Draft Announcement by decree

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									Announcement


Company Name                    :     BOUSTEAD HOLDINGS BERHAD
Stock Name                      :     BSTEAD
Date Announced                  :     6 MAY 2009


BOUSTEAD HOLDINGS BERHAD (“BHB” OR “COMPANY”)

     PROPOSED JOINT-VENTURE BETWEEN BOUSTEAD HOTELS AND RESORTS SDN
      BHD (“BHRSB”), A WHOLLY OWNED SUBSIDIARY OF BOUSTEAD HOLDINGS
      BERHAD WITH TACORP HOLDINGS SDN BHD (“THSB”) FOR THE INCORPORATION
      OF A JOINT-VENTURE COMPANY TO BE KNOWN AS MIDAS MAYANG SDN BHD
      (“JVC”) (“PROPOSED JOINT-VENTURE ”); AND

     PROPOSED ACQUISITION OF TWO PIECES OF LAND HELD UNDER PN 7219 LOT
      15109 MUKIM SUNGAI KARANG, DISTRICT OF KUANTAN, NEGERI PAHANG (“LOT
      15109”) AND PN 1029 LOT 4603, MUKIM SUNGAI KARANG, CHERATING, DISTRICT OF
      KUANTAN, NEGERI PAHANG (“LOT 4603”) (BOTH COLLECTIVELY KNOWN AS
      “EXISTING PROPERTIES”) BY JVC FROM THSB (“PROPOSED ACQUISTION OF
      EXISTING PROPERTIES”).



1.    INTRODUCTION

      The Board of Directors of BHB (“Board”) wishes to announce that its wholly owned subsidiary,
      Boustead Hotels and Resort Sdn Bhd (“BHRSB”) had on 6 May 2009 entered into the
      following agreements:-

      (i)     BHRSB entered into a Joint-Venture Agreement with Tacorp Holdings Sdn Bhd
              (“THSB”) (“JV Agreement”) to incorporate a joint-venture company known as Midas
              Mayang Sdn Bhd (“JVC”) for the purpose of developing two pieces of land held under
              PN 7219 Lot 15109 Mukim Sungai Karang District of Kuantan Negeri Pahang and PN
              1029 Lot 4603 Mukim of Sungai Karang, Cherating, District of Kuantan , Negeri
              Pahang (both collectively referred to “Existing Properties”) together with an adjacent
              land measuring 1.679 hectares (hereinafter referred to as “Lot A”) for the purpose of
              constructing and developing the Existing Properties and Lot A into a hotel resort to be
              known as “Royale Cherating Resort & Spa Kuantan” (“Proposed Joint-Venture”); and

      (ii)    Midas Mayang Sdn Bhd (“JVC”) entered into a Sale and Purchase Agreement with
              THSB(“Sale and Purchase Agreement”) to purchase PN 7219 Lot 15109 Mukim
              Sungai Karang District of Kuantan Negeri Pahang and PN 1029 Lot 4603 Mukim of
              Sungai Karang, Cherating, District of Kuantan, Negeri Pahang at a purchase
              consideration of RM4.2 million. (“Proposed Acquisition of Existing Properties”)

      Details of the Proposed Joint-Venture and Proposed Acquisition of Existing Properties
      (collectively known “Proposed Transactions”) are set out in the ensuing sections.


2.    DETAILS OF PROPOSED TRANSACTIONS

      2.1     Proposed Joint-Venture

              2.1.1     Particulars

                 THSB is the registered and beneficial owner of two pieces of lands i.e. the Existing
                 Properties and has agreed to procure an adjacent land, i.e. Lot A, properties that are
                 at a prime location for the development of a resort hotel. BHRSB operates hotels


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 under the brand name “Royale” in West Malaysia. Given the potential of the Existing
 Properties and Lot A, both THSB and BHRSB have agreed to form a joint-venture
 company known as Midas Mayang Sdn Bhd (“JVC”) for the purpose of constructing
 and developing a resort hotel to be known as “Royale Cherating Resort and Spa
 Kuantan”.

2.1.2   Information on THSB

        THSB is incorporated in Malaysia under the Companies Act on 21 January,
        1978. THSB is principally involved in real property holdings and letting of
        property and investment holding. The authorised capital is RM1,000,000
        made up of RM775,000 divided into 775,000 ordinary shares of RM1.00 each
        and RM225,00 divided into 225,000 preference shares of RM1.00 of which
        RM510,000 divided into 275,000 ordinary shares of RM1.00 paid in cash and
        10,000 otherwise in cash and RM225,000 divided into 225,000 redeemable
        non-cumulative preference shares (“RNCP”) of RM1.00 have been issued.

