(The Ijok Land, Amanjaya Land, SP Land and Mukim 12 Land are collectively referred to as the Lands ).

Transcription

1 ORIENTAL INTEREST BERHAD ( OIB OR THE COMPANY ) (I) (II) PROPOSED ACQUISITIONS; AND PROPOSED AMENDMENT (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of OIB ( Board ), RHB Investment Bank Berhad ( RHB Investment Bank ) wishes to announce that OIB Properties (K) Sdn Bhd, a wholly-owned subsidiary of OIB ( OIB (K) or the Purchaser ) had on 23 May 2017, entered into four (4) separate conditional sale and purchase agreements for the proposed acquisitions of the following:- a parcel of leasehold land measuring approximately acres held under P.T. No (H.S. (D) 5728), Mukim Ijok, District of Kuala Selangor, State of Selangor ( Ijok Land ) from Advance Return Sdn Bhd ( Advance Return ), for a purchase consideration of RM28,000,000 to be satisfied through a combination of cash amounting to approximately RM14,999,231 and the issuance of 13,000,769 redeemable preference shares in OIB ( Consideration RPS ) at an issue price of RM1.00 each ( Proposed Ijok Land Acquisition ) ( Ijok Land SPA ); (iii) (iv) 406 sub-divided freehold lands measuring in aggregate approximately acres of Parent Lot P.T. No (H.S. (D) ), Bandar Amanjaya, District of Kuala Muda, State of Kedah ( Amanjaya Land ) from Seloka Setia Sdn Bhd ( Seloka Setia ), for a purchase consideration of RM40,142,000 to be satisfied through a combination of cash amounting to approximately RM21,503,540 and the issuance of 18,638,460 Consideration RPS at an issue price of RM1.00 each ( Proposed Amanjaya Land Acquisition ) ( Amanjaya Land SPA ); part of six (6) parcels of freehold lands measuring in aggregate approximately acres (or approximately 57.38% 1 of the total land area of acres) held under Lot Nos. 3189, 3190 and 3191 (GM 4694, GM 4695 and GRN 32168), Mukim Sungai Petani and Lot No , P.T. Nos and 91 (H.S. (D) , H.S. (D) and H.S. (D) ), Bandar Amanjaya, all in District of Kuala Muda, State of Kedah ( SP Land ), from Impian Seloka Sdn Bhd ( Impian Seloka ), for a purchase consideration of RM34,805,000 to be satisfied through a combination of cash amounting to approximately RM18,644,579 and the issuance of 16,160,421 Consideration RPS at an issue price of RM1.00 each ( Proposed SP Land Acquisition ) ( SP Land SPA ); and 11 parcels of adjoining freehold lands measuring in aggregate approximately 5.03 acres held under Lot Nos to (GRN to 70996), Lot Nos to (GRN to 70972), Lot Nos to (GRN to 71010) and P.T. No (H.S. (D) 24950) all in Mukim 12, District of Barat Daya, State of Pulau Pinang ( Mukim 12 Land ) from ETOS Wangsa Sdn Bhd ( ETOS Wangsa ), for a purchase consideration of RM26,280,000 to be satisfied through a combination of cash amounting to approximately RM1,314,000 and the issuance of 9,986,400 new ordinary shares in OIB ( Consideration Shares ) at an issue price of RM2.50 each ( Proposed Mukim 12 Land Acquisition ) ( Mukim 12 Land SPA ). (The Ijok Land, Amanjaya Land, SP Land and Mukim 12 Land are collectively referred to as the Lands ). (The Proposed Ijok Land Acquisition, Proposed Amanjaya Land Acquisition, Proposed SP Land Acquisition and Proposed Mukim 12 Land Acquisition are collectively referred to as the Proposed Acquisitions ). 1 Derived based on the land area to be acquired divided by the total land area, measured in square feet i.e. 6,474,132/11,283,654 x %. 1

2 (Advance Return, Seloka Setia, Impian Seloka and ETOS Wangsa are collectively referred to as the Vendors and individually referred to as the Vendor ). (The Ijok Land SPA, Amanjaya Land SPA, SP Land SPA and Mukim 12 Land SPA are collectively referred to as the SPAs ). In addition, OIB also proposes to amend certain clauses in the existing articles of association of the Company ( Constitution ) to facilitate the issuance of the Consideration RPS ( Proposed Amendment ). Further details of the Proposals are set out in the ensuing sections. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Acquisitions The Proposed Acquisitions entail the acquisitions of the Lands by OIB (K) from the Vendors for a total purchase consideration of RM129,227,000 (subject to the adjustments as set out in the SPAs and Section of this Announcement) to be satisfied via a combination of cash, Consideration RPS and Consideration Shares ( Purchase Consideration ) in the following manner:- Purchase Consideration Average Consideration Consideration price per SPA(s) Vendor(s) Land size Cash RPS Shares Total sq ft (acres) ( 000 sq ft) (RM) (RM) (RM) (RM) (RM) Ijok Land SPA Amanjaya Land SPA SP Land SPA Mukim 12 Land SPA Advance Return Seloka Setia Impian Seloka ETOS Wangsa , ,999,231 13,000,769-28,000, , ,503,540 18,638,460-40,142, , ,644,579 16,160,421-34,805, ,314,000-24,966,000 26,280, Total , ,461,350 47,799,650 24,966, ,227,000 Notes:- Entails the issuance of 47,799,650 Consideration RPS. Entails the issuance of 9,986,400 Consideration Shares to be issued at RM2.50 per Consideration Share. Subject to the terms and conditions of the SPAs, OIB (K) shall purchase the Lands free from encumbrances, with vacant possession, subject to the conditions of title and restrictions-in-interest relating to or affecting the Lands. Under the terms of the SPAs, Advance Return, Seloka Setia and Impian Seloka may nominate their holding company, Ripro Sdn Bhd ( Ripro ) to receive their respective Consideration RPS on their behalf, while ETOS Wangsa may nominate its holding company, LLSB 1980 Holdings Sdn Bhd ( LLSB ), to receive the Consideration Shares on its behalf. Further information on the Lands are set out in Appendix I of this Announcement. 2

