LAND & GENERAL BERHAD ( L&G OR COMPANY )

Transcription

1 LAND & GENERAL BERHAD ( L&G OR COMPANY ) (I) (II) PROPOSED RENOUNCEABLE RIGHTS ISSUE OF RM77,779,589 NOMINAL VALUE OF FIVE (5)-YEAR, 1%, IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS ( ICULS ) AT 100% OF THE NOMINAL VALUE OF RM0.13 EACH ON THE BASIS OF RM0.13 NOMINAL VALUE OF THE ICULS FOR EVERY ONE (1) EXISTING ORDINARY SHARE OF RM0.20 EACH IN L&G HELD ON AN ENTITLEMENT DATE TO BE DETERMINED AND ANNOUNCED LATER ( PROPOSED RIGHTS ISSUE OF ICULS ); AND PROPOSED ACQUISITION OF ONE (1) BLOCK OF THIRTEEN (13)-STOREY STRATIFIED OFFICE FLOORS BEING CONSTRUCTED OVER A PIECE OF FREEHOLD LAND HELD UNDER GERAN 825, LOT NO. 3, PRESINT 3, TOWN AND DISTRICT OF PUTRAJAYA, STATE OF WILAYAH PERSEKUTUAN PUTRAJAYA BY MAPLE DOMAIN SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF L&G, FROM MAYLAND AVENUE SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF MALAYSIA LAND PROPERTIES SDN BHD, FOR A TOTAL CASH CONSIDERATION OF RM72,485,000 ( PROPOSED ACQUISITION ), (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of L&G ( Board ), Public Investment Bank Berhad ( PIVB ) wishes to announce that L&G is proposing to undertake the following: proposed renounceable rights issue of RM77,779,589 nominal value of five (5)-year, 1%, ICULS at 100% of the nominal value of RM0.13 each ( Rights ICULS ) on the basis of RM0.13 nominal value of the ICULS for every one (1) existing ordinary share of RM0.20 each in L&G ( L&G Share(s) ) held on an entitlement date to be determined and announced later ( Entitlement Date ); and proposed acquisition of one (1) block of thirteen (13)-storey stratified office floors being constructed over a piece of freehold land held under Geran 825, Lot No. 3, Presint 3, town and district of Putrajaya, state of Wilayah Persekutuan Putrajaya ( Land ) ( Office Building ) by Maple Domain Sdn Bhd ( MDSB ), a wholly-owned subsidiary of L&G, from Mayland Avenue Sdn Bhd ( MASB ), a wholly-owned subsidiary of Malaysia Land Properties Sdn Bhd ( MLP ), for a total cash consideration of RM72,485,000 ( Purchase Consideration ). Details of the Proposals are set out in the ensuing sections

2 2. DETAILS OF THE PROPOSALS 2.1 Proposed Rights Issue of ICULS Details of the Proposed Rights Issue of ICULS The proposed rights issue of ICULS, to be undertaken on a renounceable basis, entails the issuance of RM77,779,589 nominal value of ICULS at 100% of the nominal value of RM0.13 each on the basis of RM0.13 nominal value of ICULS for every one (1) existing L&G Share held on the Entitlement Date. The shareholders of L&G, whose names appear on the record of depositors on the Entitlement Date, shall be entitled to participate in the Proposed Rights Issue of ICULS ( Entitled Shareholders ) and can fully or partially subscribe and/or renounce their entitlements for the Rights ICULS. Any unsubscribed Rights ICULS will first be made available to the other Entitled Shareholders and/or renouncee(s)/transferee(s) for applications for the excess Rights ICULS. The Proposed Rights Issue of ICULS is proposed to be undertaken on a full subscription basis, and therefore an irrevocable undertaking will be procured from Mayland Parkview Sdn Bhd ( MPSB ), a major shareholder of L&G, to subscribe for RM77,779,589 nominal value of Rights ICULS ( Irrevocable Undertaking ). For further details of the Irrevocable Undertaking, kindly refer to Section of this Announcement. The ICULS will be constituted by a Trust Deed to be executed between the Company and an appointed trustee for the benefits of the ICULS holders. The indicative principal terms of the ICULS are set out in Appendix I of this Announcement Basis of arriving at the issue price of the Rights ICULS and the conversion price of the ICULS The Rights ICULS shall be issued at 100% of the nominal value of RM0.13 each. The conversion price of the ICULS of RM0.26 for one (1) new L&G Share was arrived at after taking into consideration, amongst others, the following: par value of L&G Shares of RM0.20 each; and five (5)-day volume weighted average market price ( VWAMP ) up to and including 8 April 2013, being the last practicable day immediately prior to this Announcement ( LPD ), of the L&G Shares of RM0.429 each

