S P SETIA BERHAD ("S P SETIA")

Transcription

1 S P SETIA BERHAD ("S P SETIA") PROPOSED ACQUISITION BY SETIA ECO VILLA SDN BHD, A SUBSIDIARY OF S P SETIA, OF A PARCEL OF LAND IN CYBERJAYA MEASURING APPROXIMATELY ACRES ("SAID LAND") FROM CYBERVIEW SDN BHD AND SETIA HARUMAN SDN BHD FOR A TOTAL PURCHASE CONSIDERATION OF RM420,439, INTRODUCTION The Board of Directors of S P Setia ( Board ) wishes to announce that on 2 March 2011, Setia Eco Villa Sdn Bhd ( Setia Eco Villa or Purchaser ), a subsidiary of S P Setia, has entered into a conditional sale and purchase agreement ( SPA ) with Cyberview Sdn Bhd ( Cyberview or Proprietor ) and Setia Haruman Sdn Bhd ( Setia Haruman or Vendor ) for the proposed purchase of a piece of freehold land within the Cyberjaya Flagship Zone ( CFZ Area ) measuring approximately acres for a purchase consideration of RM420,439, ( Purchase Consideration ) or RM36 per square foot. ( Proposed Acquisition ) 2. INFORMATION ON SETIA ECO VILLA Setia Eco Villa was incorporated in Malaysia as a private limited company under the Companies Act, 1965 on 29 March The present authorised share capital is RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 10 shares are issued and fully paid up. Setia Eco Villa will be a joint-venture company for the purpose of acquiring the Said Land from the Vendor for a mixed residential and commercial development on a joint venture basis. S P Setia and Setia Haruman are respectively the owners of 70% and 30% of the issued and paid-up ordinary shares of Setia Eco Villa. 3. INFORMATION ON CYBERVIEW Cyberview is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 10 October The present authorised share capital is RM2,000,000,001 comprising 2,000,000,000 ordinary shares of RM1.00 each and 1 special share of RM1.00, of which 332,500,000 ordinary shares and 1 special share have been issued and fully paidup. Cyberview is a subsidiary of Minister of Finance (Incorporated) and is the landowner of the land in the CFZ Area. The principal activities of Cyberview are that of monitoring and ensuring the proper implementation of the CFZ Area development undertaken by the main developer, Setia Haruman. Cyberview also acquires land for the purpose of property investment and property development.

2 4. INFORMATION ON SETIA HARUMAN Setia Haruman is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 28 March The present authorised share capital is RM1,005,000,000 comprising 1,000,000,000 ordinary shares of RM1.00 each and 5,000,000 preference shares of RM1.00 each, of which 6,000,000 ordinary shares have been issued and fully paid-up. Setia Haruman is the master developer of the CFZ Area and its principal activities are property development, project development and sale of land. Its role includes planning, designing and preparing primary infrastructure for the CFZ Area, and subsequently selling parcels of land to sub-developers and individual purchasers. 5. INFORMATION ON THE SAID LAND The Said Land is pending alienation to the Proprietor and by reason thereof, the separate document of title to the Said Land has yet to be issued by the relevant authority as at the date of the SPA. The Said Land is strategically located within the CFZ Area and is highly accessible and well connected by a network of highways including the North-South Expressway, the Damansara-Puchong Expressway and the MAJU Expressway, which has considerably shortened the travel time between Kuala Lumpur and Cyberjaya to approximately 20 minutes. In addition, the Said Land is within easy reach of Multimedia University, Lim Kok Wing University College of Creative Technology, Cyberjaya University College of Medical Science, Hospital Putrajaya, Hospital Serdang, Century Square office blocks, the Multimedia Development Corporation Headquarters, Putrajaya Marriot Hotel, Cyberview Lodge Resort and Spa, Cyberpark and the Street Mall. The Purchaser proposes to undertake a mid to high-end gated and guarded development comprising mainly semi-detached homes, bungalows and commercial developments on the Said Land ( Proposed Project ). Based on the preliminary feasibility study and layout plan, which is subject to the approval of the relevant authorities, the Proposed Project is expected to have an estimated gross development value of approximately RM3 billion. The Proposed Project is expected to commence in financial year 2012 and span a development period of approximately 6 years. Please refer to the attached map for location details of the Said Land. 6. DETAILS OF THE PROPOSED ACQUISITION 6.1. Salient Terms of the Proposed Acquisition Basis of Consideration The Purchase Consideration of RM420,439, was calculated at the rate of RM36 per square foot on the basis of the category of land use of the Said Land