3 2.1.1 Basis of and justification for the Purchase Consideration The Purchase Consideration was arrived at on a willing-buyer willing-seller basis after taking into consideration the development potential of the Lands as well as the market value of the Lands of RM129,227,000, as appraised by Laurelcap Sdn Bhd ( Laurelcap ), VPC Alliance (Alor Star) Sdn Bhd ( VPC Alliance ) and PPC International (Penang) Sdn Bhd ( PPC International ) (collectively referred to as the Independent Valuers ). A summary of the valuations for the Lands as set out in the respective valuation reports ( Valuation Reports ) are as follows:- Land Independent Valuer Date of valuation Method(s) of valuation Market value (RM) Ijok Land Laurelcap 10 April 2017 Comparison and residual methods Amanjaya Land VPC Alliance 10 April 2017 Comparison and residual methods 28,000,000 40,142,000 SP Land VPC Alliance 10 April 2017 Comparison method 34,805,000 Mukim 12 Land PPC International 20 April 2017 Comparison method 26,280,000 Total 129,227,000 Note:- Comparison method The comparison method entails comparing the relevant Lands with similar properties that were transacted recently within the same location or other comparable localities. In comparing similar properties, adjustments were made for differences in attributes and factors such as location, accessibility, size, title conditions and restrictions, designated use, improvements and amenities, time element and other relevant factors to arrive at the final valuation of the Lands. Residual method The Residual Method entails the determining of the total gross development value and deducting from this the costs of construction and site works, professional fees, interest on capital borrowed, contingencies and developer s risk and profit. The residual value is the value of the land and this is deferred for the period of development to arrive at the current market value of the land Basis of and justification for determining the issue price of the Consideration RPS and Consideration Shares, and the redemption price of the Consideration RPS Consideration RPS The issue price and redemption price of the Consideration RPS have been fixed at RM1.00 per Consideration RPS, representing % of its nominal value. In view that the Consideration RPS will not be listed, quoted or traded on Bursa Malaysia Securities Berhad ( Bursa Securities ) and are not convertible into ordinary shares in OIB ( Shares or OIB Shares ), the issue price and redemption price were determined on a willing-buyer willing-seller basis after taking into consideration the tenure and the coupon rate of the Consideration RPS of four percent (4%) per annum. Consideration Shares The issue price of the Consideration Shares has been fixed on a willing-buyer willing-seller basis at RM2.50 per Consideration Share based on the five (5)-day volume weighted average market price ( VWAP ) of OIB Shares up to and including 22 May 2017, being the last market day immediately preceding the signing of the Mukim 12 Land SPA, of RM

4 The issue price of the Consideration Shares represents the following discounts to the historical VWAP of OIB Shares up to and including 22 May 2017 and the last traded market price of OIB Shares immediately preceding the date of this Announcement:- OIB Shares Premium/ Share price (Discount) (RM) (%) One (1)-month VWAP (0.06) Three (3)-month VWAP (6.73) Six (6)-month VWAP (8.72) Last traded market price immediately preceding the date of this Announcement (Source: Bloomberg) Mode of settlement of the Purchase Consideration OIB (K) will pay the Purchase Consideration in the following manner:- Mode of settlement Date of settlement Note(s) Purchase Consideration (%) (RM) For all SPAs:- Cash deposit ( Deposit ) Upon the signing of the SPAs ,461,350 For the Ijok Land SPA, Amanjaya Land SPA and SP Land SPA:- Balance cash consideration Consideration RPS For the Mukim 12 Land SPA:- Consideration Shares Within three (3) months from the fulfilment of all Conditions Precedent (as defined herein) Within three (3) months from the fulfilment of all Conditions Precedent Within three (3) months from the fulfilment of all Conditions Precedent ,000, ,799, ,966,000 Total ,227,000 Notes:- The breakdown of the cash consideration by the respective SPAs is as follows:- SPA Vendor Deposit Balance cash consideration (RM) (RM) Ijok Land SPA Advance Return 1,400,000 13,599,231 Amanjaya Land SPA Seloka Setia 2,007,100 19,496,440 SP Land SPA Impian Seloka 1,740,250 16,904,329 Mukim 12 Land SPA ETOS Wangsa 1,314,000 - Total 6,461,350 50,000,000 4