3 For illustrative purposes, the theoretical ex-rights price of L&G Shares as at the LPD is RM0.37 each, calculated based on the five (5)-day VWAMP of the L&G Shares up to and including the LPD of RM0.429 per L&G Share. Based on the above, the conversion price of the ICULS of RM0.26 represents a discount of approximately RM0.11 or 29.73% over the theoretical ex-rights price of RM0.37 per L&G Share. As set out in the terms of the ICULS and based on the conversion price of RM0.26, the ICULS may be converted into new L&G Shares in the following manner: by surrendering RM0.26 nominal value of ICULS for one (1) new L&G Share; or by surrendering RM0.13 nominal value of ICULS together with cash such that in aggregate it amounts to RM0.26 for one (1) new L&G Share. Premised on the terms of the ICULS, the ICULS can be converted into new L&G Shares anytime from the date of issuance of the ICULS up to its maturity date, which is the last market day prior to the fifth (5th) anniversary of the date of issuance of the ICULS ( Maturity Date ). Any ICULS which are not converted would be mandatorily converted into new L&G Shares on the Maturity Date. Any fractional new L&G Share arising from the mandatory conversion of the ICULS on the Maturity Date will be disregarded and will be dealt with by the Board as it may deem fit and expedient in the best interest of the Company.\ Irrevocable Undertaking The Proposed Rights Issue of ICULS will be undertaken on a full subscription basis. In order to ensure that all the Rights ICULS are fully subscribed, the Board will procure a written irrevocable undertaking from the major shareholder of L&G, namely MPSB, to subscribe for RM77,779,589 nominal value of the Rights ICULS pursuant to the Proposed Rights Issue of ICULS in the manner as set out in the table below: Major shareholder L&G Shares held directly as at the LPD No. of L&G Shares 000 % Rights ICULS entitlement Nominal value of Rights ICULS RM 000 %^ Irrevocable Undertaking Nominal value of Rights ICULS RM 000 %^ MPSB 103, , ,

4 Note: ^ As a percentage of RM77,779,589, being the nominal value of the Rights ICULS to be issued pursuant to the Proposed Rights Issue of ICULS. In view of the Irrevocable Undertaking to be procured from MPSB, there will not be any underwriting arrangement required for the Proposed Rights Issue of ICULS Implication of the Malaysian Code on Take-Overs and Mergers 2010 ( Code ) As at the LPD, MPSB holds 103,420,000 L&G Shares, representing approximately 17.29% of the issued and paid-up share capital of L&G. Premised on MPSB s Irrevocable Undertaking and based on the assumption that no shareholders subscribe for the Rights ICULS, MPSB would be obligated to subscribe for all the Rights ICULS. As such, the shareholdings of MPSB in L&G could potentially increase from 17.29% up to 58.64%, upon the full conversion of the ICULS (assuming by surrendering RM0.13 nominal value of ICULS together with cash such that in aggregate it amounts to RM0.26 for one (1) new L&G Share). However, the actual shareholding of MPSB in L&G would depend on amongst others, the timing and actual holdings of its ICULS converted into new L&G Shares (on the assumption that MPSB does not dispose any of its existing or acquire any new L&G Shares and/or ICULS). The conversion of the ICULS held by MPSB may result in the shareholdings of MPSB and its person(s) acting in concert ( PAC(s) ) (if any), direct or indirect shareholding to collectively exceed 33% of the voting shares in L&G at any point of time. Pursuant to the Code, MPSB and its PACs (if any) would be obliged to extend a mandatory take-over offer for all the remaining L&G Shares and convertible securities not already owned by them. In relation to the above, MPSB may make an application to the Securities Commission Malaysia ( SC ) to seek an exemption for MPSB and its PACs (if any) under Paragraph 16.1 of Practice Note ( PN ) 9 of the Code from the obligation to extend a mandatory take-over offer for all the remaining L&G Shares and convertible securities not already owned by them upon the conversion of the ICULS. The application will be made at a later date but prior to triggering the mandatory take-over offer obligation. MPSB has been advised by PIVB and is aware that the SC may consider granting an exemption to MPSB and its PACs (if any) when the conditions under Paragraph 16.3 of PN 9 of the Code have been satisfied, for amongst others include the following: there is no disqualifying transaction ^; - 4 -

5 (iii) approval has been obtained from independent holders of voting shares or voting rights of the offeree at a meeting of the holders of the relevant class of voting shares or voting rights to waive their rights to receive the mandatory offer from the offeror and PACs; and the names of the parties that have abstained from voting at the general meeting have been submitted to the SC. Note: ^ disqualifying transaction shall have the meaning given in Paragraph 16.4 of PN 9 of the Code Subject to satisfying the conditions aforementioned, the SC may consider granting an exemption to MPSB and its PACs (if any) with or without conditions Utilisation of proceeds from the Proposed Rights Issue of ICULS Based on the nominal value of RM0.13 per ICULS and the Irrevocable Undertaking, the total gross proceeds that are expected to be raised from the Proposed Rights Issue of ICULS is RM77,779,589 which is intended to be utilised as follows: Details of utilisation RM Estimated Timeframe for utilisation of proceeds from date of receipt Funding for the Proposed 67,048,625 Within twenty-four (24) Acquisition (a) months Working capital requirements (b) 9,730,964 Within twelve (12) months Defray estimated expenses 1,000,000 Within six (6) months relating to the Proposals (c) Total 77,779,589 Notes: (a) (b) The proceeds of approximately RM67.05 million will be utilised for the partial settlement of the Purchase Consideration for the Proposed Acquisition as details set out in Section of this Announcement. The working capital requirements include but are not limited to the funding of L&G and its subsidiaries day-to-day operations such as employee remuneration, statutory related expenses, payment of creditors and other operating/administrative expenses

