CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED ACQUISITION OF:-

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, and make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. Shareholders should rely on their own evaluation to assess the merits and risks of the proposal as set out herein. CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED ACQUISITION OF:- 1. TWO (2) PARCELS OF DEVELOPMENT LANDS LOCATED ALONG THE PARTLY COMPLETED JALAN BUKIT KUKUS IN THE LOCALITY OF PAYA TERUBONG, PULAU PINANG KNOWN AS LOT NOS 9813, 9814 & 9815 HELD UNDER GRANT NOS , & (PARCEL A) AND LOT NOS 9816 & 9817 HELD UNDER GRANT NOS & (PARCEL B) MUKIM 13, DAERAH TIMOR LAUT, PULAU PINANG 2. THREE (3) ABANDONED PROJECTS KNOWN AS PHASES 2A, 2B and 3A WITHIN TAMAN TERUBONG INDAH, PAYA TERUBONG, PULAU PINANG ERECTED ON LOT NOS (Plot 4), 9812 (Plot 5) & 9819 (Plot 12) RESPECTIVELY, HELD UNDER GRANT NOS , & 58467, ALL OF MUKIM 13, DAERAH TIMOR LAUT, PULAU PINANG BY PLB LAND SDN. BHD. ( PLB LAND ), A WHOLLY-OWNED SUBSIDIARY OF PLB ENGINEERING BERHAD ( PLB ) FROM MAJESTIC HEIGHTS SDN BHD (IN LIQUIDATION) FOR A TOTAL CASH CONSIDERATION OF RM29,000, AND RM3.00 RESPECTIVELY ("PROPOSED ACQUISITION") AND NOTICE OF EXTRAORDINARY GENERAL MEETING The Notice of the Extraordinary General Meeting ( EGM ) of PLB Engineering Berhad to be held at PLB Engineering Berhad, 3rd Floor, Training Room, 1320, Jalan Baru, Taman Chai Leng, Prai, Penang on Friday, 7 December 2012 at a.m. or at any adjournment thereof, together with the Form of Proxy are enclosed in this Circular. If you are unable to attend and vote in person at the EGM, you may complete the Form of Proxy in accordance with the instructions thereon and deposit it at our Company s registered office at A Menara BHL Bank, Jalan Sultan Ahmad Shah, Penang not later than forty-eight (48) hours before the stipulated date and time for holding the EGM or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last date and time for lodging the Form of Proxy : Wednesday, 5 December 2012 at a.m. Date and time of the Extraordinary General Meeting : Friday, 7 December 2012 at a.m. This Circular is dated 22 November 2012

2 DEFINITIONS Act : The Companies Act, 1965, as amended from time to time and any re-enactment and regulation issued thereof Agreements : the Agreements dated 30 April 2012 in respect of the purchase of the Vacant Lands and Project Lands Board : Board of Directors of PLB Bursa Securities : Bursa Malaysia Securities Berhad ( W) Circular : This Circular to Shareholders of PLB dated 22 November 2012 in relation to the Proposed Acquisition Charge / Existing Charge : the charge created over the Vacant Lands and the Project Lands under the National Land Code 1965 by Majestic Heights to MBSB as collateral for a loan granted by MBSB to Majestic Heights Director(s) : Shall have the meaning given in Section 2(1) of the Capital Market and Services Act, 2007 and includes in the case of an issuer of structured warrants or a listed issuer which is a collective investment scheme, a director of the issuer of the structured warrants or a director of a management company of the collective investment scheme respectively. EGM or the Meeting : Extraordinary General Meeting EPS : Earnings Per Share FYE : Financial year ended/financial year ending KGV or the Valuer : KGV International Consultants (Pg) Sdn Bhd ( K), an independent firm of professional valuers registered with The Board of Valuers, Appraisers and Estate Agents Malaysia Lands : Both Vacant Lands and Project Lands LPD : 9 November 2012, being the latest practical date prior to the dispatch of this Circular LR : The Main Market Listing Requirements of Bursa Securities including any amendment thereto that may be made from time to time. Majestic Heights or the Vendor : Majestic Heights Sdn Bhd (Company No X) (In Liquidation) a company incorporated with limited liability under the laws of Malaysia and in liquidation acting by and through its Liquidators Mak Kum Choon (NRIC No ) and Ng Meng Kwai (NRIC No ) 2

3 DEFINITIONS (CONT D) Major Shareholder : Includes a person who has an interest or interests in one or more voting shares in a corporation and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is equal to or more than 10% of the aggregate of the nominal amounts of all the voting shares in the corporation or equal to or more than 5% of the aggregate of the nominal amounts of all the voting shares in the corporation where such person is the largest shareholder of the company. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Companies Act A major shareholder includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a major shareholder of the listed issuer or any other corporation which is its subsidiary or holding company. MBSB or Chargee : Malaysia Building Society Bhd, a local financial institution to which the Lands are currently charged to NA : Net Assets NTA : Net Tangible Assets PLB or the Company : PLB Engineering Berhad ( X) PLB Group or the Group : PLB, its subsidiary companies and associated companies, collectively PLB Land or the Purchaser : PLB Land Sdn. Bhd. ( H), a wholly-owned subsidiary of PLB Project Lands : Three (3) abandoned projects knows as Phases 2A, 2B and 3A within Taman Terubong Indah, Paya Terubong, Pulau Pinang erected on Lot Nos (Plot 4), 9812 (Plot 5) & 9819 (Plot 12) respectively held under Grant Nos , & 58467, all of Mukim13, Daerah Timor Laut, Pulau Pinang with an area measuring approximately acres Project Lands Agreement the Agreement dated 30 April 2012 in respect of the purchase of the Project Lands Proposed Acquisition : Proposed acquisition of the Vacant Lands and the Project Lands Purchase Price : Total Cash consideration of RM29,000, in respect of the Proposed Acquisition 3