5 The breakdown of the Consideration RPS by the respective SPAs is as follows:- SPA Vendor Consideration RPS No. (RM) Ijok Land SPA Advance Return 13,000,769 13,000,769 Amanjaya Land SPA Seloka Setia 18,638,460 18,638,460 SP Land SPA Impian Seloka 16,160,421 16,160,421 Total 47,799,650 47,799, Indicative salient terms of the Consideration RPS The indicative salient terms of the Consideration RPS are as set out in Appendix II of this Announcement Ranking of the Consideration RPS and the Consideration Shares Consideration RPS The Consideration RPS shall, upon allotment and issuance, rank equally without any preference or priority among themselves and in priority to OIB Shares, but shall rank behind all secured and unsecured obligations of OIB. In the event of liquidation, dissolution, winding-up or other repayment of capital (other than on redemption):- (a) (b) (c) the Consideration RPS shall confer on the Consideration RPS holders the right to receive in priority to the holders of all other class of securities in the share capital of OIB, cash repayment in full of the amount (and the amount of any coupon that has fallen due and remaining in arrears) of up to 100% of the Issue Price (as defined herein) of the Consideration RPS, provided that there shall be no further right to participate in any surplus capital or surplus profits of OIB; the Consideration RPS shall not confer on the Consideration RPS holders thereof the right to participate in the distribution of surplus assets or profits; and in the event that OIB has insufficient assets to permit payment of the full Issue Price to the Consideration RPS holders, the assets of OIB shall be distributed proportionally to the Consideration RPS holders in proportion to the amount that each Consideration RPS holders would otherwise be entitled to receive. Consideration Shares The Consideration Shares shall, upon allotment and issuance, rank equally in all respects with each other and existing OIB Shares, save and except that the Consideration Shares shall not be entitled to any dividends, rights, allotments and/ or any other distributions which may be declared, made or paid to the shareholders of the Company, the entitlement date of which is prior to the date of allotment of the Consideration Shares Listing of and quotation for the Consideration RPS and Consideration Shares Consideration RPS The Consideration RPS will not be listed on any stock exchange. Consideration Shares An application will be made to Bursa Securities for the listing of and quotation for the Consideration Shares. 5

6 2.1.7 Source of funding of the Purchase Consideration The Deposits amounting to approximately RM6.46 million which have been paid to the respective Vendors solicitors on the date of the SPAs was funded via internally generated funds. The balance cash consideration for the Proposed Ijok Land Acquisition, Proposed Amanjaya Land Acquisition and Proposed SP Land Acquisition shall be funded entirely via bank borrowings. The redemption amount for the Consideration RPS of approximately RM47.80 million and the coupon payable to the holders of the Consideration RPS are expected to be funded via internally generated funds Other salient terms of the SPAs The other salient terms of the SPAs are as follows: Conditions Precedent The completion of the sale and purchase of the Lands is conditional upon the following conditions precedent ( Conditions Precedent ) having been fulfilled within four (4) months from the date of the SPAs with an automatic extension of two (2) months from the expiry of the aforesaid four (4) months period or any further period as the parties may mutually agree in writing ( Conditions Precedent Period ): (iii) (iv) the approval from Bursa Securities for the listing of and quotation for the Consideration Shares on the Main Market of Bursa Securities having been obtained by OIB; the approval from the Board of Directors and shareholders of the Purchaser for the Proposed Acquisitions having been obtained by the Purchaser; the approval from the shareholders of OIB for the Proposed Acquisitions at an extraordinary general meeting to be convened having been obtained by OIB; the approval from the board of directors and shareholders of the respective Vendors for:- (a) (b) the sale and the transfer of the respective Lands to the Purchaser or the individual purchasers, as the case may be, in the sole discretion of the Purchaser; and the granting of the Power of Attorney to the Purchaser in form and substance as per the specimen Power of Attorney as annexed under the schedule of the SPAs, and in accordance with the terms and conditions of the SPAs having been obtained by the respective Vendors; (v) (vi) (vii) the state authority s unconditional consent to transfer of the Ijok Land from Advance Return to the Purchaser having been obtained by Advance Return, at Advance Return s own cost and expense ( Consent to Transfer ); in the event the Purchaser elects to transfer the Ijok Land or any part thereof directly to the individual purchasers upon the completion of the proposed development of the Ijok Land, the state authority s unconditional consent to charge of the Ijok Land by Advance Return to the Purchaser s financier having been obtained by Advance Return, at the Purchaser s own cost and expense ( Consent to Charge ), if required; the approval, consent or authorisation of any other relevant authority and/ or parties not specifically mentioned above (if any) as may be advised by the Purchaser s solicitors to the Vendors solicitors within three (3) months from the date of the SPAs, failing which it shall be deemed that no such additional approval or consent from authorities is required for the sale and purchase of the Lands herein. The SPAs shall become unconditional upon the fulfilment of the Conditions Precedent. The date of fulfilment of all the Conditions Precedent shall be referred to as the Unconditional Date. 6

7 Default by Purchaser If the Purchaser fails to pay the balance purchase price to the Vendor under the respective SPAs within the time and in the manner prescribed in the respective SPAs or fails, refuses or neglects to observe or perform any of its obligations pursuant to the respective SPAs and the Purchaser fails to remedy such failure or breach within fourteen (14) days from the date of the notice from the Vendor to the Purchaser requesting for the remedial action, the Vendor shall be entitled, without prejudice to its rights and remedy available in law, either:- to seek specific performance of the respective SPAs (in which respect the alternative remedy of monetary compensation will not be regarded as compensation or sufficient compensation for any default by the Purchaser); or by written notice to the Purchaser, to forthwith terminate the sale of the respective Lands, and in such event:- (a) (b) (c) the deposit shall be forfeited by the Vendor; all monies paid hereunder towards the purchase consideration, save and except for the deposit, shall be refunded by the Vendor to the Purchaser via cash and free of interest within fourteen (14) days from the date of notice of termination, provided that the Purchaser has at its own cost removed the private caveat, charge, or any encumbrances which has been presented by or on behalf of the Purchaser or the Purchaser s financier for registration against the respective Lands, if applicable; and the Purchaser shall forthwith, in simultaneous exchange for the refund as stated in Section (b) above, return to the Vendor all documents which the Vendor may have delivered to the Purchaser, the Purchaser s solicitors or the Purchaser s financier s solicitors (as the case may be) pursuant to the terms of the respective SPAs with the interest of the Vendor in the respective Lands remaining intact, save and except for any encumbrances created by any third party and provided that if the memorandum of transfer has been stamped with the adjudicated stamp duty, the Purchaser shall be entitled to retain the same for cancellation and refund of the adjudicated stamp duty paid. Subject to the refund as stated under Section (b) above:- (a) (b) the Vendor shall be discharged from any further obligation to the Purchaser under the respective SPAs; and the Vendor shall be entitled to deal with or otherwise dispose of the respective Lands at such price, in such manner and upon such terms as the Vendor sees fit as if the respective SPAs had not been entered into between the Vendor and the Purchaser Default by Vendor If the Vendor:- (1) fails to perform or observe any provision of the SPAs which is required to be performed or observed on the part of the Vendor or breaches any representations and warranties made (as the case may be), and such failure or breach is not rectified by the Vendor within fourteen (14) days from the date of the notice in writing from the Purchaser to the Vendor requesting for the rectification of the failure; or (2) makes any arrangement or composition with his creditors generally; or (3) becomes insolvent or is unable to pay its debts; or (4) has a petition for winding-up presented against it and which petition is not withdrawn or removed within three (3) months of the petition being served on it; or (5) has a winding-up order made against it; or 7