6 (c) The estimated expenses of approximately RM1.00 million include the estimated professional fees and fees payable to the relevant authorities. Any surplus or shortfall of funds for the payment of expenses for the Proposals will be adjusted accordingly from or to the working capital, as the case may be. The quantum of proceeds to be received by L&G pursuant to the full conversion of the ICULS is up to approximately RM77,779,589 (assuming by surrendering RM0.13 nominal value of ICULS together with cash such that in aggregate it amounts to RM0.26 for one (1) new L&G Share). Notwithstanding the above, the actual quantum of proceeds to be received by L&G pursuant to the conversion of all the ICULS cannot be determined at this juncture as it would be dependent on the mode of conversion of the ICULS into new L&G Shares. Nevertheless, the Group intends to use such proceeds, if any for the working capital requirements and future business expansion of the Group. In view that the Board has yet to identify any suitable and viable investment opportunity as at the LPD, the Board intends to place such proceeds to be received from the conversion of the ICULS, if any, in interest-bearing fixed deposit accounts with licenced financial institution(s) or in short-term money market instruments Listing of and quotation for the ICULS and the new L&G Shares to be issued arising from the full conversion of the ICULS An application will be made to Bursa Malaysia Securities Berhad ( Bursa Securities ) for the: admission of the ICULS to the Official List of Main Market of Bursa Securities and listing of and quotation for the ICULS; and listing of and quotation for the new L&G Shares to be issued arising from the full conversion of the ICULS 2.2 Proposed Acquisition on the Main Market of Bursa Securities Details of the Proposed Acquisition On 9 April 2013, MDSB had entered into the following agreements with MASB for the Proposed Acquisition: master sale agreement for the acquisition of the Office Building being constructed over the Land, with total net lettable area ( NLA ) of 132,687 square feet ( sq. ft. ) for a total cash consideration of approximately RM72.49 million ( MSA ); - 6 -

7 (iii) thirteen (13) definitive sale and purchase agreements for the acquisition of the entire office floor situated at each level of the Office Building ( Office Parcel(s) ) with details set out in Appendix II ( SPA(s) ); and deed of mutual covenants for the mutual benefit of MASB and MDSB as well as the other owners of the Project (as defined in Section of this Announcement) ( DMC ), which covenants and agreements contained in the DMC are separate and independent of the MSA and SPA. The MSA, SPAs and DMC are collectively to be referred as the Agreements. The Office Building forms part of the Project as defined in Section of this Announcement Information of MDSB MDSB was incorporated in Malaysia on 28 October 2009 as a private company limited by shares under the Companies Act, 1965 ( Act ). MDSB is a whollyowned subsidiary of L&G of which MPSB, a wholly-owned subsidiary of MLP, is a major shareholder of L&G. The principal activity of MDSB is property development. The authorised share capital of MDSB is RM100,000 comprising 100,000 ordinary shares of RM1.00 each and the issued and paid-up share capital of MDSB is RM2.00 comprising two (2) ordinary shares of RM1.00 each in MDSB. As at the LPD, the directors of MDSB are Abdul Hamid bin Md Yusof and Ho Nyuk Yen Information of MASB MASB was incorporated in Malaysia on 16 November 2007 as a private company limited by shares under the Act, under the name of Bliss Avenue Property Development Sdn Bhd. MASB assumed its present name on 8 July MASB is a wholly-owned subsidiary of MLP, which in turn is also the holding company of MPSB. MASB is principally engaged in property development. The authorised share capital of MASB is RM500,000 comprising 500,000 ordinary shares of RM1.00 each and the issued and paid-up share capital of MASB is RM250,000 comprising 250,000 ordinary shares of RM1.00 each in MASB. As at the LPD, the directors of MASB are Tan Sri Dato David Chiu, Yap Boon Teck and Rahmat bin Dahalan