3 being building ; free from all encumbrances; and with vacant possession upon all the terms and subject to all the conditions contained in the SPA. The Purchase Consideration was arrived at on a willing-buyer willing-seller basis after taking into consideration the development potential, and the absence of low and medium costs development requirement on the Said Land S P Setia is unable to disclose the net book value of the Said Land as it is not privy to such information Conditions Precedent and Estimated Time Frame for Completion The Proposed Acquisition is conditional upon the fulfillment of inter-alia, the following conditions precedent (collectively, "Conditions Precedent"):- (i) (ii) (iii) (iv) within 1 month from the date of the SPA, S P Setia, Setia Haruman and the Company entering into a Subscription and Shareholders Agreement ( SSA ). The SSA will set out the terms and conditions upon which the Parties agree to enter into the joint venture and their participation in the Company, to enable the Company to acquire the Said Land to be developed as a mixed residential and commercial development; within 12 months from the date of the SPA, the Purchaser obtaining the approval of the Economic Planning Unit of the Prime Minister s Department of Malaysia; within 12 months from the date of the SPA, the Vendor obtaining the Title Deed from the relevant authorities; and within 12 months from the date of the SPA, the approval of the State Authority of Selangor being obtained by the Vendor, for the transfer of the Said Land in favour of the Purchaser. The SPA shall become unconditional on the date on which the last of the Conditions Precedent has been duly fulfilled ( Unconditional Date ) Payment of Purchase Consideration The Purchase Consideration will be satisfied wholly in cash by the Purchaser from internal funds and/or external borrowings in the following manner:- (i) (ii) deposit amounting to RM42,043, representing 10% of the Purchase Consideration upon the execution of the SPA; and the balance of the Purchase Consideration of RM378,395, representing 90% of the Purchase Consideration payable within a period of 3 months from the Unconditional Date.

4 6.2. Liabilities to be Assumed There are no liabilities including contingent liabilities and guarantees to be assumed by S P Setia arising from the Proposed Acquisition Completion of the Proposed Acquisition Barring unforeseen circumstances and subject to the fulfillment of the Conditions Precedent, the Proposed Acquisition is expected to be completed during the financial year ending 31 October ECONOMIC OUTLOOK AND PROSPECTS The Malaysian economy registered a growth of 4.8% in the fourth quarter of Higher private and public sector spending contributed to the expansion in domestic demand. For the year as a whole, the Malaysian economy registered a growth of 7.2% (2009: -1.7%). Financing conditions remained supportive of economic activity. The demand for financing from both the public and private sectors was supported by continued access to financing, the reasonably low cost of borrowing and ample liquidity in the financial system. Private consumption spending will continue to benefit from the favourable labour market conditions, firm commodity prices and access to financing. The roll-out of construction and infrastructure activities and the implementation of the economic transformation programme by the Government are likely to provide significant support to the growth momentum in private investment. Cyberjaya, MSC Malaysia s pioneer and premier cybercity, is poised to bring development-centric initiatives to fruition in line with the recently announced Budget 2011, championing the Government s vision for Cyberjaya as the nation s foremost centre for international and local ICT, multimedia and shared-services outsourcing investments and operations. Since its inception as Malaysia s own Silicon Valley, Cyberjaya has become host to more than 500 companies including global multinationals such as HP, Dell, Fujitsu, Motorola, AMD, DHL, KPMG, HSBC, Nokia, Shell, BMW and Ericsson all of which have set up regional and global centres in the cybercity. Sources:- Bank Negara Malaysia, Press Release dated 18 February 2011 SME & Entrepreneurship Magazine, 3 November 2010 In light of these factors, the management of S P Setia is of the view that the prospects for the proposed development are positive and is not aware of any risks factors arising from the Proposed Acquisition other than the normal market and global economic risks. 8. RATIONALE FOR THE PROPOSED ACQUISITION AND PROPOSED PROJECT S P Setia s successful eco-themed development, Setia Eco Park has garnered tremendous recognition over the past few years, most notably prestigious wins of the Best Master Plan Development award in Malaysia in 2006 and the International Prix d Excellence award accorded by the Federation of International Real Estate ( FIABCI ) for the World s Best