8 (6) has resolution for its winding-up passed by its members (other than for the purpose of reconstruction or amalgamation) or creditors; or (7) has a receiver or manager appointed against its assets or undertakings, then the Purchaser shall be entitled, without prejudice to its rights and remedy available in law, either: to seek specific performance of respective the SPAs (in which respect the alternative remedy of monetary compensation will not be regarded as compensation or sufficient compensation for any default by the Vendor); or by written notice to the Vendor, to forthwith terminate the purchase of the respective Lands, and in the event of such termination: (a) (b) the Vendor shall within fourteen (14) days from the date of the notice of termination, refund to the Purchaser the deposit and any other sum paid towards the purchase consideration, via cash and free of interest and irrevocably undertake to pay a sum which is equivalent to the deposit to the Purchaser as agreed liquidated damages provided that the Purchaser has at its own cost removed the private caveat, charge, or any encumbrances which has been presented by or on behalf of the Purchaser or the Purchaser s financier for registration against the respective Lands, if applicable; and the Purchaser shall, in simultaneous exchange for such refund and payment as stated in Section (a) above, return to the Vendor all documents which the Vendor may have delivered to the Purchaser, the Purchaser s solicitors or the Purchaser s financier s solicitors (as the case may be) pursuant to the provisions of the respective SPAs with the interest of the Vendor in the respective Lands remaining intact, save and except for any encumbrances created by any third party and provided that if the memorandum of transfer has been stamped with the adjudicated stamp duty, the Purchaser shall be entitled to retain the same for cancellation and refund of the adjudicated stamp duty paid. Subject to the refund as stated under Section (a) above: (a) (b) the Vendor shall be discharged from any further obligation to the Purchaser under the respective SPAs; and the Vendor shall be entitled to deal with or otherwise dispose of the respective Lands at such price, in such manner and upon such terms as the Vendor sees fit as if the respective SPAs had not been entered into between the Vendor and the Purchaser Discrepancy in Area and Valuation (1) Any error or misstatement as to the position measurements boundaries and/ or area of the respective Lands shall give the Purchaser an entitlement to an adjustment of the purchase price in accordance with the provisions of the terms of the respective SPAs. (2) If the position measurements boundaries and/or area of any Lands as shown or indicated in the document of title or other documents is less than the area as is existing in excess of three per cent (3%), there shall be an adjustment of the purchase price for the difference (if any) calculated at the rate of RM18.07, RM27.86, RM5.38 and RM per sq ft for the Ijok Land, Amanjaya Land, SP Land and Mukim 12 Land respectively, as stated in the respective SPAs whereupon the Vendor shall deduct the difference against the cash consideration. (3) Notwithstanding the above, the parties acknowledge that the Purchase Consideration is arrived at based on the valuation conducted for the purpose of this transaction and that in event the method of the valuation or the basis of the valuation is not consistent with the requirements of the authority concern resulting in any variation exceeding two per cent (2%) of the Purchase Consideration, the parties shall proceed to renegotiate the Purchase Consideration. 8

9 Memorandum of Transfer (1) The Purchaser shall have the option to elect either to transfer the respective Lands: in favour of the Purchaser ( Transfer to Purchaser ), whereupon the memorandum of transfer in favour of the Purchaser shall be perfected and dealt with in accordance with the terms of the respective SPAs; or in favour of the individual purchasers upon the completion of the proposed development of the respective Lands or any part thereof ( Direct Transfer to End Purchasers ), and the Purchaser shall notify the Purchaser s solicitors of their option on or before the Unconditional Date. (2) For the avoidance of doubt, notwithstanding that the Purchaser has before the Unconditional Date elected for Direct Transfer to End Purchasers, the Purchaser shall still be entitled to exercise its rights to elect for Transfer to Purchaser after the completion of the respective SPAs Non Registration of Transfer (1) Notwithstanding completion of the respective SPAs, if the memorandum of transfer in relation to the respective Lands or the memorandum of transfer in favour of the individual purchasers, as the case may be, in respect of the respective Lands or any part thereof is not accepted or is rejected for registration or is not registered in the name of the Purchaser or the individual purchasers, as the case may be, for any reason whatsoever, save and except where there is any default, wilful neglect or blameworthy conduct on the part of any of the parties herein, each party hereto shall use its best endeavours:- (iii) to ascertain the cause or reason for such non-acceptance or rejection or nonregistration, as the case may be; to rectify, remedy and/ or overcome such cause or reason; and to cause the memorandum of transfer in relation to the respective Lands or the memorandum of transfer in favour of the individual purchasers in respect of the respective Lands or any part thereof, as the case may be, to be accepted for registration and/ or registered. (2) In the event such cause or reason cannot be or is not rectified, remedied and/ or overcome within a period of two (2) calendar months from the date such non-acceptance or rejection or non-registration is made known to both parties hereto, the Purchaser shall have the option not to proceed with the sale and purchase under the respective SPAs and upon the exercise of such option by the Purchaser by notice in writing to the Vendor:- the Vendor or the Vendor s solicitors shall, within 14 days from the date of the notice of termination, to refund or to pay to the Purchaser:- (a) in respect of the SPAs all the purchase consideration or part thereof, or including all moneys and the deposit paid towards account of the purchase consideration in respect of the respective SPAs, as the case may be, via cash and free of interest; 9

