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Proposed Acquisition

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					Draft Announcement
MELATI EHSAN HOLDINGS BERHAD (“MELATI” OR “COMPANY”)

PROPOSED ACQUISITION OF FOUR (4) PIECES OF DEVELOPMENT LANDS IN PEKAN
PANDAMARAN, DAERAH KLANG, NEGERI SELANGOR BY MELATI EHSAN
CONSOLIDATED SDN BHD (“MECO”), A WHOLLY OWNED SUBSIDIARY OF THE
COMPANY, FROM TPPT SDN. BHD. FOR A TOTAL CASH CONSIDERATION OF RM15.5
MILLION (“PROPOSED ACQUISITION”)

Contents:

1.    INTRODUCTION
      The Board of Directors (“Board”) of MELATI, is pleased to announce that on
      11 November 2009, MECO, a wholly-owned subsidiary of MELATI, had entered into a
      Sales and Purchase Agreement (“SPA”) with TPPT Sdn. Bhd. (“TPPT” or “the
      Vendor”) for the acquisition of four pieces of development lands in Pekan
      Pandamaran, Daerah Klang, Negeri Selangor (collectively “the Said Lands”) for a total
      cash consideration of RM15.5 million (“Purchase Consideration”).


2.    DETAILS OF THE PROPOSED ACQUISITION
      The Vendor agrees to sell and MECO agrees to purchase the Said Lands free from
      any encumbrances, subject to all conditions of title, whether express or implied, (if
      any) as contained in the documents of title of the Said Lands with the existing
      category of land use affecting the Said Lands on an ‘as is where is’ basis without
      vacant possession and upon the terms and subject to the conditions contained in the
      SPA.

2.1   Information on TPPT and the ownership
      TPPT was incorporated on 22 November 1990 in Malaysia under the Companies Act,
      1965. Its present authorised share capital is RM500,000 comprising 500,000 ordinary
      shares of RM1.00 each, of which 250,000 ordinary shares have been issued and fully
      paid-up.

      The principal activity of TPPT is that of property development to meet social
      objectives of ‘Tabung Pusingan Perumahan Kos Rendah’ scheme for the promotion
      of affordable property ownership. Its major shareholders are Bank Negara Malaysia,
      CIMB Bank Berhad, Malayan Banking Berhad, Affin Bank Berhad and Public Bank
      Berhad. Its directors are Md. Yusof Bin Hussin, Dato’ Mohd Razif Abd. Kadir, Nor
      Shamsiah Mohd Yunus, Dato’ Mohd Hanif Sher Mohamed, Dato’ Johan Ariffin and
      Hidzir Bin Yahya.

2.2   Information on the Said Land
      Details of the Said Lands are as follows:-

       (i)     Said Lands      :   Comprises four (4) pieces of development lands
                                   measuring in total approximately 27.11 acres held under
                                   Lot Nos. 83948, 83947, 83949 and 83950 bearing titles
                                   Hakmilik No. PN 11845, PN 11846, PN 11847 and PN
                                   11848 all in Pekan Pandamaran, Daerah Klang, Negeri
                                   Selangor Darul Ehsan.

       (ii)    Type of Land    :   Development land

       (iii)   Land area       :   12183 square meters (Lot 83948 PN 11845);
                                   74150 square meters (Lot 83947 PN 11846);
                                   10935 square meters (Lot 83949 PN 11847); and
                                   12475 square meters (Lot 83950 PN 11848)

       (iv)    Proposed use    :   Mixed Development

       (v)     Tenure          :   Leasehold land

       (vi)    Encumbrance     :   Nil
2.3   Basis of Arriving at the Purchase Consideration
      The cash consideration of RM15.5 million for the Said Lands was arrived at on a
      “willing-buyer willing-seller” basis after taking into consideration, amongst other, that
      the Said Lands will be acquired without vacant possession i.e. with the presence of
      squatters, and the recent property prices transacted in the same location or other
      comparable localities.

2.4   Mode of Settlement
      The Purchase Consideration shall be paid in the following manner:-
      a) Earnest Deposit
         The sum of RM155,000 only (which is equivalent to 1% of the Purchase
         Consideration) was paid to the Vendor prior to the execution of the SPA.

      b) Balance Deposit
         The sum of RM4,495,000 only (which is equivalent to 29% of the Purchase
         Consideration) shall be payable to the Vendor upon the execution of the SPA.

      c) Balance Sum
         The sum of RM10,850,000 only (which is equivalent to 70% of the Purchase
         Consideration) shall be payable to the Vendor within three (3) months from the
         date of the SPA.

2.5   Source of funding
      MELATI intends to fund the Purchase Consideration using internally generated funds
      and/or borrowings. However, the exact breakdown on the source of financing, if any,
      has yet to be determined at this junction.

