Proposed Acquisition of the Entire Equity Interests in ... - Bursa Malaysia

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Mar 15, 2016 - Proposed Acquisition of the Entire Equity Interests in Pekan Semangat Sdn. Bhd. (“Proposed Acquisitionâ
Proposed Acquisition of the Entire Equity Interests in Pekan Semangat Sdn. Bhd. (“Proposed Acquisition”) 1.

Details of the Proposed Acquisition BLD Plantation Bhd (“BLDP” or “the Company”) has on 15 March 2016 entered into a Share Sale Agreement (“SSA”) with Loi Heng Sewn, Lau Yong Lee, Albert Hong Hin Kay and Dr. Ngoi Sing Shang (“Vendors”) to acquire from the Vendors the entire 1,100,000 ordinary shares of RM1.00 each (“Sale Shares”) in the share capital of Pekan Semangat Sdn. Bhd. (Company No. 641647-P) (“Pekan”) for a cash consideration of RM155,220,066 (“Purchase Price”). The Sale Shares are free from any interest or equity of any person (including without prejudice to the generality of the foregoing, any right to acquire, option or right or preemption) or any mortgage, deposit, charge, pledge, lien or assignment, or any other form of encumbrance, priority or security interest or arrangement of whatsoever nature over or in the Sale Shares (“Security Interest”).

2.

Brief information on Pekan Pekan was incorporated in Malaysia on 9 February 2004 under the laws of Malaysia as a private limited company with its registered office at No. 23C, Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor. The principal activity of Pekan is solely as an investment holding company and is the registered and beneficial owner of 1,680,000 issued and paid up ordinary shares of RM1.00 each representing 70% equity interest of Agrogreen Ventures Sdn. Bhd. (Company No. 828645-P) (“Agrogreen”). Pekan has an authorized share capital of RM10,000,000.00 divided into 10,000,000 ordinary shares of RM1.00 each, of which 1,100,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The directors and shareholders of Pekan and their respective shareholdings are as follows: Name

Shareholding (Direct) No. of ordinary shares % of RM1.00 each

Directors and shareholders: Loi Heng Sewn Lau Yong Lee Albert Hong Hin Kay Dr. Ngoi Sing Shang 3.

550,000 374,000 88,000 88,000

50 34 8 8

Brief information on Agrogreen Agrogreen was incorporated in Malaysia on 8 August 2008 under the laws of Malaysia as a private limited company with its registered office at 2nd Floor, Sublot 30, Brighton Square, Jalan Song, 93350 Kuching, Sarawak. Agrogreen has an authorized share capital of RM10,000,000.00 divided into 10,000,000 ordinary shares of RM1.00 each, of which 2,400,000 ordinary shares of RM1.00 each have been issued and fully paid-up.

Agrogreen is in the business of oil palm plantation and is the registered proprietor of the following parcels of provisional lease of State lands, totaling 5,442 hectares situated at: Lot 18, Block No. 2, Stungkor Land District, measuring approximately 1,442 hectares; and ii) Lot 16, Block No. 2, Stungkor Land District, measuring approximately 4,000 hectares. i)

(herein together referred to as “Stungkor Lands”) out of which not less than 5,000 hectares have been developed into an oil palm plantation. The directors and shareholders of Agrogreen and their respective shareholdings are as follows: Shareholding (Direct) No. of ordinary shares % of RM1.00 each

Name Directors: Loi Heng Sewn Haji Mohamad Sabry Bin Othman

-

-

1,680,000 360,000 360,000

70 15 15

Shareholders: Pekan Semangat Sdn. Bhd. Signature Palms Sdn. Bhd. Haji Mohamad Sabry Bin Othman 4.

Brief information of the Vendors Name Loi Heng Sewn Lau Yong Lee Albert Hong Hin Kay Dr. Ngoi Sing Shang

5.