10 (b) in respect of the Ijok Land SPA, Amanjaya Land SPA and/ or SP Land SPA, cash payment equivalent to:- (aa) (bb) (cc) the amount of all coupon paid, up to the date of notice of termination, by OIB to the Vendor, for the Consideration RPS; all payments paid, up to the date of notice of termination, for the redemption of the Consideration RPS; the sum equivalent to the total redemption price for the Consideration RPS outstanding as at the date of notice of termination, to facilitate the redemption of the Consideration RPS by OIB ( RPS Redemption Sum ); and (c) in respect of the Mukim 12 SPA, ETOS Wangsa shall also surrender or cause to be surrendered to OIB all the Consideration Shares received by it or its nominee, LLSB, as the case may be, for cancellation in accordance with Section (2)(b) of this Announcement, provided that the Purchaser has, at its own cost removed the private caveat or any encumbrances which has been presented by or on behalf of the Purchaser or the Purchaser s financier for registration against the respective Lands, if applicable; the Purchaser shall, in simultaneous exchange for such refund and payment as stated in Section (2) above:- (a) cause OIB:- (aa) (bb) in respect of the Ijok Land SPA, Amanjaya Land SPA and SP Land SPA, to redeem all outstanding Consideration RPS as at the date of termination of the Ijok Land SPA, Amanjaya Land SPA and/ or SP Land SPA, as the case may be, at the redemption price subject to the salient terms of the Consideration RPS as set out in Appendix II of this Announcement and in accordance with the provisions of the Act by using the RPS Redemption Sum; and/ or in respect of the Mukim 12 Land SPA, to cancel the Consideration Shares in accordance with the procedures set out under Section 115 of the Act, and (b) return to the Vendor all documents which the Vendor may have delivered to the Purchaser or the Purchaser s solicitors or the Purchaser s financier s solicitors (as the case may be) pursuant to the provisions of the respective SPAs with the interest of the Vendor in the respective Lands remaining intact, save and except for any encumbrances created by any third party and provided that if the memorandum of transfer has been stamped with the adjudicated stamp duty, the Purchaser shall be entitled to retain the same for cancellation and refund of the adjudicated stamp duty paid; and (iii) subject to the refund as stated under Section (2) above:- (a) (b) the Vendor shall be discharged from any further obligation to the Purchaser under the respective SPAs; and whereupon, the Vendor shall be entitled to deal with or otherwise dispose of the respective Lands at such price, in such manner and upon such terms as the Vendor sees fit as if the respective SPAs had not been entered into between the Vendor and the Purchaser. 10

11 2.1.9 Liabilities to be assumed by OIB There is no liability, including any contingent liability and guarantee, to be assumed by OIB pursuant to the Proposed Acquisitions Original costs and dates of investment to the Vendors The original costs and dates of investment to the Vendors of the respective Lands are as follows:- Lands Vendors Dates of investment Original costs of investment (RM 000) Ijok Land Advance Return 22 June , Amanjaya Land Seloka Setia 16 March , SP Land Impian Seloka 16 February , February 2007 Mukim 12 Land ETOS Wangsa 17 March , Total 37, Estimated additional financial commitment Save for the Purchase Consideration, the bank borrowings amounting to RM50.00 million, the redemption sum for the Consideration RPS on/ before the Maturity Date (as defined herein) and undertaken by OIB (K) and the future development costs on the Lands, the exact quantum of which has yet to be determined at this juncture, the Board does not foresee any additional financial commitment arising from the Proposed Acquisitions. 2.2 Proposed Amendment The Proposed Amendment entails the consequential amendment to the Constitution of OIB to facilitate the issuance of the Consideration RPS as a new class of securities pursuant to the Proposed Acquisitions. 3. INFORMATION ON THE VENDORS 3.1 Information on Advance Return Advance Return is a company incorporated in Malaysia on 25 April 2007 as a private limited company. The principal activity of Advance Return is investment holding. As at 12 May 2017, being the latest practicable date ( LPD ), the total issued share capital of Advance Return is RM6 comprising six (6) shares in Advance Return and the directors of Advance Return are Tan Ah Bah, Low Ping Kun and Low Kok Horng. As at LPD, the substantial shareholders and their shareholdings in Advance Return are as follows:- Substantial shareholders Direct Indirect No. of shares % No. of shares % Ripro Kemboja Jati Sdn Bhd ( Kemboja Jati ) LLSB Tan Chang Tok Sdn Bhd ( TCTSB ) Famivest Sdn Bhd ( Famivest )

