Download HUBLINE BERHAD (“HUBLINE” OR THE “COMPANY”)

MALAYSIAN RESOURCES CORPORATION BERHAD (“MRCB” OR “COMPANY”)
ACQUISITION OF 18,000 ORDINARY SHARES OF RM1.00 EACH REPRESENTING EIGHTEEN PERCENT
(18%) OF THE EQUITY INTEREST IN COSY BONANZA SDN. BHD. (“CBSB”) TOGETHER WITH 2,482,000
REDEEMABLE PREFERENCE SHARES OF RM1.00 EACH IN CBSB AND 3,775,000 REDEEMABLE
PREFERENCE SHARES-A OF RM0.01 EACH IN CBSB FROM KUWAIT FINANCE HOUSE (MALAYSIA)
BERHAD (“KFH”), FOR A PURCHASE CONSIDERATION OF RM7.775 MILLION (“ACQUISITION”)
1.
INTRODUCTION
The Board of Directors of MRCB (“Board”) wishes to announce that MRCB had on 28 December 2010
entered into a KFH Musyarakah Buy-Out Agreement (“Agreement”) with KFH and Quill Sentral Sdn. Bhd.
(“Quill”) in relation to the Acquisition, the particulars of which are set out in the ensuing sections below.
This announcement is made by the Company pursuant to paragraph 9.19(23) of the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the Acquisition is a non-related
party transaction.
2.
DETAILS OF THE PROPOSED ACQUISITION
2.1
Particulars
Pursuant to the Agreement, MRCB will acquire all the fully paid-up shares of RM6.275 million held by KFH
in CBSB comprising 18,000 ordinary shares of RM1.00 each in CBSB (“Shares”), representing 18% equity
interest in CBSB together with 2,482,000 redeemable preference shares of RM1.00 each in CBSB (“RPS”)
and 3,775,000 redeemable preference shares of RM0.01 each in CBSB (“RPS-A”) (“the Sale Shares”) for a
total purchase consideration of RM7.775 million (“Purchase Consideration”).
Pursuant to the Agreement, the Purchase Consideration shall be paid on or before 31 December 2010
(“Completion Date”) whereupon the legal and beneficial owner of the Sale Shares shall pass to MRCB. On
30 December 2010, KFH has delivered the share certificate and all other documents for the purposes of
registration of the transfer of the Sale Shares in favour of MRCB in exchange of the Purchase Consideration
paid by MRCB to KFH on 29 December 2010. In this regard, the Agreement has been completed and CBSB
has effectively become a subsidiary of MRCB having a total equity interest of 62.5% in CBSB.
2.2
Background information of CBSB
CBSB was incorporated in Malaysia under the Companies Act, 1965 (“Act”) on 1 October 2007 as a private
limited company under its present name. As at 30 November 2010, CBSB has an authorised share capital
of RM5,000,000 comprising 5,000,000 Shares, 20,000,000 RPS and 2,500,000,000 RPS-A, of which
100,000 Shares together with 9,900,000 RPS and 15,100,000 RPS-A have been issued and paid.
CBSB is principally involved in property development and is the legal owner of a piece of land measuring
approximately 7,503 square metres held under Geran 46092, Lot 70, Seksyen 70, Bandar Kuala Lumpur,
District of Kuala Lumpur, Negeri Wilayah Persekutuan KL (“Lot B”).
Lot B has been approved for development of an office tower with a total gross floor area (“GFA”) of
approximately 1.5 million square feet (“sf”) and having an estimated Gross Development Value (“GDV”) of
over RM1,000 million. The net book value of Lot B as at 31 December 2009 was RM133 million.
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2.3
Basis of arriving at the Purchase Consideration
The Purchase Consideration which represents RM1.5 million premium over the cost of the Sale Shares was
determined on a willing buyer-willing seller basis after taking into consideration the prevailing market value
of the land without any development on Lot B and the prospect of CBSB (please refer to paragraph 4).
A valuation of the land on Lot B was performed by an independent professional valuer in March 2008 for the
purpose of credit security and the market value of the land was approximately RM141 million.