4 DEFINITIONS (CONT D) Registered Proprietor : Majestic Heights Sdn Bhd (Company No X) (In Liquidation) a company incorporated with limited liability under the laws of Malaysia and in liquidation acting by and through its Liquidators Mak Kum Choon (NRIC No ) and Ng Meng Kwai (NRIC No ) RM and sen : Ringgit Malaysia and Sen respectively SC : Securities Commission SPA : The Sale and Purchase Agreement dated 14 September 2011 entered into between PLB Land and Majestic Heights Share(s) : Ordinary share(s) of RM1.00 each in PLB Vacant Lands : Two (2) parcels of development lands located along the partly completed Jalan Bukit Kukus in the locality of Paya Terubong, Pulau Pinang known as Lot Nos 9813, 9814 & 9815 held under Grant Nos , & (Parcel A) and Lot Nos 9816 & 9817 held under Grant Nos & (Parcel B) Mukim 13, Daerah Timor Laut, Pulau Pinang with an area measuring approximately acres Vacant Lands Agreement : the Agreement dated 30 April 2012 in respect of the purchase of the Vacant Lands Valuation Report : The valuation report in respect of the Lands prepared by the Valuer dated 30 May 2012 For the purpose of this Circular, reference to time relates to Malaysian standard time. In this Circular, words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine gender and vice versa. Reference to persons shall, where applicable, include corporations. 4

5 TABLE OF CONTENTS Letter from the Board of Directors to the Shareholders of PLB containing:- 1. INTRODUCTION 7 2. DETAILS OF THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 3. RATIONALE FOR THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 4. INDEPENDENT VALUER S VALUATION OF THE PROPERTIES PROSPECTS OF THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 6. RISK FACTORS FINANCIAL EFFECTS OF THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 8. TENTATIVE TIMETABLE APPROVAL REQUIRED OUTSTANDING CORPORATE EXERCISE DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS AND/OR PERSONS CONNECTED TO DIRECTORS AND/OR MAJOR SHAREHOLDERS 12. DIRECTORS RECOMMENDATION EXTRAORDINARY GENERAL MEETING FURTHER INFORMATION 31 PAGE APPENDIX I INFORMATION ON THE PROJECT LANDS, VACANT LANDS AND FIRST PURCHASED LANDS II VALUATION CERTIFICATE 40 III FURTHER INFORMATION 56 IV LOCATION MAP NOTICE OF EXTRAORDINARY GENERAL MEETING... FORM OF PROXY... ENCLOSED ENCLOSED 5

6 Registered Office: A, Menara BHL Bank Jalan Sultan Ahmad Shah Penang Board of Directors: 22 November 2012 Dato Ong Choo Hoon (Group Executive Chairman) Dato Dr. Ong Seng Soon (Group Managing Director) Encik Mardzukhi Bin Abu Bakar (Executive Director) Dato Mohd Shariff Bin Ibrahim (Alternate Director to Mardzukhi Bin Abu Bakar) Madam Ong Guat Beng (Executive Director) Mr. Ong Seng Chye (Executive Director) Mr. Saw Chin Eng (Independent Non-Executive Director) Dato Noordin Bin Md. Noor (Independent Non-Executive Director) Madam Teoh Siew Tin (Independent Non-Executive Director) Dear Shareholders PROPOSED ACQUISITION OF:- 1. TWO (2) PARCELS OF DEVELOPMENT LANDS LOCATED ALONG THE PARTLY COMPLETED JALAN BUKIT KUKUS IN THE LOCALITY OF PAYA TERUBONG, PULAU PINANG KNOWN AS LOT NOS 9813, 9814 & 9815 HELD UNDER GRANT NOS , & (PARCEL A) AND LOT NOS 9816 & 9817 HELD UNDER GRANT NOS & (PARCEL B) MUKIM 13, DAERAH TIMOR LAUT, PULAU PINANG ( VACANT LANDS ); AND 2. THREE (3) ABANDONED PROJECTS KNOWN AS PHASES 2A, 2B and 3A WITHIN TAMAN TERUBONG INDAH, PAYA TERUBONG, PULAU PINANG ERECTED ON LOT NOS (Plot 4), 9812 (Plot 5) & 9819 (Plot 12) RESPECTIVELY, HELD UNDER GRANT NOS , & 58467, ALL OF MUKIM 13, DAERAH TIMOR LAUT, PULAU PINANG ( PROJECT LANDS ) 6