12 Substantial shareholders Direct Indirect No. of shares % No. of shares % LLS & Sons Sdn Bhd ( LLS & Sons ) Low Keong Koon Sdn Bhd ( LKKSB ) Low Ping Kun Sdn Bhd ( LPKSB ) Low Keong Koon Low Ping Kun Tan Poh Sim Note:- Deemed interested pursuant to Section 8(4) of the Companies Act, 2016 ( Act ). 3.2 Information on Seloka Setia Seloka Setia is a company incorporated in Malaysia on 8 February 2005 as a private limited company and is a wholly-owned subsidiary of Ripro. The principal activity of Seloka Setia is property development. As at LPD, the total issued share capital of Seloka Setia is RM3 comprising three (3) shares in Seloka Setia and the directors of Seloka Setia are Low Ping Kun, Low Kok Aun, Low Keong Koon, Low Kok Teng, Low Kok Horng and Tan Ah Bah. Further details on the substantial shareholders of Ripro are as set out in the table under Section 3.1 of this Announcement. 3.3 Information on Impian Seloka Impian Seloka is a company incorporated in Malaysia on 22 February 2005 as a private limited company and is a wholly-owned subsidiary of Ripro. The principal activity of Seloka Setia is rubber and palm oil estate operators. As at LPD, the total issued share capital of Impian Seloka is RM5,000 comprising 5,000 shares in Impian Seloka and the directors of Impian Seloka are Low Ping Kun, Low Kok Aun, Low Keong Koon, Low Kok Teng, Low Kok Horng and Tan Ah Bah. Further details on the substantial shareholders of Ripro are as set out in the table under Section 3.1 of this Announcement. 3.4 Information on ETOS Wangsa ETOS Wangsa is a company incorporated in Malaysia on 9 January 2007 as a private limited company and is a wholly-owned subsidiary of LLSB. The principal activity of ETOS Wangsa is property and investment holding. As at LPD, the total issued share capital of ETOS Wangsa is RM120 comprising 120 shares in ETOS Wangsa and the directors of ETOS Wangsa are Low Ping Kun, Low Kok Aun, Low Keong Koon, Low Kok Kean and Low Kok Shen. 12

13 As at LPD, the substantial shareholders and their shareholdings in ETOS Wangsa are as follows:- Substantial shareholders Direct Indirect No. of shares % No. of shares % LLSB LLS & Sons LKKSB LPKSB Low Keong Koon Low Ping Kun Tan Poh Sim Note:- Deemed interested pursuant to Section 8(4) of the Act. 4. INFORMATION AND PROSPECTS OF THE LANDS 4.1 Ijok Land The Ijok Land is strategically located within the up and coming North-West Klang Valley corridor, approximately 51.3 kilometres due north-west of Kuala Lumpur City Centre, 40.0 kilometres due north-west of Petaling Jaya town centre and approximately 18.0 kilometres due north-west of Sungai Buloh town centre. It is accessible from Kuala Lumpur City Centre via Jalan Duta or the Lebuhraya Kuala Lumpur Kuala Selangor. Despite comprising oil palm estates, small agricultural holdings and small cottage industries, signs of development are apparent on the southern flank whereby agricultural lands have been cleared and terrains levelled. The Ijok Land is part of the up and coming North-West Klang Valley development comprising Shah Alam 2, Alam Perdana, Alam Jaya, Desa Coalfield, Bandar Saujana Utama and Bandar Baru Puncak Alam. Further, the Ijok Land is well connected to established suburban centres such as Kota Damansara, Shah Alam and Sungai Buloh via major roads. This accessibility is further enhanced by the announcement of new proposed highways including Damansara Shah Alam Elevated Highway and West Coast Expressway. Given its strategic location, the Board is confident that the development of the Ijok Land will be well received and as such, will contribute positively to the future earnings of OIB and its subsidiaries ( Group or the OIB Group ). 4.2 Amanjaya Land The Amanjaya Land is situated approximately 7.0 kilometres north-east of Bandar Amanjaya town centre and approximately 8.0 kilometres from Sungai Petani Expressway Toll Plaza. The properties located near the Amanjaya Land are mainly developed with residential, commercial and industrial properties. Completed developments comprise shop offices, detached houses, semi-detached houses, terrace houses and apartments. Among the nearby housing developments are Ambangan Heights, Taman Bandar Baru Sungai Lalang, Taman Bayu Indah, Taman Sri Bayu and Taman Gemilang. The Amanjaya Land s prospects are enhanced due to the developed surroundings, which include residential, commercial and industrial developments. As such, the Board is confident that development of the Amanjaya Land will be well-received and contribute positively to the future earnings of the Group. 13

14 4.3 SP Land The SP Land is situated approximately 7.0 kilometres north-east of Bandar Amanjaya town centre and about 8.0 kilometres from Sungai Petani Expressway Toll Plaza (Northern exit). The SP Land is also located approximately 1.5 kilometres from the Amanjaya Land. Properties located near the SP Land are mainly residential, commercial and industrial properties and completed developments comprise shop offices, detached houses, semi-detached houses, terrace houses and low cost flats. Among the nearby housing developments are Ambangan Heights, Taman Bandar Baru Sungai Lalang, Taman Bayu Indah, Taman Sri Bayu and Taman Gemilang. Similar to the Amanjaya Land, the SP Land s prospects are enhanced due to the developed surroundings, which include residential, commercial and industrial developments. As such, the Board is confident that any development on the SP Land would similarly be well-received and contribute positively to the earnings of the Group. 4.4 Mukim 12 Land The Mukim 12 Land fronts the south-eastern and southern side of Changkat Sungai Ara 2/A, Bayan Lepas, Pulau Pinang. It is located approximately 1.5 kilometres to the west and 6.0 kilometres to the south of the Relau and Bayan Lepas towns respectively. The Mukim 12 Land is surrounded mainly by developed single, two (2) to three (3)-storey terrace houses, semi-detached and detached houses, flats and apartment blocks and two (2) to three (3)-storey shophouses. Other prominent landmarks within the vicinity include the Jabatan Pendaftaran Negara, INTI International College Penang, Penang Golf Club, Equatorial Hotel and SPICE Arena. The Board is of the opinion that the prospects of the Mukim 12 Land are bright given that commercial, retail, educational and public facilities are available in the locality. Further information on the Lands are as set out in Appendix I. 5. RATIONALE OF THE PROPOSALS 5.1 Proposed Acquisitions The Proposed Acquisitions are in line with the OIB Group s strategy to continuously replenish and expand its existing land bank in strategic locations. As at LPD, the total land bank held by the Group for development stood at approximately acres. Further, the Proposed Acquisitions will enable the Group to scale up its property development activities in locations with strong growth potential. The increasing economic activities in the surrounding areas are expected to provide a good base of potential buyers for future development of the Lands. In light of the prospects of the Lands (as set out in Section 4 of this Announcement), the Company expects that the Proposed Acquisitions will enable the Group to benefit from the future sale of the Group s properties to be developed on each of the Lands. 5.2 Proposed Amendment The Proposed Amendment is to facilitate the issuance of the Consideration RPS. 14