5 Master Plan Development in Recently, Setia Eco Park was again recognized and rewarded for successfully translating and bringing its award-winning master plan to fruition by winning FIABCI Malaysia s Best Residential Development (Low-Rise) Category in The widely-recognised success and popularity of Setia Eco Park has led to significant price appreciation of its properties in the secondary market and record-setting pricing benchmarks in the primary market. As an example, a semi-detached house in Setia Eco Park which originally transacted for approximately RM600,000 in 2005 is now changing hands for more than RM1.2 million in the secondary market. Similarly the starting price for recently launched semi-detached houses in this green enclave is approximately RM2 million a 20% increase from the previous starting price benchmark set less than a year ago. There is therefore very clear and present demand for properties in ecologically attuned enclaves in the Klang Valley. The Proposed Acquisition allows S P Setia to tap onto this demand by offering products with Setia Eco Park s proven award-winning DNA in a new and upcoming Klang Valley location. The Proposed Project will be designed and developed to blend seamlessly with the natural topography of the Said Land with flowing creeks, lush greeneries, green parks, extensive landscaping and streetscapes. In view of the above, the Proposed Acquisition is expected to contribute positively to the earnings and cash flow of S P Setia in the future. 9. EFFECTS OF THE PROPOSED ACQUISITION 9.1. Share Capital and Major Shareholders The Proposed Acquisition which will be satisfied entirely in cash will not have any effect on the share capital and major shareholders of S P Setia Earnings and Net Assets ("NA") The Proposed Acquisition is not expected to have any material effect on the S P Setia Group's earnings and NA for the financial year ending 31 October However, the Proposed Acquisition is expected to contribute positively to the future earnings and NA of S P Setia Gearing The Proposed Acquisition will not have a material effect on the gearing of S P Setia for the financial year ending 31 October PERCENTAGE RATIOS Based on S P Setia's audited financial statements for financial year ended 31 October 2010, the highest percentage ratio under paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 13.44%.

6 11. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST None of the Directors or Substantial Shareholders of S P Setia or persons connected to them has any interest, direct or indirect, in the Proposed Acquisition. 12. DIRECTORS STATEMENT The Board after having considered all aspects of the Proposed Acquisition is of the opinion that it is in the best interest of S P Setia. 13. APPROVALS REQUIRED The Proposed Acquisition is not subject to the approval of the shareholders of S P Setia but is subject to the relevant authorities' approvals as set under Section 6 herein. 14. DOCUMENT FOR INSPECTION A copy of the SPA may be inspected at the registered office of S P Setia at Plaza 138, Suite 18.03, 18th Floor, 138 Jalan Ampang, Kuala Lumpur during normal office hours on Mondays to Fridays (except public holidays) for a period of 14 days from the date of this announcement. This announcement is dated 2 March 2011.

7 Location Details of Said Land - Major Highway Linkages

8 Location Details of Said Land Major Roads within Cyberjaya