        The ordinary shareholders of THSB are:-

        (i)     Datin Seri Habibah binti Muhd Yusoff         - 65, 550
        (ii)    Tengku Marsilla binti Tengku Abdullah        - 65, 550
        (iii)   Tengku Abu Bakar Ahmad                       - 65,550
        (iv)    Datin Seri Habibah binti Muhd Yusoff         - 88,350
                (Trustee for Tengku Shaheera binti Tengku Abdullah)

        The RNCP shareholders are:-

        (i)     Datin Seri Habibah binti Muhd Yusoff           - 112,500
        (ii)    Tengku Marsilla binti Tengku Abdullah          - 112,500

        The directors of THSB are:-

        (a)     YAM Tengku Abdullah ibni Sultan Abu Bakar (“YAM Tengku
                Abdullah”); and
        (b)     Mr. Yap Kon Min.


2.1.3   Salient terms of Joint-Venture Agreement

        (i)     Conditions Precedent

        The Joint-Venture Agreement is conditional upon, inter alia, the following
        terms:-

                (a)    The execution of the Sale and Purchase Agreement
                       between THSB as the vendor and JVC as the purchaser
                       of the Existing Properties at a purchase consideration of
                       RM4,200,000 simultaneously upon execution of the Joint-
                       Venture Agreement;

                (b)    If applicable, the approval of the Foreign Investment
                       Committee of the Prime Minister’s Department, Malaysia;

                (c)    The approval for the change of the Category of Land Use
                       and Express Condition for the Existing Properties and if
                       applicable, Lot A to resort/hotel or commercial;

                (d)    The extension of the leases of the Existing Properties
                       and if applicable, Lot A so that the leases of the
                       Properties expire on the same date;



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                       (e)      The approval or consent from the Menteri Besar Pahang
                                for the Existing Properties and if applicable, Lot A to be
                                transferred to the JVC (hereinafter referred to as
                                “Consent to Transfer”);

                       (f)      The Existing Properties are ready to be transferred to the
                                JVC free from any encumbrances, charges, liens,
                                caveats with vacant possession with the latest quit rent
                                and assessment receipts and the receipts for the other
                                outgoings to relevant authorities all paid for, being
                                deposited to BHRSB or its solicitors;

                       (g)      The issuance of the individual title for Lot 4603; and

                       (h)      The procurement of Lot A at a price deemed reasonable
                                at the sole discretion of the JVC .

               THSB and/or YAM Tengku Abdullah shall fulfil items (c), (d), (e), (f), (g) and (h),
               (i) and (j) and thereafter proceed to present the transfer of the Properties within
               six (6) months from the date of this Agreement or an extended period of three
               (3) months to be mutually agreed by the parties.

               In the event that the conditions precedent are not fulfilled within six (6)
               months from the date of this Agreement or an extended period of three (3)
               months to be mutually agreed by the parties,. BHRSB shall be entitled to
               terminate the JV Agreement.

(ii)           Equity Structure of the JVC

       (a)     Pending the fulfillment of the conditions precedent, the issued and paid-up
               capital of the JVC shall be RM100 divided into 100 ordinary shares of
               RM1.00 each and held in the proportion of 49% BHRSB and 51% THSB
               51%.

       (b)     Upon fulfillment of the conditions precedent, the issued and paid-up capital of
               the JVC shall be increased to RM10,000,000 and be held by the parties in
               the proportion of 70% BHRSB and 30% THRSB.

       (c)     BHRSB’s shares shall be subscribed in cash while THRSB’s shares shall be
               by way of capitalization of part of the purchase price of the Existing
               Properties.

       (d)     Any increase in the paid-up capital of the JVC shall be as the parties deem
               necessary to meet the cost of developing the Project and shall be in the
               proportion of 70: 30.


2.2    Proposed Acquisition of the Existing Properties

       2.2.1   Particulars

               For the purpose of the joint-venture and the Project, THSB has agreed to sell
               and the JVC has agreed to purchase the Existing Properties at the Purchase
               Consideration of RM4,200,000, which is on willing-seller-willing-buyer basis.

               The Existing Properties are situated within a locality known as Kampung
               Cherating Lama, which is about 44 kilometres north of Kuantan town centre.
               The Existing Properties are located within an established tourism area in
               Pahang with home-stays, chalets, mini-hotels and resort hotels. The well-



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                known Club Mediterranean is located adjacent to the north of the Existing
                Properties while Impiana Beach Resort is located further north.


        2.2.2   Information on Existing Properties

                The registered owner of the Existing Properties is THSB. However, to
                facilitate the development of the Project, application for conversion of land
                use and extension of leases need to be made as well as application for
                consent to transfer from MB Pahang.

(a)     Lot 15109


        -       A leasehold land held under PN 7219 Lot 15109 Mukim Sungai Karang,
                District of Kuantan, Negeri Pahang (“Lot 15109”) measuring 7302 square
                metres.

        -       The Category of Land Use is Building and the Express Condition for Lot
                15109 is Recreational, Club House, Playground only.