15 6. RISK FACTORS Saved as disclosed below, the Board is not aware of any other risk factor arising from the Proposals which could materially affect the business, operating results and financial condition of the Company. 6.1 Non-completion risk The completion of the Proposed Acquisitions is subject to, among others, the fulfilment of the terms and conditions of the SPAs as well as the Conditions Precedent, by the relevant parties. However, there is no assurance that all the terms and conditions and Conditions Precedent can be fulfilled by the parties to the SPAs within the time frame as set out in the SPAs or that the Proposed Acquisitions will not be exposed to risks such as the inability to comply with the conditions imposed by the relevant authorities. In such event, the Proposed Acquisitions may be delayed or terminated and all the potential benefits arising therefrom may not materialise. In this regard, OIB s plans to develop the Lands may be affected. Nevertheless, the Board will take all reasonable steps to ensure that all the terms and conditions and Conditions Precedent of the SPAs are met within the stipulated timeframe and that every effort is taken to obtain the necessary approvals to complete the Proposed Acquisitions in a timely manner. 6.2 Business risk The future development of the Lands is subject to risks inherent in the property development industry which OIB is already involved in. Such risks may include, adverse changes in real estate market prices, changes in demand for types of residential, commercial and industrial properties, competition from other property developers, changes in economic, social and political conditions, delay in completion of property development projects against the scheduled completion, performance of third-party subcontractors, labour and material supply shortages, fluctuations in the prices of building materials and costs of labour charges, increase in real property gains tax and adverse changes in property tax assessments and other statutory charges. Any adverse change in such conditions may have an adverse material effect on the Company. 6.3 Funding and interest rate risk As set out in Section of this Announcement, the Company intends to fund the balance cash consideration for the Proposed Acquisitions amounting to RM50.0 million via bank borrowings. Further, the Company will be required to redeem all of the outstanding Consideration RPS within seven (7) years from the date of issuance. Further, the Company may be required to source for alternative sources of funding for the redemption of the Consideration RPS. There can be no assurance that the anticipated benefits of the Proposed Acquisitions will be realised within the expected timeframe or that the OIB Group will be able to generate desired returns from the future development of the Lands to repay the bank borrowings. In the event of delay in receipt or absence of the anticipated benefits, the Group s repayment of such borrowings could be delayed and this will result in higher borrowing costs. Further the Company may be required to source for alternative sources of funding for the redemption of the Consideration RPS. This may adversely affect the Group s future results of operations and financial performance. In order to mitigate this risk, the Company will continuously monitor the progress of development works of the Lands and keep abreast with developments relating to the property development market. 15

16 6.4 Compulsory acquisition by the Government Pursuant to the Land Acquisition Act, 1960 ( Land Act ), the Government has the power to compulsorily acquire any land, whether in whole or in part, in Malaysia. In the event of any compulsory acquisition of any of the Lands, the compensation to be awarded shall be computed on the basis as prescribed in the First Schedule of the Land Act. There can be no assurance that such compensation will be equal or greater than the Purchase Consideration. However, in the event of compulsory acquisition by the Government, the SPAs provide that OIB (K) may elect to discontinue with the Proposed Acquisitions in the event the balance purchase consideration has not been paid, whereby, in such event, the Vendors are to refund the Deposit and any other sum paid towards the Purchase Consideration, free of interest, provided that OIB (K) has at its own cost removed the private caveat, charge, or any encumbrances which has been presented by or on behalf of OIB (K) for registration against any of the Lands, if applicable and OIB (K) shall then return the documents delivered to them by the Vendors. 6.5 Non-registration of memorandum of transfer in favour of individual purchasers Pursuant to the terms of the SPAs, OIB (K) may elect for Transfer to Purchaser or Direct Transfer to End Purchasers. In the event OIB (K) elects for the Direct Transfer to End Purchasers, there may be instances where the memorandum of transfer may fail to be registered due to reasons beyond the control of OIB (K). In the event of such failure, there can be no assurance that the individual purchasers will not seek compensation against OIB (K), being the developer of the Lands. In the event of non-registration of memorandum of transfer, the SPAs allow OIB (K) the option to unwind the sale and purchase transactions under the SPAs or any of the SPAs. Nevertheless, as the process of registration of memorandum of transfers is usually administrative in nature, the Company shall endeavor to minimise such risks by taking the necessary steps presently within its control and continuously monitoring for any changes in regulations of the land authorities. 6.6 Flooding risk for Ijok Land The Independent Valuer, had, vide its Valuation Report observed that the platform level of the Ijok Land ranges between an approximate 6.0 metres to 9.8 metres above sea level and the proximity of the Sungai Buloh river and the low and uneven terrain may expose the Ijok Land to potential flooding. In order to prevent such occurrence, the Jabatan Pengairan dan Saliran Daerah Kuala Selangor ( JPS ) has recommended that the said platform level be raised to 11.0 metres to be at par with its neighbouring development and a retention pond be built. The Independent Valuer has estimated that the costs to raise the platform level by approximately two (2) metres, on average, will be approximately RM6.03 million and such costs will comprise of soil cost and compaction. In managing this risk, OIB (K) shall take into consideration JPS recommendation in developing the Ijok Land. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 16