8 2.2.4 Information of the Project and the Office Building MASB is the registered proprietor of the Land and is currently developing and constructing a commercial development project on the Land, which comprises: one (1) tower block with the Office Building and a two (2)-storey commercial space; two (2) blocks of podium with a four (4)-storey commercial space and a seven (7)-storey hotel (215 rooms); and (iii) two (2)-storey car park in basement 1 and 2, (collectively referred to as the Project ). The Project is situated at Precinct 3, Putrajaya, which comprises ministries and institutions related to the development of the arts and culture in Putrajaya. It lies approximately twenty-five (25) kilometres to the south of the Kuala Lumpur city centre, twenty (20) kilometres by road to the north of Kuala Lumpur International Airport ( KLIA ) and about five (5) kilometres to the east of Cyberjaya. It is easily accessible via Damansara-Puchong Expressway ( LDP ), South Klang Valley Expressway, Kajang Dispersal Link Expressway and Maju Expressway ( MEX ). The immediate vicinity of the Project comprises Putrajaya Corporation Complex, Palace of Justice, Tuanku Mizan Zainal Abidin Mosque, Poslaju National Courier and Boulevard Square. MASB had, on 23 April 2010 and 16 August 2012, obtained the Planning Approval and the revised Planning Approval, respectively, from the Putrajaya Corporation for the purposes of developing and constructing on the Land and for the Project. The development of the Project commenced on 1 March 2012 and is expected to be fully completed with Certificate of Completion and Compliance by 30 June As at 6 February 2013, the Office Building is about 31% completed with constructions of basement to 10th floor. The Land is currently charged by MASB to AmBank (M) Berhad ( Existing Chargee ) of which the presentations were registered on 19 August 2008 and 2 April 2010, respectively. Issuance of the redemption statement and undertaking from the Existing Chargee in relation to the Office Building to be acquired by MDSB shall form part of the conditions precedent as set out in Section of this Announcement

9 Pursuant to the Agreements, MDSB is acquiring the Office Building from MASB. The details of the Office Building are as follows: Postal Address : Lot 3C5, Presint 3, Putrajaya Title no. : Geran 825 Description : Thirteen (13)-storey stratified office floors being part of a proposed integrated commercial development that also comprises therein a seven (7)-storey hotel, retail podium and basement car park currently under construction Land tenure : Freehold Proposed usage : Commercial Gross floor area : 180,984 sq. ft. NLA : 132,687 sq. ft. Stage of completion as at 6 February 2013 Approvals obtained for development Market value appraised by PA International Property Consultants (KL) Sdn Bhd ( PA International ) : Approximately 31% : Planning Approval and the revised Planning Approval had been obtained from the Putrajaya Corporation on 23 April 2010 and 16 August 2012, respectively, for the purposes of developing and constructing on the Land and for the Project : Average RM575 per sq. ft. or equivalent to approximately RM76,300,000 based on the NLA Encumbrances : The Land is charged to AmBank (M) Berhad on 19 August 2008 and 2 April Basis of arriving at the Purchase Consideration The purchase consideration of approximately RM72.49 million for the Office Building was arrived at on a willing buyer-willing seller basis, after taking into consideration, amongst others, the following: (iii) the market value of the Office Building of average RM575 per sq. ft. or equivalent to approximately RM76,300,000 (based on the NLA of 132,687 sq. ft.) ( Market Value ) appraised by the independent registered valuer, PA International appointed by L&G via its valuation report dated 4 March 2013 using the comparison method and investment method; discount of 5% on the Market Value appraised by PA International; the strategic location and earnings potential of the Office Building; and - 9 -

10 (iv) the rental yield guarantee provided by MASB of 5% per annum for two (2) years. A summary of the Market Value of the Office Building derived by PA International is as follows: Date of valuation report 4 March 2013 Date of valuation 21 February 2013 Market Value Methods of valuation RM76,300,000 Comparison method and investment method The comparison method of valuation involves determining the market value by directly comparing the property under valuation with similar properties which have been sold, finding its value from these transactions. This method of valuation is based on the principle that the market value of a property would be in line with the market values of similar properties in the same locality as the Office Building, the values being indicated through sales transaction of these properties. Adjustments are then made for differences in location, size, facilities available, market conditions and other factors in order to arrive at a common basis for comparison. The investment method of valuation may be used to value a property that generates regular income for the owner. In this method, the annual rental income of the Office Building is estimated having provision for void, outgoings incidental to the ownership to arrive at the net annual rental value. The projected net annual income is then multiplied using an appropriate capitalisation rate to convert the income stream into the present capital value of the Office Building. Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Based on the range of Market Value assessed by PA International of RM76.30 million after adopting the comparison method of valuation, premised upon valid and conclusive sales data, MDSB and MASB have negotiated and mutually agreed upon the Purchase Consideration of the Office Building of approximately average RM546 per sq. ft. or equivalent to approximately RM72.49 million (based on the NLA of 132,687 sq. ft.) representing approximately 5% discount on the Market Value assessed by PA International. The Purchase Consideration shall be satisfied in the manner as disclosed in Section of this Announcement