        -       The lease expires on 29 April, 2103

(b)     Lot 4603

        -       A leasehold land held under PN 1029 Lot 4603, Mukim Sungai Karang,
                Cherating, District of Kuantan, Negeri Pahang (“Lot 4603”) measuring 5814
                square metres.

        -       The Category of Land Use for L0t 4603 is Building and the Express Condition
                is for one (1) unit of residential building.

        -       The lease expires on 19 January, 2087

                An application has been submitted for surrender and re-alienation of Lot 4603
                to the relevant Land Office and the individual title has not been issued as yet
                by the said Land Office.


2.2.3   Salient terms of the Sale and Purchase Agreement

                (i)     Conditions Precedent

        The Sale and Purchase Agreement is conditional inter alia upon the following
        conditions being fulfilled within six (6) months from the date of this Agreement or an
        extended period of three (3) months to be mutually agreed by the parties :-

        (a)     If applicable, the approval from the Foreign Investment Committee for the
                sale and purchase of the Existing Properties;

        (b)     The approval for the change of the Category of Land Use and Express
                Condition for the Existing Properties and if applicable, Lot A to
                resort/hotel or commercial;

        (c)     The extension of leases of the Existing Properties and if applicable, Lot
                A and to expire on the same date;

        (d)     The approval or consent from the Menteri Besar Pahang for the Existing
                Properties to be transferred to the Purchaser (hereinafter referred to as
                “Consent to Transfer;



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             (e)     The issuance of the individual title for Lot 4603; and

             (f)     The procurement of Lot A at a price deemed reasonable at the sole
                     discretion of the JVC.


             In the event any one or more of the above Conditions Precedent is/are not fulfilled
             within six (6) months from the date hereof or an extended period of three (3) months
             to be mutually agreed by the parties, the Sale and Purchase Agreement shall be
             deemed terminated and THSB shall refund or cause the refund of the Deposit and
             any other monies paid by JVC to THSB towards the Purchase Price free from interest
             within fourteen (14) days from the date of receipt of notice of termination from JVC
             failing which late payment interest at the rate of eight percent (8%) per annum shall
             be imposed on the Deposit until full settlement of the Deposit and thereafter neither
             party shall have any claim against the other.

     (i)     Payment of the Purchase Price

     The Deposit of RM1,200,000 will be paid in cash to THSB upon execution of the Sale and
     Purchase Agreement and the balance of the Purchase Price amounting to RINGGIT
     MALAYSIA: THREE MILLION (RM3,000,000) only (hereinafter referred to as "the Balance
     Purchase Price") shall be paid in part by the allotment of 2,999,949 ordinary shares in the
     Purchaser to the Vendor and part in cash.


3.   RATIONALE FOR PROPOSED TRANSACTIONS

     The Proposed Transactions will allow BHRSB to be a player in the prime tourism location of
     Cherating, Pahang with the development of Royale Cherating Resort and Spa with boutique
     hotel facilities.



4.   EFFECTS OF PROPOSED TRANSACTIONS

     (i)     Share capital and substantial shareholders shareholdings

             The Proposed Transactions will not have any effect on the issued and paid-up share
             capital of the Company and the substantial shareholders’ shareholdings.

     (ii)    Net assets and gearing

             The Proposed Transactions will not have a material effect on the net assets and
             gearing of the Company.

     (iii)   Earnings

             The Proposed Transactions will not have a material effect on the earnings of the
             Company for the financial year ending 31 December, 2009.


5.   APPROVALS REQUIRED

     The Proposed Transactions is conditional upon the following approvals:-

     (i)     If applicable, the Foreign Investment Committee for the joint-venture, which is yet to
             be obtained.




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6.      DIRECTOR’S AND SUBSTANTIAL SHAREHOLDER’S INTERESTS

        None of the directors or substantial shareholders of BHB and persons connected to them,
        have any interest, direct or indirect, in the Proposed Transactions.


7.      DIRECTORS’ RECOMMENDATION

        The Board, after taking into consideration all aspects of the Proposed Transactions is of the
        opinion that the Proposed Transactions are in the best interest of the Company.


8.      EXPECTED COMPLETION DATE

        Barring unforeseen circumstances, the Proposed Transactions is expected to be completed in
        October, 2009 or early 2010.


9.      DEPARTURE FROM SECURITIES COMMISSION’S POLICIES AND GUIDELINES ON
        ISSUE/OFFER OF SECURITIES (“SC GUIDELINES”)

        To the best knowledge of the Board, the Proposed Transactions do not depart from the SC
        Guidelines.


10.     DOCUMENT AVAILABLE FOR INSPECTION
                                                                                              th
        The JVA and SPA will be made available at the Company’s registered office at 28 Floor,
        Menara Boustead, 69, Jalan Raja Chulan, 50200 Kuala Lumpur from Monday to Friday
        (except public holiday) during business hours for 3 months from the date of this
        announcement.

                            th
This announcement is dated 6 May, 2009.




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