7 1. INTRODUCTION 1.1 On 14 September 2011, PLB Land, a wholly-owned subsidiary of PLB, had entered into a Sale and Purchase Agreement ( SPA ) with Majestic Heights Sdn Bhd (In Liquidation) ( Majestic Heights ), wherein Majestic Heights had agreed to sell and PLB Land had agreed to purchase the following freehold lands for a total consideration of RM18,000,000 (the First Acquisition ):- (a) GRN (formerly known as HBM 38), Lot 9818 Mukim 13, Daerah Timor Laut with land area approximately 11,061 square metre; (b) GRN (formerly known as HBM 40), Lot 9820 Mukim 13, Daerah Timor Laut with land area approximately 29,789 square metre; (c) GRN (formerly known as HBM 41), Lot 9821 Mukim 13, Daerah Timor Laut with land area approximately 8,672 square metre; (d) GRN (formerly known as HBM 42), Lot 9822 Mukim 13, Daerah Timor Laut with land area approximately 6,834 square metre; (e) GRN (formerly known as HBM 45), Lot 9825 Mukim 13, Daerah Timor Laut with land area approximately 1,424 square metre; and (f) GRN (formerly known as HBM 46), Lot 9826 Mukim 13, Daerah Timor Laut with land area approximately 1,666 square metre. ( the First Purchased Lands ) 1.2 Pursuant to the SPA, Majestic Heights had agreed to sell and PLB Land had agreed to purchase the First Purchased Lands for a total consideration of RM18,000, free from encumbrances but subject to the terms and conditions contained in the SPA. PLB Land had on 16 August 2011 paid RM1,800,000 as deposit for the First Acquisition and the balance of RM16,200, was paid on 13 December The First Acquisition was completed on 13 December The First Acquisition was financed via a combination of internally generated funds and bank borrowings, the proportions of which are 30% and 70% respectively. The rationale of the First Acquisition is to increase the lands banks of the Group for future development purpose. 1.4 There are no liabilities including contingent liabilities and guarantees assumed pursuant to the First Acquisition other than financing for the completion of the First Acquisition. 1.5 The First Purchased Lands acquired are freehold lands and are not an estate or plantation. PLB Land intends to develop the said First Purchased Lands, however, PLB Land has not submitted any plans to any relevant authorities as at LPD. 1.6 As PLB Land was not privy to the financial statements of Majestic Heights, PLB Land was unable to procure the net book value of the First Purchased Lands as at LPD. The First Purchased Lands were vacant lands with no building erected thereon and it was not use for any purpose as at LPD. 7

8 1.7 Further to the First Acquisition, the liquidators of Majestic Heights had on 7 October 2011 announced the sale of the Vacant Lands and the Project Lands by way of tender. The tender was opened from 7 October 2011 to 6 January 2012 for tenderers to submit their proposal together with 5% of the total proposal price. There was no reserve price set for the tender, and the Company is not privy to the details of the lowest and highest bids made during the tender exercise. In view of the First Acquisition, PLB Land has participated in the said tender as it believes that it would be able to achieve economies of scale i.e. lowering average cost of development which is generally associated with larger scale developments compared to smaller ones as costing per unit would be much lower and the marketability of the products are also more viable due to lower selling prices which is contributed by the lower costs in developing the First Purchased Lands together with the Vacant Lands and Project Lands. 1.8 On 5 January 2012, PLB Land, had participated in an open tender as stated in para 1.7 above organised by Messrs. Deloitte KassimChan of Level 19, Uptown 1, No.1 Jalan SS21/58, Damansara Uptown, Petaling Jaya in respect of the Lands by submitting its proposal to acquire the Vacant Lands and the Project Lands for the total consideration of Ringgit Malaysia Twenty Nine Million (RM29,000,000) only and had successfully bid for the Vacant Lands and the Project Lands. There was no reserve price set for the tender, and the Company is not privy to the details of the lowest and highest bids made during the tender exercise. Subsequent to the bid, PLB Land had entered into the Agreements dated 30 April 2012 in respect of a proposed acquisition of the Vacant Lands and Project Lands for a total cash consideration of RM29,000,003.00, and an announcement to the effect was made on the even date. 1.9 The First Purchased Lands, the Vacant Lands and the Project Lands are all contiguous to each other. A copy of the map to show the location of the Lands is attached as Appendix IV to this Circular. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE RELEVANT INFORMATION ON THE PROPOSAL AND TO SEEK YOUR APPROVAL ON THE RESOLUTION IN RELATION TO THE PROPOSAL TO BE TABLED AT THE COMPANY S FORTHCOMING EGM. THE NOTICE OF EGM AND THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR. SHAREHOLDERS OF PLB ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR BEFORE VOTING ON THE RESOLUTION TO GIVE EFFECT TO THE PROPOSAL AT THE FORTHCOMING EGM 2. DETAILS OF THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 2.1 Information on PLB Land PLB Land was incorporated in Malaysia as a private limited company on 16 April 1975 as Eastern Interior Furnishing Sdn Bhd and changed to its present name on 19 May The authorised capital of PLB Land is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each, all of which have been issued and fully paid-up. PLB Land is a wholly-owned subsidiary of PLB. 8

9 PLB Land is principally involved in the business of property letting, investment holding and property development. The directors of PLB Land as at 9 November 2012 are as follows:- Name of Directors Dato Ong Choo Hoon Dato Dr. Ong Seng Soon Ms Ong Guat Beng Mr. Ong Seng Chye 2.2 Information on Majestic Heights Majestic Heights was incorporated in Malaysia as a private limited company on 21 November The authorised capital of Majestic Heights is RM4,000,000 comprising 4,000,000 ordinary shares of RM1.00 each, of which all have been issued and fully paid-up and whollyowned by the Azabar Holdings Sdn Bhd. Majestic Heights is principally involved in the business of property development. The above information in relation to Majestic Heights was extracted from Companies Commission of Malaysia on 16 August Majestic Heights has since been wound up on 16 October 2001 and its affairs are being managed by its Liquidators Mak Kum Choon (NRIC No ) and Ng Meng Kwai (NRIC No ) with its office care of Deloitte KassimChan, Level 19, Uptown 1, No.1 Jalan SS21/58, Damansara Uptown, Petaling Jaya vide an Order granted by the Penang High Court dated 16 October Salient Terms of the SPA Settlement and Purchase Consideration A. The Vendor agreed to sell and the Purchaser agreed to purchase the First Purchased Lands for a total consideration of Ringgit Malaysia Eighteen Million (RM18,000,000) only free from encumbrances. The Purchaser had on paid a sum of Ringgit Malaysia One Million Eight Hundred Thousand (RM1,800,000-00) only as deposit (the Deposit ) to the Vendor. B. The Purchaser shall pay to the Vendor s Solicitors as stakeholders the balance of the Purchase Price in the sum of Ringgit Malaysia Sixteen Million Two Hundred Thousand (RM16,200,000-00) only ( Balance Sum of the SPA ) within Three (3) months from the date of the SPA ( Completion Date of the SPA). C. In the event that the Purchaser shall fail to pay the Balance Sum of the SPA on or before the Completion Date of the SPA, the Vendor shall automatically grant to the Purchaser an extension of One (1) month from the Completion Date of the SPA (the last day for payment shall be referred to as the "Extended Completion Date of the SPA") notwithstanding that no written request for such an extension of time was given to and received by the Vendor or the Vendor s Solicitors prior to the Completion Date of the SPA PROVIDED ALWAYS THAT the Purchaser shall pay to the Vendor simultaneously with the payment 9