11 2.2.6 Salient terms of the MSA Agreement to sell and to purchase MASB has agreed to sell and MDSB has agreed to purchase the Office Building at the Purchase Consideration, and each Office Parcel at its respective purchase consideration as set out in Appendix II, with vacant possession free from all encumbrances but subject to conditions imposed by the provisions contained in the MSA and the SPA and/or already subsisting at the date hereof (if any) and any conditions expressed and/or implied in the Land and the separate strata titles when issued to the Office Parcel respectively and/or any part thereof and subject to the terms, conditions, covenants and stipulations contained in the MSA. Simultaneously with the execution of the MSA, MDSB and MASB shall execute the SPAs and the DMCs in respect of each Office Parcel forming the Office Building as set out in respective Sections and of this Announcement. In respect of each Office Parcel, MASB and MDSB agree that MDSB is purchasing the Office Parcel on the following basis: (iii) the Office Parcel being free from all equities, charges, liens, caveats and encumbrances, interests, claims, proceedings, prohibition orders, trusts, squatters and tenants and with vacant possession but subject to all conditions and restrictions expressed or implied in the documents of title to the Land and upon the terms and subject to the conditions contained in the MSA and the SPA; the Land being freehold in tenure; and all premium and development charges payable for the Project has been fully paid. MASB and MDSB hereby agree that the Office Parcel shall not include the car park parcel. Notwithstanding the aforesaid, MASB agrees and undertakes to MDSB or shall procure the car park parcel owner to undertake to MDSB that: it will make available or procure the car park parcel owner to make available of not less than one hundred and twenty (120) car park bays for use by occupants of the Office Building on a season parking basis or such other basis to be mutually agreed upon by the parties and at the prevailing market parking rate at the vicinity areas of the Land; and the parking rates will be reviewed every three (3) years and adjusted based on the prevailing parking rates at the vicinity areas of the Land with a maximum increase of not more than 10%

12 Mode of settlement Pursuant to the MSA, the Purchase Consideration should be settled in the following manner: (iii) upon execution of the MSA, MDSB shall pay to MASB an earnest deposit amounting to RM5,436,375 or equivalent to the aggregate of 7.5% of the purchase consideration of each Office Parcel; upon the fulfillment of the conditions precedent (as defined in Section below) and the execution of the SPAs, the Purchase Consideration shall be paid by MDSB to MASB progressively at the time and in the manner in accordance with the relevant payment schedule set out in the relevant SPAs (as set out in Appendix III) for each Office Parcel. Each and every of such instalment payment shall be paid within fourteen (14) days from the date of receipt by MDSB of the notice from MASB describing the respective stages of construction and requesting such payments; and MASB agrees and authorises MDSB to pay such part of the Purchase Consideration directly to the Existing Chargee as redemption sum Rental guarantee MASB undertakes and guarantees to MDSB that for a two (2) years period, commencing from the first day of the next calendar month immediately following the date of delivery of vacant possession of the first Office Parcel from MASB to MDSB in accordance with the relevant SPA (collectively, Rental Guarantee Periods and each year Rental Guarantee Period ), the total rental per annum for all Office Parcels received or to be received by MDSB for the tenanting of the Office Parcels shall not be less than RM3,624,250 ( Guaranteed Rental ). MASB shall pay to MDSB any shortfall ( Rental Shortfall ) between the Guaranteed Rental and the rentals so received or so to be received by MDSB ( Actual Rental ) for any of the Rental Guarantee Periods, within thirty (30) days from the date of its receipt of letter of demand from MDSB. For the purpose of computing the Actual Rental and the Rental Shortfall for any of the Rental Guarantee Periods: the amount Actual Rental shall be computed based on the aggregate of the rentals received or to be received as stated in the tenancy agreements or any documentary evidence for the tenanting of the Office Parcels for that Rental Guarantee Period; if any of the rentals received or receivable is for any period outside that Rental Guarantee Period, the rentals received or receivable shall be pro-rated accordingly;

13 (iii) for the avoidance of doubt, any security deposit or utility deposit received or receivable shall not be regarded as rental; (iv) Conditions Precedent a statement signed in writing by MDSB on the amount of the Actual Rental and the Rental Shortfall for that Rental Guarantee Period, shall be binding on both parties in the absence of manifest error or evidence to the contrary. The MSA is conditional upon and subject to the fulfillment of the following conditions precedent on or before the date falling six (6) months from the date of the MSA or such extended date as may be mutually agreed upon by the parties ( Conditions Precedent Fulfillment Due Date ): (iii) L&G having obtained the approval of the shareholders for the Proposed Rights Issue of ICULS and the Proposed Acquisition; L&G having obtained the approval of the SC for the issuance of the ICULS pursuant to the Proposed Rights Issue of ICULS; L&G having obtained the approval of Bursa Securities for: (a) (b) admission of the ICULS to the Official List of Main Market of Bursa Securities and listing of and quotation for the ICULS; and listing of and quotation for the new L&G Shares to be issued arising from the full conversion of the ICULS, on the Main Market of Bursa Securities; (iv) (v) the Proposed Rights Issue of ICULS has been fully completed and the relevant payment subscription monies have been received by L&G; MASB having procured the Existing Chargee to issue, in respect of each Office Parcel, the redemption statement and undertaking from the Existing Chargee for that Office Parcel to: (a) upon receipt of the redemption sum in full for that Office Parcel: (aa) (bb) (cc) disclaim all its rights, title and interest in or to the Office Parcel; exclude the Office Parcel from any foreclosure proceedings which the Existing Chargee may institute in respect of the existing charges over the Land; upon issuance of strata title to the Office Parcel, deliver the strata title to MDSB together with the relevant duly executed discharge of charge for the Office Parcel;