NRIC No./Passport No. 600320-08-5947 610130-08-5806 Singapore Passport No. (0749515C) Singapore Passport No. (2168472D)

Sale Shareholdings Shares 550,000 50% 374,000 34% 88,000 8% 88,000

8%

1,100,000

100%

Brief description of the Stungkor Lands (a)

Provisional Lease of State Land dated 17 October 2011, Lot 18, Block No. 2, Stungkor Land District: Location Title area Land Usage Classification Tenure Encumbrances

-

Sampadi, Lundu 1,442 hectares for agricultural purposes Mixed Zone Land 60 years from the date of provisional lease Charged to RHB Bank Berhad for outstanding loan

(b)

Provisional Lease of State Land dated 5 April 2010, Lot 16, Block No. 2, Stungkor Land District: Location Title area Land Usage Classification Tenure Encumbrances

(c)

6.

-

Sampadi, Lundu 4,000 hectares for agricultural purposes Mixed Zone Land 60 years from the date of provisional lease Charged to RHB Bank Berhad for outstanding loan

Total planted area for Lot 18 - About 5,000 hectares and Lot 16 Age of Oil Palm for Lot 18 - One (1) to five (5) years and Lot 16

Basis and justification of the purchase consideration The Purchase Price for the Proposed Acquisition of RM155,220,066 was arrived at on a "willing-buyer willing-seller" basis after taking into consideration the market value of the Stungkor Lands.

7.

Mode of payment The Purchase Price was/shall be paid in the following manner: Upon the execution of the Share Sale Agreement (“SSA”), BLDP shall pay a sum of RM15,522,006.00 ("the Deposit" out of which amount a sum equal to 3% of the Purchase Price shall be deposited with Pekan's Solicitor as stakeholder pending issuance of the clearance certificates by the Inland Revenue Department in respect of the disposal of the Sale Shares) which comprises 10% of the Purchase Price, by paying to each of the Vendors in the mode and for an amount equal to the proportion of the Deposit to which the respective Vendors are entitled from BLDP as stated in the SSA; ii) Within 90 days from the unconditional date of the SSA or such extended period as mutually agreed by BLDP and the Vendors and concurrent upon the Vendors fully performing Clauses 6.2 and 6.3 of the SSA and the Vendors not in breach of any of their obligations under the SSA, BLDP shall pay RM139,698,060.00 ("Balance Purchase Price") which comprises 90% of the Purchase Price to each of the Vendors in the mode and for an amount equal to the proportion of the Balance Purchase Price to which the respective Vendors are entitled from BLDP as stated in the SSA but which amount is subject to adjustments pursuant to the settlement account stated in the SSA; iii) Without prejudice to the rights of the Vendors under the SSA, if any part of the Purchase Price shall remain unpaid upon the due date, compensation on the due and unpaid portion of the Purchase Price shall commence from the due date and be payable by BLDP to the Vendors calculated on day to day basis at the rate of 10% per annum; and iv) BLDP shall not be liable to pay compensation on any delay which is not attributable to or caused by BLDP. i)

8.

Source of funding The Purchase Price shall be satisfied via a combination of internally generated funds and external borrowings with detailed terms to be finalised. In determining the quantum of external borrowings to be taken up vis-à-vis internal funds, BLDP shall endeavour to achieve an optimum funding mix after taking into consideration, amongst others, the gearing level, interest costs as well as internal cash requirements of the BLDP Group.

9.

Effect of the Proposed Acquisition The Proposed Acquisition is not expected to have a material effect on the earnings per share, net assets per share, share capital and substantial shareholders’ shareholding of the Company, barring unforeseen circumstances. The Purchase Price shall be satisfied via a combination of internally generated funds and external borrowings. Depending on the eventual quantum of external borrowings to be taken up by the BLDP Group to finance the Purchase Price, the gearing level of the BLDP Group is expected to increase in tandem upon completion of the Proposed Acquisition.