10 of the Balance Sum of the SPA s interest at the rate of Eight per centum (8%) per annum ( Agreed Interest ) on the outstanding sum due to the Vendor from the expiry of the Completion Date to the date of actual payment of the outstanding sum within the Extended Completion Date calculated on a daily basis based on a 365 day year Default By Vendor In the event that the Vendor defaults or wilfully refuses to complete the sale herein within the time stipulated herein, and if the Purchaser shall have performed and observed its obligations and liabilities hereunder on his part to be performed and observed then the Purchaser shall be entitled at its option to take such action as may be necessary to compel specific performance of the SPA and for damages for such breach Default By Purchaser In the event the Purchaser fails to make payment pursuant to item above, or the Purchaser shall be wound up, or enter into any composition or arrangement with its creditors or suffer any execution, then the SPA shall be deemed to have been repudiated by the Purchaser and the Vendor may terminate the SPA by notice in writing to the Purchaser and in such an event:- a. the Vendor shall be entitled to deal with or otherwise dispose of the First Purchased Lands in such manner as the Vendor shall deem fit as if the SPA had not been entered into; b. the money previously paid by the Purchaser to the Vendor excluding any interest paid shall be dealt with and disposed of as follows:- i. the Deposit shall be forfeited by the Vendor as agreed liquidated damages; ii. any other monies paid thereof shall be refunded to the Purchaser free of interest. c. the Purchaser s Solicitors are authorised to nullify and cancel the duly executed Transfer which would then be of no further effect and return all other documents (including but not limited to the issue document of title) to the Vendor and/or the Vendor s Solicitors, as the case may be. If the Purchaser is entitled to seek a refund of the stamp duty paid on the Transfer from the Stamp Office, the Vendor agrees to allow the Purchaser s Solicitors to retain the Transfer for such purpose; d. neither party hereto shall have any further claim against the other for costs damages compensation or otherwise hereunder; e. each party hereto shall pay its own costs in this matter; f. the Purchaser at his own costs and expense shall immediately withdraw the private caveat entered and return all the relevant documents to the Vendor intact; and 10

11 g. the Purchaser and/or the Purchaser s Solicitors and/or the Financier shall redelivering to the Vendor or to the Vendor s Solicitors the original individual title with the Vendor s interest remain intact and unchanged together with all other relevant documents in respect of the First Purchased Lands which has been delivered to the Purchaser or the Purchaser s Solicitors or the Financier or its solicitors earlier Possession of the First Purchased Lands The Purchaser is entitled to the possession of the First Purchased Lands within Five (5) days after full payment of the Purchase Price of the SPA together with the Agreed Interest (if any) and all the apportionment of outgoings due by the Purchaser to the Vendor s Solicitors as stakeholders Entire Agreement The SPA constitutes the entire agreement between the parties and supercedes all prior agreements undertakings negotiations, discussions letters, correspondences and communications (oral or written or expressed or implied) of the parties. No variation or amendment of the SPA shall be enforceable unless effected in writing signed by all the parties Condition of the First Purchased Lands The Purchaser hereby confirms that the First Purchased Lands is sold in its present state and condition as per the date of the SPA on an as is where is basis and subject to the existing category of land use and freehold land tenure and the Purchaser shall be deemed to have inspected the First Purchased Lands and has satisfied themselves by examination and inspection and carried out all necessary searches and inquiries at the relevant authorities to the First Purchased Lands and the Purchaser shall be deemed to have purchased the First Purchased Lands in its present state and condition as per the date of the SPA on an as is where is basis and the Purchaser shall not be entitled to rescind the purchase or to claim any compensation or damages nor any reduction in the purchase price in respect of the conditions, measurement, area and state of the First Purchased Lands Salient Terms of the Agreements: Settlement and Purchase Consideration The Project Lands and the Vacant Lands will be purchased subject to the encumbrances (including any liabilities and/or guarantees) as detailed in paragraphs to The Project Lands Agreement A. The purchase consideration of Project Lands of Ringgit Malaysia Three RM3.00 only shall be paid by the Vendor to the Purchaser upon execution of the Project Lands Agreement. However, it is to be noted that the valuation made by KGV has an indicative amount of (RM4,400,000.00) as the value for the Project Lands. 11