14 (dd) refund the redemption sum for that Office Parcel to MDSB in the event the discharge of charge in respect of the Office Parcel is not or cannot be registered; and (b) in the event of foreclosure or sale of the Land before receipt of full redemption sum for that Office Parcel by the Existing Chargee, refund all such part of the redemption sum received by the Existing Chargee in respect of the Office Parcel. (hereinafter collectively referred to as the Conditions Precedent ) Non-fulfillment of the Conditions Precedent If any of the Conditions Precedent is not fulfilled by the Conditions Precedent Fulfillment Due Date, the MSA shall terminate. Upon the termination of the MSA as aforesaid: the deposit and any money paid by MDSB under the MSA shall be refunded to MDSB free from all interest in exchange for the returning to MASB any other relevant documents forwarded to MDSB; and all obligations and liabilities of MDSB and MASB contained in the MSA shall cease to have effect and, none of the parties shall have any claim against the other for costs, damages, compensation or otherwise save for any antecedent breaches Completion In respect of each Office Parcel, completion of the sale and purchase of that Office Parcel shall take place upon full payment of the purchase consideration for each Office Parcel in accordance with the terms of the SPA for that Office Parcel. Prior to completion, MASB undertakes to obtain and deliver to MDSB a letter of no-objection from the relevant authorities to allow an access door to be placed at the wall for levels 4 to 8 of the Office Building. On completion in respect of any Office Parcel, all interest in that Office Parcel shall pass to L&G and MASB shall hold that Office Parcel as bare trustee for L&G notwithstanding that the transfer to that Office Parcel may not have been effected. For the avoidance of doubt, notwithstanding any provision contained in the MSA or in any SPA, the sale and purchase of any Office Parcel and the completion thereof are conditional upon the sale and purchase of other Office Parcels and the completion thereof

15 Events of default If either party shall: (iii) fail to execute any of the SPA and the DMC to the Office Parcel in the manner and times as agreed; commit any breach of or fail to perform or observe the covenants, terms and conditions expressed or implied contained in the MSA; or commit an act of bankruptcy or enter into any composition or arrangement with its creditors of being a company go into liquidation or receivership whether compulsory or voluntary, then and in such cases it shall be lawful for the non-defaulting party hereof at any time thereafter to give a notice in writing to the defaulting party to remedy the default and/or breach within fourteen (14) days of the date of such notice, failing which the MSA shall be deemed to be repudiated by the defaulting party. Upon such termination as aforesaid and in the case where the defaulting party is MDSB: MASB shall be entitled to deal with or otherwise dispose of the Office Parcels in such manner as MASB shall see fit as if the MSA had not been entered into; and the deposit paid by MDSB to MASB shall be forfeited to MASB and MASB shall refund and cause to be refunded to MDSB, all other moneys paid by MDSB to MASB, and thereafter, neither party hereto shall have any further claim against the other for costs, damages, compensation or otherwise hereunder other than and except those conferred upon them by the provision of this Clause or antecedent breach. Upon such termination as aforesaid and in the case where the defaulting party is MASB: MDSB shall be entitled to seek for specific performance; or MASB shall within seven (7) business days of such termination notice being given, refund and cause to be refunded to MDSB, the deposit and all moneys received by it or for its account and further pay to MDSB an amount equivalent to the deposit as agreed liquidated damages, and thereafter, neither party hereto shall have any further claim against the other for costs, damages, compensation or otherwise hereunder other than and except those conferred upon them by the provision of this Clause or antecedent breach

16 Upon such termination pursuant to the above, as the case may be, MDSB shall forthwith deliver to MASB vacant possession to the Office Parcels (if vacant possession has previously been delivered to MDSB) and withdraw the private caveat presented or registered against the Land by MDSB Salient terms of the SPAs For the avoidance of doubt, the terms and conditions of the thirteen (13) SPAs for the Proposed Acquisition are the same and shall be applicable on an individual basis and not on a collective basis. The sale and purchase of the Office Parcel by MASB and MDSB under the SPAs are conditional upon the fulfillment/waiver of the Conditions Precedent contained in the MSA as set out in Section of this Announcement Mode of settlement MDSB shall pay the purchase consideration for each Office Parcel to MASB as set out in Appendix II of this Announcement and the same shall be payable by MDSB in the manner as set out in Appendix III. The instalments shall be paid by MDSB to MASB within fourteen (14) days from the date of a notice in writing from MASB requesting payment of the same and every request for the payment of such instalments shall be supported by the requisite certificate of the architect for the Project and every such certificate so signed shall be conclusive proof of the fact that the works therein referred to have been commenced or completed, as the case may be. If any of the instalments shall remain unpaid by MDSB at the expiration of the said period of fourteen (14) days, interest on such unpaid instalment or instalments shall commence immediately until the date of actual payment and such interest shall be calculated from day to day at the rate of 8% per annum on the amount of the unpaid instalment or instalments Events of default If MDSB shall: fail to pay any interest, instalments or other sums payable under this Agreement within the time stipulated for such payment; before the payment of the full purchase consideration for each Office Parcel and delivery of vacant possession, commit any breach of or fail to perform or observe the covenants, terms and conditions expressed or implied contained in the SPAs; or