10. Salient terms of the SSA (a)

Subject to the fulfilment of the Conditions Precedent, the Vendors shall sell and BLDP in full reliance upon the Warranties and outcome of the Due Diligence Exercises, shall purchase the Sale Shares free from any Security Interest and with all rights attaching thereto and accruing thereon as at and from the date of the SSA at the Purchase Price and upon the terms and conditions contained in the SSA;

(b)

BLDP shall not be obliged to complete the purchase of any of the Sales Shares unless the purchase of all the Sale Shares is completed simultaneously in accordance with the SSA;

(c)

Upon the completion of the acquisition of the Sale Shares, BLDP shall own 100% of the issued shares of Pekan which owns 70% of the issued shares in Agrogreen which owns the Stungkor Lands and the plantation business operated on the Stungkor Lands; and

(d)

Conditions precedent The obligations of the Vendors to sell and BLDP to purchase the Sale Shares upon the terms of the SSA shall be conditional upon the fulfilment of all the conditions within the 60 days commencing from the date of the SSA or a further period as may be mutually agreed in writing by the parties (“Approval Period”). If any of the conditions precedent is not fulfilled by the Approval Period, any of the parties may seek to extend the Approval Period for a further period as may be mutually agreed in writing by the parties. Thereafter, if the conditions precedent is still not fulfilled, any of the parties may rescind the SSA by written notice to the other party and the provisions of Clause 4.4 of the SSA shall apply.

11.

Future prospects The Proposed Acquisition is expected to contribute positively to the earnings of the BLDP Group. The Board is positive that the profit contribution from the Proposed Acquisition will grow in line with the higher anticipated return. The Board believes that with the increase in the size of the land bank pursuant to the Proposed Acquisition, it will put the

BLDP Group on a strong footing to become one of the major players in the oil palm cultivation business in Malaysia. 12.

Risk factors The Board does not foresee any material risks pursuant to the Proposed Acquisition except for the inherent risk factors associated with the palm oil industry in which BLDP Group is already involved.

13.

Particulars of all liabilities including contingent liabilities and guarantees to be assumed by the Company, arising from the Proposed Acquisition Save for the advances given by the Vendors to Pekan and Agrogreen, and loan facility undertaken by Agrogreen to be assumed by BLDP, BLDP shall not assume any other liabilities, including contingent liabilities and guarantees pursuant to the Proposed Acquisition.

14.

Whether the Proposed Acquisition is subject to the approval of shareholders and the relevant government authorities and the estimated time frame for submission of the application to the relevant authorities The Proposed Acquisition is not subject to the approval of shareholders and the relevant government authorities.

15.

Rationale for the Proposed Acquisition including any benefit which is expected to accrue to BLDP as a result of the Proposed Acquisition The Proposed Acquisition is to enable BLDP to acquire the controlling interest in the business of Agrogreen together with the Stungkor Lands, assets and equipment owned by Agrogreen. The Proposed Acquisition is consistent with BLDP’s plans to continue to expand its oil palm cultivation business by acquiring new land bank in Malaysia, particularly in Sarawak. The Proposed Acquisition represents a strategic investment by BLDP and is expected to contribute positively to the earnings as well as the shareholders’ value of the BLDP Group in the medium to long term, barring unforeseen circumstances.

16.

The relevant documents for the Proposed Acquisition and the time and place where the documents may be inspected The SSA, valuation report and other relevant documents in connection with the Proposed Acquisition are available for inspection at the registered office of BLDP at Level 6, Crown Towers, 88, Jalan Pending, 93450 Kuching, Sarawak during normal business hours for Monday to Friday (except for Saturday, Sunday and Public Holidays), for a period of three (3) months from the date of this announcement.

17.

The date on which the terms of the Proposed Acquisition were agreed upon The terms of the Proposed Acquisition were agreed upon on 15 March 2016.

18.

Statement by the Board of Directors Having considered the rationale and all other aspects of the Proposed Acquisition, the Board of Directors of BLDP was of the opinion that the Proposed Acquisition is in the best interests of the BLDP Group.

19.

Estimated timeframe for completion of the Proposed Acquisition The Proposed Acquisition is expected to be completed within 150 days from the date of the SSA.

20.

Highest percentage ratio of the Proposed Acquisition The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements is 23.50%.

This announcement is dated 15 March 2016.