12 B. The Vendor had upon signing of the Agreements i.e. on 30 April 2012 paid to MBSB the sum of Ringgit Malaysia Three (RM3.00) being the full redemption sum on a charge due to the Chargee to secure the banking facilities granted to the Vendor on the Project Lands and Vacant Lands ( Existing Charge ) and upon the full payment of the purchase price for the Vacant Lands by the Purchaser to the Vendor; to obtain from MBSB the discharge of charge, the duplicate charge and the document of title to the Project Lands and any other relevant documents ( Discharge Documents ) and the document of title to the Vacant Lands The Vacant Lands Agreement A. The purchase consideration of Vacant Lands of Ringgit Malaysia Twenty Nine Million (RM29,000,000) only shall be paid by the Purchaser to the Vendor in the following manner:- i. the sum of Ringgit Malaysia One Million Four Hundred Thousand (RM1,400,000) only already paid by the Purchaser to the Vendor on 6 January 2012 ( Earnest Deposit ) pursuant to the tender conditions i.e. 5% of the bidder s tender price is to be paid on or before the last date of the tender exercise; and ii. iii. iv. the further sum of Ringgit Malaysia: One Million Five Hundred Thousand (RM1,500,000) only was paid by the Purchaser to the Vendor upon the execution of the Vacant Lands Agreement i.e. on 30 April 2012 (this payment and the Earnest Deposit shall hereinafter be referred to as the Deposit ) the balance of the purchase consideration of Vacant Lands amounting to Ringgit Malaysia Twenty Six Million and One Hundred (RM26,100,000) only ( Balance Sum ) shall be paid by the Purchaser to the Vendor s Solicitors within Ninety (90) days from the date of the Vacant Lands Agreement ( Completion Date ). In the event that the Purchaser shall fail to pay the Balance Sum on or before the Completion Date, the Vendor shall automatically grant to the Purchaser an extension of Thirty (30) days from the Completion Date (the last day for payment shall be referred to as the ("Extended Completion Date") notwithstanding that no written request for such an extension of time was given to and received by the Vendor or the Vendor s Solicitors prior to the Completion Date provided always that the Purchaser shall pay to the Vendor simultaneously with the payment of the Balance Sum interest at the rate of Eight per centum (8%) per annum on the outstanding sum due to the Vendor from the expiry of the Completion Date to the date of actual payment of the outstanding sum within the Extended Completion Date calculated on a daily basis based on a 365 day year. B. The Vendor shall pay to MBSB the Deposit and the Balance Sum within three (3) months from the date of the Agreements (or such other date as extended according to the Agreements) being the full payment of the redemption sum amounting to Ringgit Malaysia Twenty Nine Million (RM29,000,000) only due on the Existing Charge and upon full payment of the Purchase Price to 12

13 obtain from MBSB the Discharge Documents and the document of title to the Project Lands Condition Precedent The Project Lands Agreement A. The Vendor and the Purchaser agree that the sale and purchase of the Project Lands is subject to and conditional upon the sale and purchase of the Vacant Lands to the Purchaser also being completed. In the event the sale and purchase of the Vacant Lands to the Purchaser is not completed for any reasons whatsoever save and except for any default or non-compliance by the Vendor of any terms and conditions contained in the Project Lands Agreement or in the event of any breach or default on the part of the Purchaser of any of the terms and conditions in respect of the Vacant Lands, then in which event it shall be deemed to be a breach or default by the Purchaser of the terms and conditions herein contained whereby the provisions on Default By Purchaser in item shall apply. B. The sale of the Project Lands are subject to the Project Land Caveats as defined in item 1.2 of Appendix I. PLB Land also agrees and undertakes with the Vendor that in the consideration of the Vendor selling the Project Lands to PLB Land for the sum of Ringgit Malaysia Three (RM3.00) only subject to the Project Lands Caveats except for the Charge in favour of MBSB and without vacant possession 1, PLB Land shall: i. at its own costs and expenses to revive and complete the Project, and assume and undertake whatever obligations (if any) of the Vendor in connection with the Project, the Sold Units and the Project Lands, and ii. iii. iv. at its own costs and expenses resolve and settle whatever claims, rights, titles or interests whether legal or equitable over the Project Lands or any part thereof, and of the purchasers of the Sold Units comprised in the Project previously sold by the Vendor, and obtain for the Vendor its release from whatever obligations (if any) of the Vendor in connection with the Project, the Sold Units and the Project Lands, and keep the Vendor indemnified and indemnify the Vendor against all and any claims (if any) in connection with the Project, the Sold Units and the Project Lands, and v. at its own costs and expenses to obtain the withdrawal or removal of the Project Lands Caveats, C. The Vendor and the Purchaser agree that the sale and purchase of the Vacant Lands shall be completed or deemed completed only upon the Purchaser paying to the Vendor the full purchase price in respect of the sale and purchase of the Vacant Lands under the Vacant Lands Agreement and the transfer in favour of the Purchaser in respect of the Vacant Lands has been registered by the relevant authority. 1 The Project Lands are sold free of the Charge but subject to the Private Land Caveats and is sold without vacant possession 13

