while the issued and paid-up capital is RM250,000.00 comprising 250,000 ordinary shares of RM1.00 each
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Salient Terms of the JVA 3.1
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Both Avia and DASB has agreed to incorporate a new company and hold 50% of the ordinary shares in the capital of JVCO as per following proposed structure : a.
Avia: 500,000 ordinary shares with a nominal value of RM1.00 each through a nominee, representing 50% of the share capital of JVCO against a total contribution by Avia of RM500,000; and
b.
DASB: 500,000 ordinary shares with a nominal value of RM1.00 each through a nominee, representing 50% of the share capital of JVCO against a total contribution by DASB of RM500,000.
JVCO shall solely be to carry out, from within its premises in Malaysia inspection, repair and overhaul services of aircraft components within the following product categories: oxygen equipment, survival equipment, fire suppression, air conditioning, electrical equipment and fuel and hydraulic equipment for commercial aviation and/or civil airline (non-military) customers.
Basis of Consideration DASB will subscribe for its equity shareholding in JVCO at par for total consideration of RM500,000, wholly in cash from its internally generated funds and/or bank borrowings.
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Rationale and Prospect for the Joint Venture With vast experience in the Defence Aviation Maintenance, Repair and Overhaul (“MRO”) on Safety and Survival Equipment, Destini is positioning itself to expand its services into the Commercial Aviation Sector. The newly formed Joint Venture will provide Component MRO for Airline Sector. This shall include carrying out inspection, repair and overhaul services of aircraft components specifically oxygen equipment, survival equipment (including evacuation slides, rafts and life jackets), fire suppression, environmental control system, electrical equipment and fuel & hydraulic system. Further advanced capabilities and product/services will brought on line as the Joint Venture develops. The Joint Venture shall carry out these activities in Malaysia and for purely Airline Customers for the ASEAN Region. For India and Japan, it will be on a case-to-case basis. DASB through the Joint Venture and its recently acquired SafeAir Technical Sdn. Bhd. (“SafeAir”) will benefit from new business opportunities in the commercial aviation MRO services, as the Asia-Pacific region will need about 13,000 new planes, worth US$1.9 trillion over the next decade.
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Risk Factors As in any business venture, the Joint Venture is subject to inherent risk in business and industry including but not limited to those associated with changes in the economic, political and regulatory conditions such as changes to government policies and administration, interest rates, taxes and exchange control regulations. In addition, there is no assurance that the anticipated benefits of the Joint Venture will be realised or that the Company will be able to generate sufficient revenues from the Joint Venture to offset the associated costs incurred. Nevertheless, Destini will continue to exercise due care in considering the risks and benefits associated with the Joint Venture and will undertake appropriate measures to mitigate the various business risks identified.
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Liabilities to be Assumed There are no liabilities to be assumed by Destini arising from the Joint Venture.
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Financial Effect of the Joint Venture The Joint Venture will not have any effect on the share capital and substantial shareholders' shareholdings of the Company as it will be fully satisfied in cash. In addition, the Joint Venture is not expected to have a material effect on the earnings per share, net assets and gearing of the Group for the financial year ending 31 December 2015. Barring any unforeseen circumstances, the Joint Venture is expected to contribute positively to the Group’s earnings and net assets in the future.
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Approvals The Joint Venture is not subject to approval the shareholders of the Company or other relevant authorities.
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Interest of Directors, and Major Shareholders and/ or Persons Connected None of the directors and/or major shareholders of the Company and/or persons connected with them have any interest, direct or indirect, in the Joint Venture.
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Estimate Timeframe for completion Barring any unforeseen circumstances and subject to the fulfilment of all the conditions set out in the JVA, the Joint Venture is expected to complete by the third quarter of the Group’s financial year ending 31 December 2015.
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Directors’ Statement The Directors of Destini, after taking into consideration of all financial and other factors, is of the opinion that the Joint Venture is in the best interest of the Company.
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Highest Percentage Ratio The highest percentage ratio applicable to the Disposal pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 0.2%.
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Documents for Inspection The JVA is available for inspection at the registered office of the Company at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur between 8.30 a.m. and 5.30 p.m. from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.
This announcement is dated 23 June 2015.