17 7. EFFECTS OF THE PROPOSALS The Proposed Amendment will not have any effect on the total issued share capital, substantial shareholders shareholdings, net assets ( NA ) per Share, gearing, earnings and earnings per share ( EPS ) of OIB. The pro forma financial effects of the Proposed Acquisitions are set out in the ensuing sections. 7.1 Total issued share capital For illustrative purposes only, the pro forma effects of the Proposed Acquisitions on the total issued share capital of OIB are as set out below:- No. of OIB Shares RM ( 000) ( 000) Total issued share capital as at LPD 144, ,872 To be issued pursuant to the Proposed Acquisitions 9,986 24,966 Enlarged issued share capital 154, ,838 THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 17

18 7.2 Substantial shareholders shareholdings The issuance of Consideration RPS will not have any effect on the substantial shareholders shareholding of OIB as they are not convertible into OIB Shares and will be fully redeemed upon maturity. Based on the Register of Substantial Shareholders of OIB as at LPD, the pro forma effects of the Proposed Acquisitions on the ordinary shareholdings of the substantial shareholders of OIB are as follows:- (I) As at LPD After the Proposed Acquisitions < Direct > < Indirect > < Direct > < Indirect > Substantial shareholders No. of Shares % No. of Shares % No. of Shares % No. of Shares % Jupiter Sunrise Sdn Bhd ( Jupiter Sunrise ) 85,030, ,030, TCTSB 11,779, ,779, Goh Say Seah Realty Sdn Bhd 8,087, ,087, Famivest ,030, ,030, Low Ping Kun ,030, ,030, LLSB ,030, ,026, ,030, LLS & Sons ,030, ,056, LKKSB ,030, ,056, LPKSB ,030, ,056, Low Keong Koon ,030, ,056, Tan Poh Sim ,030, ,056, Tan Eian Hoe ,779, ,779, Tan Swee Huat Sdn Bhd ,779, ,779, Tan Ean Poe ,779, ,779,

19 (I) As at LPD After the Proposed Acquisitions < Direct > < Indirect > < Direct > < Indirect > Substantial shareholders No. of Shares % No. of Shares % No. of Shares % No. of Shares % Tan Yen Sooh ,779, ,779, Tan Swee Bee Sdn Bhd ,779, ,779, Tan Yen Tong ,779, ,779, Tan Yean Sim ,779, ,779, HSPS Holdings Sdn Bhd ,779, ,779, Tan Ean Pin ,779, ,779, Tan Ean See ,779, ,779, Tan Ean Hoon ,779, ,779, Tan Chung Yi ,779, ,779, Goh Say Goh Say Seak - - 8,087, ,087, Note:- Deemed interested pursuant to Section 8(4) of the Act. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 19

20 7.3 NA per Share and gearing The pro forma effects of the Proposed Acquisitions on the consolidated NA and gearing of OIB based on the latest audited consolidated statement of financial position of OIB as at the financial year ended ( FYE ) 30 June 2016 and on the assumption that the Proposals are completed on 30 June 2017, are as follows:- (I) (II) Audited as at 30 June 2016 After the Proposed Acquisitions After (I) and assuming full redemption of the Consideration RPS RM 000 RM 000 RM 000 Share capital 144, , ,838 Fair value reserves Revaluation reserves 9,385 9,385 9,385 Retained earnings 159, , ,842 NA/Shareholders funds 314, , ,092 Number of OIB Shares ( 000) 144, , ,858 NA per OIB Share (RM) (iii) Interest-bearing borrowings (RM 000) 83, ,050 (v) 133,250 (vi) Gearing (times) (iv) Notes:- (iii) (iv) (v) (vi) Although the Consideration Shares will be issued at RM2.50 per Consideration Share, the Financial Reporting Standard 2 (revised) requires the recognition of the fair value of the Consideration Shares to be based on the traded price of the Consideration Shares as at the Completion Date. Includes other incidental expenses in relation to the Proposals amounting to approximately RM1.0 million, which includes advisory fees, regulatory fees, expenses to convene the extraordinary general meeting ( EGM ), printing of the circular to shareholders of OIB ( Circular ), despatch of the Circular and advertising expenses as well as other miscellaneous expenses (inclusive of GST). Calculated based on NA over number of OIB Shares. Calculated based on total interest-bearing borrowings over NA. After taking into consideration the present value of total coupon payments to be paid on the Consideration RPS and the present value of the Consideration RPS of approximately RM11.48 milion and RM36.32 million respectively (discounted based on the coupon rate of 4.0%), and bank borrowings of RM50.00 million. Upon redemption of the Consideration RPS of approximately RM47.80 million. 7.4 Earnings and EPS The Proposed Acquisitions are not expected to have any material effect on the earnings and EPS of the Group for the financial year ending 30 June 2017 as the Proposed Acquisitions are expected to be completed in the fourth (4 th ) quarter of Notwithstanding the future prospects arising from the development of the Lands, annual coupon payments for the Consideration RPS will reduce the consolidated earnings and EPS of OIB. Further, the consolidated EPS of OIB is expected to be diluted as a result of the increase in the number of OIB Shares in issue pursuant to the issuance of the Consideration Shares although the potential impact of dilution in future earnings and EPS of the Group would be offset by the contributions generated from the development of the Lands and the subsequent sale of the properties. For information purposes, the actual interest incurred (in relation to the bank borrowings to fund the Proposed Ijok Land Acquisition, Proposed Amanjaya Land Acquisition and Proposed SP Land Acquisition) up to the commencement of development works for the Lands will be capitalised in the Group s Statement of Financial Position. 20