14 D. The Vendor and the Purchaser agree that notwithstanding the sum of Ringgit Malaysia Three (RM3.00) only has been paid by the Purchaser to the Vendor upon the execution of the Project Lands Agreement the sale and purchase of the Project Lands shall be completed or deemed completed only: i. upon the Purchaser paying to the Vendor the full purchase price in respect of the sale and purchase of the Vacant Lands under the Vacant Lands Agreement, and ii. iii. the Vendor has forwarded the purchase price for the Vacant Lands to MBSB in part payment of the redemption sum due on the Existing Charge and to obtain from MBSB the discharge of charge, the duplicate charge and the document of title to the Vacant Lands and the Project Lands and any other relevant documents, and the transfer in favour of the Purchaser in respect of the Vacant Lands has been registered by the relevant authority The Vacant Lands Agreement A. The Vendor and the Purchaser agree that the sale and purchase herein of the Vacant Lands is subject to and conditional upon the sale and purchase of the Project Lands to the Purchaser being also completed. In the event the sale and purchase of the Project Lands to the Purchaser is not completed for any reasons whatsoever save and except for any default or non-compliance by the Vendor of any terms and conditions contained in the Vacant Lands Agreement or in the event of any breach or default on the part of the Purchaser of any of the terms and conditions in respect of the Project Lands, then in which event it shall be deemed to be a breach or default by the Purchaser of the terms and conditions herein contained whereby the provisions on Default By Purchaser in item shall apply. B. The Vendor and the Purchaser agree that the sale and purchase of the Vacant Lands shall be deemed completed only: i. upon the Purchaser paying to the Vendor the full Purchase Price, and ii. iii. the Vendor has forwarded the Purchase Price to MBSB as the redemption sum due on the Existing Charge and to obtain from MBSB the discharge of charge, the duplicate charge and the document of title to the Vacant Lands and any other relevant documents, and the transfer in favour of the Purchaser in respect of the Vacant Lands has been registered by the relevant authority Default By Vendor The Project Lands Agreement In the event that the Vendor defaults or refuses to complete the sale herein, and if the Purchaser shall have performed and observed its obligations and liabilities hereunder on its part to be performed and observed then the Purchaser shall be entitled to take such action as may be necessary to compel specific performance of Project Lands Agreement. 14

15 The Vacant Lands Agreement In the event that the Vendor defaults or wilfully refuses to complete the sale herein within the time stipulated herein, and if the Purchaser shall have performed and observed its obligations and liabilities hereunder on his part to be performed and observed then the Purchaser shall be entitled to take such action as may be necessary to compel specific performance of the Vacant Lands Agreement Default By Purchaser The Project Lands Agreement In the event that the Purchaser defaults or refuses to observe and perform its obligations contained in the Project Lands Agreement, and if the Vendor shall have performed and observed its obligations and liabilities hereunder on its part to be performed and observed then the Vendor shall be entitled to take such action as may be necessary to compel specific performance of the Project Lands Agreement. The Purchaser agrees that the Vendor shall be entitled to damages in addition to specific performance of the Project Lands Agreement. There is no reciprocal term for the Purchaser as it was not an agreed term in the Agreements The Vacant Lands Agreement A. In the event that the Purchaser defaults or wilfully refuses to complete the purchase and the Purchaser fails to settle the Balance Sum then the Vendor shall be entitled, at its sole discretion and option to: a. deem the Vacant Lands Agreement to have been repudiated by the Purchaser and the Vendor may terminate the Vacant Lands Agreement by notice in writing to the Purchaser and in such an event:- i. the Vendor shall be entitled to deal with or otherwise dispose of the Vacant Lands in such manner as the Vendor shall deem fit as if the Vacant Lands Agreement had not been entered into; ii. the money previously paid by the Purchaser to the Vendor excluding any interest paid shall be dealt with and disposed of as follows:- a. the Deposit shall be forfeited by the Vendor as agreed liquidated damages; b. any other monies paid thereof shall be refunded to the Purchaser free of interest. iii. the Purchaser s Solicitors are authorised to nullify and cancel the duly executed valid and registrable memorandum of transfer relating to the Vacant Lands ( Vacant Lands Transfer ) which would then be of no further effect and return all other documents (including but not limited to the issue document of title) to the Vendor and/or the Vendor s Solicitors, as the case may be. If the Purchaser is entitled to seek a refund of the stamp duty paid on the Vacant Lands Transfer from the Stamp Office, 15

16 the Vendor agrees to allow the Purchaser s Solicitors to retain the Vacant Lands Transfer for such purpose; iv. neither party hereto shall have any further claim against the other for costs damages compensation or otherwise hereunder; v. each party hereto shall pay its own costs in this matter; vi. vii. the Purchaser at his own costs and expense shall immediately withdraw the private caveat entered and return all the relevant documents to the Vendor intact; and The Purchaser or the Purchaser s Solicitors shall redeliver to the Vendor or to the Vendor s Solicitors the Discharge Documents with the Vendor s and MBSB s interest and Existing Charge remaining intact and unchanged and other relevant documents in respect of the Vacant Lands which has been released to the Purchaser or the Purchaser s Solicitors earlier; OR b. if the Vendor shall have performed and observed its obligations and liabilities hereunder on his part to be performed and observed then the Vendor shall be entitled to take such action as may be necessary to compel specific performance of the Vacant Lands Agreement Removal of Caveats The Project Lands Agreement The Purchaser agrees and undertakes at its own costs and expenses to obtain the withdrawal or removal of the Project Lands Caveats within the period of thirty six (36) months (subject to such extension of time as may be agreed mutually by the Parties hereto from time to time) from the date of the Project Lands Agreement to enable the Purchaser to be registered as the owner of the Project Lands. The following are the Project Lands Caveats lodged by Majlis Perbandaran Pulau Pinang:- Lot No. Presentation No. Date B March B March B July 2007 The above private caveats lodged by the Majlis Perbandaran Pulau Pinang is related to assessment monies not paid on the said Project Lands. The Vendors had on 14 September 2012 been given a full waiver on the said assessment monies by the Majlis Perbandaran Pulau Pinang. Thus, the Project Land Caveats are no longer valid and would be removed accordingly by the Majlis Perbandaran Pulau Pinang. 16