17 (iii) before payment in full of the purchase consideration for each Office Parcel, commit an act of bankruptcy or enter into any composition or arrangement with his creditors or being a company go into liquidation or receivership whether compulsory or voluntary, then and in such cases it shall be lawful for MASB hereof at any time thereafter to terminate the sale of the Office Parcel and forthwith terminate the SPAs by a written notice to MDSB. Upon such termination as aforesaid: MASB shall be entitled to deal with or otherwise dispose of the Office Parcel in such manner as MASB shall see fit as if the SPAs had not been entered into; and the instalments and such other sums previously paid by MDSB to MASB, excluding any interest paid, shall be dealt with and disposed of as follows: (a) (b) firstly, all interest owing and unpaid in respect of late payments (if any) of any instalment of the purchase consideration for each Office Parcel and all other interest payable under the SPAs shall be paid to MASB; secondly, an amount to be forfeited by MASB as follows: (aa) where the progressive claims has reached up to 50% of the purchase consideration for each Office Parcel, an amount equal to 10% of the purchase consideration for each Office Parcel; or (bb) where the progressive claims has reached more than 50% of the purchase consideration for each Office Parcel, an amount equal to 20% of the purchase consideration for each Office Parcel; and thereafter all obligations and liabilities of parties shall cease to have effect and none of the parties shall have any further claims against the other for cost, damages, compensation or otherwise hereunder other than those conferred upon them by the provision of this Clause or antecedent breach Delivery of vacant possession Provided that MDSB has paid to MASB all the instalments of the purchase consideration for each Office Parcel and any other sums under the SPAs as and when due and payable, the Office Parcels shall be completed and be ready for delivery together with vacant possession to MDSB within thirty six (36) calendar months from the date of the SPAs ( Vacant Possession Date )

18 In the event MASB shall delay completion and the delivery of vacant possession of the Office Parcels to MDSB, MASB shall pay to MDSB the agreed liquidated and ascertained damages calculated from day to day at the rate of 10% per annum on such portion of the purchase consideration for each Office Parcel which shall have by then been paid by MDSB to MASB from the date of expiry of the Vacant Possession Date to the date of the actual or deemed delivery of vacant possession of the Office Parcel to MDSB Salient terms of the DMCs For the avoidance of doubt, the terms and conditions of the thirteen (13) DMCs for the Proposed Acquisition are the same and shall be applicable on an individual basis and not on a collective basis. The obligations of MASB and MDSB under the DMC are conditional upon the fulfillment/waiver of the Conditions Precedent contained in the MSA as set out in Section of this Announcement Scope Without prejudice to the provisions of the MSA, MDSB has agreed, undertaken and covenanted with MASB and other parcel owners of the Project that: upon completion of the Project and prior to the formation of the Joint Management Body in respect of or for or relating to the building to be erected under the Project, comprising, amongst others, the Office Building, commercial area, hotel and car park area ( Building ), which is established or to be established under the Building and Common Property (Maintenance and Management) Act or any succeeding law ( Joint Management Body ): (a) MASB shall manage and maintain all Common Properties, such part of the Building or the Land as is not comprised in any of the Office Building, commercial area, hotel and car park area ( Common Properties ) and all Limited Common Properties, those areas of the Land or the Building and all infrastructures and improvement located thereon for the use and enjoyment of the owners of the Office Parcels to the exclusion of other parcel owners (commercial, hotel and car park), and shall include the Common Properties and common facilities ( Limited Common Properties );