2.6   Salient Terms of the SPA
      The salient terms and conditions of the SPA are as follows:-

      (i)     The Proposed Acquisition is not subject or conditional upon the consent to
              transfer from the State Authority and perfection of the transfer of the Said
              Lands by the Vendor in favour of MECO.

      (ii)    MECO shall be liable to apply for the Sate’s Authority’s consent to transfer
              the Said Lands in its favour and at its own cost and expenses.

      (iii)   The Vendor shall as and when requested by MECO execute and deliver to
              MECO the relevant documents for facilitating such application process.

      (iv)    In the event that the consent to transfer is not obtained from the State
              Authority despite all reasonable efforts and appeals by both parties within
              three (3) months from the date of the SPA or such extension(s) as shall be
              agreed to between the parties, the SPA shall survive and be enforceable and
              MECO has no right to terminate the SPA and in such event, the Vendor shall
              grant an irrevocable unlimited Power of Attorney in favour of MECO as per
              Clause 15 of the SPA so that MECO shall enjoy all the rights and powers as
              if MECO was the unfettered registered proprietor of the Said Lands.

      (v)     Completion of the Proposed Acquisition shall take place at the office of the
              Vendor’s solicitors or the Vendor with the full payment of the Balance Sum in
              favour of the Vendor on or before the completion date which is three (3)
              months from the date of the SPA.


2.7   Liabilities to be assumed
      Save for the expenses for the eviction of squatters of which the cost cannot be
      determined at this juncture, there are no liabilities, including contingent liabilities and
      guarantees to be assumed by the Company arising from the Proposed Acquisition.

2.8   Information on MECO
      MECO was incorporated in Malaysia on 25 October 1995 as a private limited
      company. The present authorised share capital of MECO is RM1,000,000 comprising
      1,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of
      RM1.00 each have been issued and is fully paid-up. MECO’s principal activity is
      construction and property development. MECO is a wholly-owned subsidiary of
      MELATI.


3.    RATIONALE FOR THE PROPOSED ACQUISITION
      The Proposed Acquisition represents an opportunity for the MELATI Group to
      accumulate strategic land bank at a reasonable price as the Said Lands are situated
      in an area with positive residential and commercial property development potential at
      the Southern Klang corridor.


4.    EFFECTS OF THE PROPOSED ACQUISITION
      The effects of the Proposed Acquisition are as follows:-

4.1   Share Capital and Substantial Shareholdings
      The Proposed Acquisition will not have any impact on the issued and paid-up share
      capital and substantial shareholdings of MELATI as the Purchase Consideration for
      the Proposed Acquisition are to be satisfied entirely by cash.

4.2   Earnings and Net Assets Per Share
      The Proposed Acquisition is not expected to have any material impact on the earnings
      and net assets per share of the MELATI Group for the current financial year ending
      31 August 2010. However, the Proposed Acquisition is expected to contribute
      positively to the future earnings of the MELATI Group.


5.    CONDITIONS OF THE PROPOSED ACQUISITION
      The Proposed Acquisition is not subject to shareholders’ approval since the highest
      percentage ratio applicable to the Proposed Acquisition is 12.04%. There are no
      conditions/approvals imposed or required for the Proposed Acquisition.


6.    RISK FACTORS AND PROSPECTS OF THE PROPOSED ACQUISITION
      The Said Lands are strategically located at the Southern Klang corridor which is
      spurred by a good network of roads and infrastructure. The Said Lands are earmarked
      for mixed development based on demand for properties in the locality. However, the
      final development proposal is not finalised and shall be subject to revision depending
      on market demand, profitability and approvals from the relevant authorities.

      Barring unforeseen circumstances, the Board is of the opinion that the strategic
      location of the Said Lands provides strong potential for development as it is within an
      area with positive residential and commercial property and is near several new and
      fast growing townships such as Bukit Tinggi and Bandar Botanic. Due to its strategic
      location, it is envisaged that the Said Lands have good development potential.

      The Board is not aware of any risk factors arising from the Proposed Acquisition other
      than the normal market and global economic risks.


7.    DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
      None of the Directors and/or major shareholders of the Company and/or persons
      connected to a Director or major substantial shareholder has any interest, direct or
      indirect, in the Proposal Acquisition.


8.    DIRECTORS’ RECOMMENDATION
      The Board, after having considered all aspects of the Proposed Acquisition, is of the
      opinion that the terms and conditions of the Proposed Acquisition are fair and
      reasonable and is in the best interest of the MELATI Group.
9.     DOCUMENTS FOR INSPECTION
       The SPA is available for inspection at the Company’s Registered Office at 5, Jalan
       Titiwangsa, 53200 Kuala Lumpur during normal business hours from Monday to
       Friday (except public holidays).



This announcement is dated 11 November 2009.

c.c. to: The Securities Commission

				
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