17 The initial searches made at the land registry also show that there are 21 registrars caveats lodged on the Project Lands, all of whom are related to financing provided by the Ministry of Finance to government servants who have purchased units under from the abandoned schemes of the Project Lands. Thus, these registrars caveats only affect the relevant units purchased by such government servants and not the whole abandoned scheme The Vacant Lands Agreement The Vendor agrees with the Purchaser that as soon practical after the execution of the Vacant Lands Agreement the Vendor shall take such steps as are necessary to obtain the withdrawal or removal of the Vacant Lands Caveats. The following are the Vacant Land Caveats which have been entered by Majlis Perbandaran Pulau Pinang on the Vacant Land: Lot No. Presentation No. Date a B May 2007 b B May 2007 c B July 2007 Under Clauses 1.2 and 6 of the Vacant Lands Agreement, the Existing Charge and the Vacant Land Caveats will be discharged and/or removed at the Vendor s own cost and expenses. It is noted that on 14 September 2012, the Vendors have been given a full waiver on the said assessment monies by the Majlis Perbandaran Pulau Pinang. Thus, the Vacant Land Caveats are no longer valid and would be removed accordingly by the Majlis Perbandaran Pulau Pinang. Notwithstanding anything to the contrary, the Parties agreed that in the event the payment of the Balance Sum is delayed by reason only of the Vendor not obtaining the withdrawal or removal of the Vacant Lands Caveats within seventy five (75) days of the date of the Vacant Lands Agreement; then the time taken for the Vendor to obtain the withdrawal or removal of the Vacant Lands Caveats in excess of the time stipulated herein shall not be taken into account in the computation of the Completion Date or the Extended Completion Date and the Completion Date or the Extended Completion Date shall be deemed automatically extended by the same number of days of such delay. 2.5 Basis of arriving at the Purchase Consideration The Purchase Price of the SPA was arrived at on a willing-buyer-willing seller basis through a public tender process after having considered the strategic location of the First Purchased Lands and the prevailing market value of residential property in the area surrounding the First Purchased Lands. The market value is the estimated amount for which an asset should exchange on the date of the valuation between a willing buyer and willing seller in an arm s length transaction. No valuation was done prior to the purchase of the First Purchased Lands but subsequently a valuation was carried out by Messrs. City Valuers & Consultants Sdn Bhd and have assessed the Market Value of the First purchased Lands at RM18 million only. A valuation was also made for the Project Lands and the Vacant Lands on 30 May 2012 where the Project Land was valued at (RM4,400,000.00) due to the additional liabilities to be incurred and the Vacant Lands at RM29 million only. The workings for the valuation done on the Project Lands is as below:- 17

18 Phase 2A (RM) Phase 2B (RM) Phase 3A (RM) Original Gross Development Value 37,391,179 53,168, ,660,797 Less: (5,947,803) (16,440,515) Payment Received from Purchasers (34,127,045) Gross Development Value 3,264,134 47,220,972 98,220,282 Less: Gross Development Cost 12,698,296 59,335,215 74,110,499 Surplus/Deficit before Developers Profit (9,434,162) (12,114,243) 24,109,783 Less: Developer s Profit Nil 4,087,057 9,822,028 Surplus/Deficit after Developers Profit (9,434,162) (16,201,300) 14,287,755 PV for 2/3 8.5% Market value at existing condition (8,014,320) B (12,683,997) C 11,185,883 Estimated Reimbursement from 5,115,000 Nil Nil previous purchasers * Market Value after reimbursement A (2,899,320) Nil Nil Therefore, the total valuation of the Project Lands is A+B+C = (RM4,397,434.00) or rounded up to (RM4,400,000.00). * as indicated by the pro-tem committee of the purchasers during the meetings held with them on 19 March 2012 & 25 May The Purchase Price of the Agreements was arrived at on a willing-buyerwilling seller basis through a public tender process after having considered the strategic location of the Vacant Lands and Project Lands the prevailing market value of residential property in the area surrounding the Project Lands and Vacant Lands and the status of completion of the project on the Project Lands. A formal valuation on the Vacant Lands and Project Lands were carried out on 15 May 2012 by KGV International Consultants (Pg) Sdn. Bhd., an independent firm of professional valuers registered with The Board of Valuers, Appraisers and Estate Agents Malaysia. KGV have assessed the Market Value of the freehold encumbered interest encompassing the Lands as follows:- 1. Project Lands - on as is where is basis subject to all encumbrances (except for the Existing Charge), with vacant possession is at (RM4,400,000.00) after taking into account the income and expenditure incurred to complete the abandoned schemes on the Project Lands; and 2. Vacant Lands - free from all encumbrances in its existing physical condition and with vacant possession is RM29,000, A copy of KGV s Valuation Certificate dated 30 May 2012 is attached as Appendix II. 2.6 Sources of funding for the Purchase Price The Purchase Price of the First Purchased Lands of Ringgit Malaysia Eighteen Million (RM18,000,000) only was financed via a combination of internally generated funds and bank borrowings, the proportions of which are 30% and 70% respectively The Purchase Price of the Vacant Lands and Project Lands of Ringgit Malaysia Twenty Nine Million and Three (RM29,000,003.00) only shall be funded solely by internally generated funds. 18