2.4
Historical financial information
The summary of the financial performance of CBSB since its incorporation is as shown below:
Revenue
Operating loss
Loss before taxation
Taxation
Loss after taxation
No. of ordinary shares in issue (‘000)
Net loss per ordinary share (RM)
Net assets
Total borrowings
2.5
Audited
1 October
2007 to 31
FYE 31
December
December
2008
2009
RM’000
RM’000
(764)
(960)
(764)
(960)
(764)
(960)
100
100
(7.64)
(9.60)
9,236
14,276
146,702
157,911
Unaudited
11-months period ended 30
November 2010
RM’000
(6,252)
(6,252)
(6,252)
100
(62.5)
17,123
169,977
Satisfaction of Purchase Consideration
The Purchase Consideration was fully paid in cash raised through MRCB’s Rights Issue in March 2010.
2.6
Assumption of liabilities
Save for the potential contingent liabilities and/or guarantees to be extended by MRCB as a shareholder of
CBSB in relation to the financing of the development of Lot B, there are no other liabilities, to be assumed
by MRCB pursuant to the Acquisition.
3.
RATIONALE FOR THE PROPOSED ACQUISITION
The Acquisition provides an opportunity for MRCB to consolidate its investment in strategic properties with
good potential capital appreciation in the near future, since Lot B is within the KL Sentral Development.
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4.
PROSPECTS
Prospects of CBSB
The Acquisition will allow MRCB to hold 62.5% of the equity interest in CBSB and thus has significant
control over its management and operations and reap the full benefits of all future revenues and profits. With
the anticipation of official sales launch in early 2011, the Board believes that the Acquisition represents a
good opportunity to further strengthen the future income of the MRCB Group.
5.
RISK EVALUATION
5.1
Acquisition risk
There is no assurance that the anticipated benefits from the Acquisition will be realised, or that MRCB will
be able to generate sufficient revenues from CBSB to offset the associated investment costs.
5.2
Business and operational risk
The Acquisition will not result in MRCB being exposed to any additional business and operational risks in
property development industry since MRCB is already principally involved in property development.
6.
HIGHEST PERCENTAGE RATIO
The highest percentage ratio applicable for the Acquisition pursuant to Paragraph 10.02(g) of the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) is 1.16% which is
derived based on the total Purchase Consideration amounting to RM7.775 million compared with MRCB’s
audited consolidated net assets attributable to equity holders of RM671.92 million as at 31 December 2009.
7.
EFFECTS OF THE ACQUISITION
7.1
Share capital and substantial shareholders’ shareholdings
The Acquisition will not have any effect on the issued and paid-up share capital of MRCB as well as its
substantial shareholders’ shareholdings as the Acquisition does not involve any issuance of shares.
7.2
Earnings
The Acquisition is not expected to have any effect on the earnings and earnings per share of MRCB Group
for the financial year ending 31 December 2010.
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7.3
Net assets and gearing
The proforma effects of the Acquisition on the consolidated net assets and gearing of MRCB based on the
latest audited financial statements as at 31 December 2009 are shown below.
Audited consolidated
as at 31 December 2009
RM’000
Share capital
RM’000
907,625
907,625
79,913
79,913
(49)
(49)
7,835
7,835
(323,405)
(323,405)
Net assets attributable to equity holders of
MRCB
671,919
671,919
No. of shares in issue (‘000)
907,625
907,625
0.74
0.74
1,643,009
1,800,920
2.4
2.7
Share premium
Currency translation reserve
Share option reserve
Accumulated losses
NA per share (RM)
Borrowings
Gearing ratio (times)
8.
After Acquisition
APPROVALS REQUIRED
No approval from the shareholders is required as the highest percentage ratio applicable for the Acquisition
pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Securities is only 1.16%
as mentioned in Section 6 above.
The Acquisition is not conditional upon any other proposal.
9.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the Directors and/or major shareholders of MRCB or any persons connected to them have any
interest, direct and/or indirect, in the Acquisition.
10.
DIRECTORS’ STATEMENT
The Board, having considered all aspects of the Acquisition and after careful deliberation is of the opinion
that the Acquisition is in the best interest of MRCB.
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11.
TIMEFRAME FOR COMPLETION
As stated in Section 2.1, the Acquisition has been completed on 30 December 2010.
12.
DOCUMENTS AVAILABLE FOR INSPECTION
The Agreement in respect of the Acquisition is available for inspection at the registered office of MRCB
during office hours from Mondays to Fridays (except for public holidays) at Level 21, 1 Sentral, Jalan
Travers, Kuala Lumpur Sentral, 50470 Kuala Lumpur for a period of 3 months from the date of this
announcement.
This announcement is dated 30 December 2010.
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