19 2.6.3 No additional financial commitment would be required and therefore no liabilities including contingent liabilities and guarantees would be assumed to complete the purchase of the Vacant Lands and the Project Lands. 2.7 Information of the First Purchased Lands, Vacant Lands and Project Lands Information on the First Purchased Lands Registered Owner Land Title (Location) Classification/ category) Description (Land) Area (acres) Purchase Consideration (RM) Majestic Heights Sdn. Bhd. (in Liquidation) Lot Nos. 9818, 9820, 9821, 9822, 9825 & 9826 held under Grant Nos , 58468, 58469, 58470, & respectively and all of which under Mukim 13, Daerah Timor Laut, Pulau Pinang Freehold ,000, Information on the Vacant Lands Registered Owner Land Title (Location) Classification/ category) Description (Land) Area (acres) Market Value* (RM) Purchase Consideration (RM) Majestic Heights Sdn. Bhd. (in Liquidation) Lot Nos. 9813, 9814, 9815, 9816 & 9817 held under Grant Nos , 58462, 58463, & respectively and all of which under Mukim 13, Daerah Timor Laut, Pulau Pinang Freehold ,000, ,000,

20 2.7.3 Information on the Project Lands Registered Owner Land Title (Location) Classification/ category) Description (Land) Area (acres) Market Value* (RM) Purchase Consideration (RM) Majestic Heights Sdn. Bhd. (in Liquidation) Lot Nos. 9811, 9812 & 9819 held under Grant Nos , & respectively and all of which under Mukim 13, Daerah Timor Laut, Pulau Pinang Freehold (4,400,000.00) 3.00 * Based on the valuation conducted by KGV on 15 May Details of the Vacant Lands, the Project Lands and the First Purchased Lands as well as the proposed development plans thereon are elaborated in Appendix I attached herewith. 3. RATIONALE FOR THE FIRST ACQUISITON AND THE PROPOSED ACQUISITION The PLB Group is principally involved in property development, property construction and investment. The property development activities of the PLB Group are currently focused in the northern region of Peninsular Malaysia. The Proposed Acquisition would enable PLB Group to increase its landbank for future development while at the same time expanding its property development activities to the capital territory. PLB Group currently intends to develop the Vacant Lands together with the First Purchased Lands into a mixed residential development targeted for middle to higher end market within the acres comprising mainly condominium, double storey semi-detached houses and double storey bungalows. At the time of printing of this Circulars, there are no detail development plans drawn up for the First Purchased Lands, the Project Lands and/or the Vacant Lands. The revival and completion of the Project Lands would constitute part of the Company s ongoing Corporate Social Responsibility activities while positively contributing to the country s economic situation as well as reducing the burden of the affected purchasers and/or other stakeholders such as the end-financiers. In order to achieve this, the Company would endeavor to fulfill the conditions as imposed under Clause 5 of the Project Land Agreement, namely to revive and complete the Project at its own costs and expenses, and assume and undertake whatever obligations (if any) of the Vendor in connection with the Project, the Sold Units and the Project Lands, and at its own costs and expenses resolve and settle whatever claims, rights, titles or interests whether legal or equitable over the Project Lands or any part thereof, and of the purchasers of the Sold Units comprised in the Project previously sold by the Vendor. The Directors of PLB are confident that the Proposed Acquisition will contribute to the long term future earnings of the PLB Group. 20

21 4. INDEPENDENT VALUER S VALUATION OF THE PROPERTIES For the purposes of the Proposed Acquisition, PLB had appointed KGV to carry out a valuation on the Vacant Lands and the Project Lands. Pursuant to KGV s valuation report dated 30 May 2012 prepared in accordance with the LR and the Assets Valuation Guidelines of the SC, KGV has ascribed a market value of RM29,000, only for the Vacant Lands on the assumption that its titles are free from encumbrances and in its existing physical condition with the benefit of vacant possession. The market value were arrived at based on the Comparison Approach which is the most appropriate valuation method in valuing the subject property as there are ample sales evidences available to justify the market value. As there is presently no approved development plan for the Vacant Lands, the Residual method of valuation was not applicable. Under this approach, the value of the property is determined by comparing it with recent sales and/or listings of similar properties in the vicinity, or if not available, within similar localities. As no two properties are often identical, adjustments were then made for differences in factors such as location, physical characteristics and time element. Professional judgement is called upon in interpreting available data and making the adjustments. As for the Project Lands, KGV opined that the Market Value of the subject property is (RM4,400,000.00) based on the Residual Approach. This method involves the estimation of the value of the property with consideration given to the gross development value of the project and deducting therefrom the estimated costs of development including construction costs, professional fees, financing charges and developer s profit. The resultant answer is then deferred over the period of time required for the completion of the project to arrive at the market value. Only the Residual Method of valuation is applied as it is the most appropriate valuation method in valuing the subject property due to the fact that each abandoned project has its own differences in the content of development, stage of completion, number of units sold and unsold, amount collected for units sold and the estimated construction costs to complete the project. The valuation certificates dated 30 May 2012 for both Vacant Lands and the Project Lands prepared by KGV is attached as Appendix II of this Circular. 5. PROSPECTS OF THE FIRST ACQUISITION AND THE PROPOSED ACQUISITION 5.1 General Economic Performance Of Penang 2011 The State projected a 6.3% in gross regional product (GRP) in 2011 compared with 7.9% in The slight decrease in the forecasted GRP growth was mainly due to the uncertainty of the global economy as a result of the EURO Zone crisis and the fragile US economy. The manufacturing sector is projected to record the highest decline from 10.7% in 2010 to 7.2% in 2011 whilst the construction and the services sectors are expected to experience a marginal decrease. The agricultural and the mining and quarrying sectors on the other hand are projected to show some improvements in growth rate to 4.3% and 4.8% respectively. The State also attracted RM9.10 billion worth of total capital Investments in 2011, ranked number one nationwide for the second time since New investments contributed nearly RM4.49 billion whilst investment for expansion or diversification contributed RM4.61 billion. 21