19 (b) MDSB shall duly perform and observe and comply with and be bound by the rules, regulations and by-laws drawn up by MASB (whether or not annexed hereto) from time to time in respect of the use of the Office Parcel and the Common Properties or the Limited Common Properties by MDSB and the occupant(s) of the Building and their conduct while in the Project as MASB may from time to time deem fit to impose for the benefit of the Project including any modifications and amendments thereof or additions or deletions thereto; and upon the formation of the Joint Management Body but prior to the formation of the Management Corporation in respect of or for or relating to the Building, established or to be established under the Strata Titles Act or any succeeding law ( Management Corporation ): (a) (b) (c) (d) the management committee appointed by the Joint Management Body shall manage and maintain all Common Properties and all Limited Common Properties; to the fullest extent permitted by law, the submanagement committee of the Joint Management Body in respect of the Limited Office Common Properties shall manage and maintain the Limited Office Common Properties; MDSB shall duly perform and observe and comply with and be bound by the rules, regulations and by-laws drawn up by the Joint Management Body from time to time in respect of the use of the Office Parcel and the Common Properties or the Limited Common Properties; MDSB shall vote, and MASB shall use its reasonable endeavours to procure other parcel owners (commercial, hotel and car park) to vote, in favour of the rules consistent with the DMC at its first annual general meeting of the Joint Management Body; and (iii) subsequent to the formation of the Management Corporation: (a) the management committee of the Management Corporation shall manage and maintain all Common Properties; (b) to the fullest extent permitted by law, the subsidiary management committee in respect of each Limited Common Properties shall manage and maintain their Limited Common Properties;

20 (c) (d) MDSB shall duly perform and observe and comply with and be bound by the rules, regulations and by-laws drawn up by the management committee of the Management Corporation from time to time in respect of the use of the Office Parcel and the Common Properties or the Limited Common Properties; and MDSB shall vote, and MASB shall use its reasonable endeavours to procure other parcel owners (commercial, hotel and car park) to vote, in favour of the rules consistent with the DMC at its first annual general meeting of the Management Corporation Maintenance of Common Properties The Management (as defined herein) shall be responsible for the up-keep, maintenance and repair of the Common Properties. All maintenance in or to the Common Properties shall be performed by the Management or its appointed agents and the costs and expenses thereof shall be charged to the Purchaser and the other parcel owners (commercial, hotel and car park) and owners of the Office Parcels and included in the Service Charges referred to herein. Any costs and expenses incurred for the up-keep, maintenance and repair of any Common Properties shall be shared by all the parcel owners in accordance with their respective share unit Maintenance of Limited Common Properties In respect of any Limited Common Properties, the relevant Management shall be responsible for the up-keep, maintenance and repair of those Limited Common Properties. All maintenance in or to the relevant Limited Common Properties shall be performed by the relevant Management or its appointed agents and the costs and expenses thereof shall be charged to all the parcel owners having the exclusive benefit of that Limited Common Properties and included in the Service Charges referred to herein. Any costs and expenses incurred for the up-keep, maintenance and repair of any Limited Common Properties shall be shared by all the parcel owners having the exclusive benefit of that Limited Common Properties in accordance with their respective share unit

21 Management means any body for the time having charge for the management of the Common Property or the Limited Common Property, and shall mean: (iii) upon completion of the Project and prior to the formation of the Joint Management Body, MASB; upon the formation of the Joint Management Body but prior to the formation of the Management Corporation, the Joint Management Body; and subsequent to the formation of the Management Corporation, the Management Corporation Sources of funding The Purchase Consideration of the Office Building will be satisfied entirely in cash and will be financed in the following manner: Purchase Consideration RM 000 Percentage Source of funding Deposit 5, % Internally generated funds (a) Balance of the Purchase Consideration Total 72, % 67, % Proposed Rights Issue of ICULS (b) Notes: (a) Mainly comprising of the Group s existing cash and bank balances. (b) The proposed utilisation of the proceeds from the Proposed Rights Issue of ICULS is set out in Section of this Announcement. As at the date of this Announcement, the deposit of RM5,436,375 has been paid to MASB Original date and cost of investment The information on the original date and cost of investment of the portion of the Land used for the development of the Office Building are not made available as the Board is not privy to such information Assumptions of liabilities There are no liabilities, including contingent liabilities and guarantees, to be assumed by L&G arising from the Proposed Acquisition save for the liability portion of the ICULS assumed by L&G pursuant to the Proposed Rights Issue of ICULS, which is set out in Section 4.2 of this Announcement

22 Additional financial commitments Save for the Purchase Consideration, renovation costs to be incurred and the costs of which have not been determined at this stage, the Board does not expect to incur any additional material financial commitment for the Proposed Acquisition Encumbrances for the Proposed Acquisition The Office Building will be acquired by L&G free from all charges, liens, pledges, encumbrances and any claims whatsoever in respect of the same on the terms and condition of the Agreements as at completion. 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Rights Issue of ICULS The rationales for the Proposed Rights Issue of ICULS are as follows: (iii) (iv) (v) enable the Group to raise funds at an attractive and lower cost without incurring higher interest cost as opposed to financial institution s borrowing and will be used primarily to settle the balance of the Purchase Consideration (after the payment of deposit) and to finance the Group s working capital requirements; enable the Group to strengthen its eventual capital base upon full conversion of the ICULS; the issuance of the ICULS would not dilute the percentage of shareholding of the existing shareholders of L&G, assuming that all the Entitled Shareholders fully subscribe for their respective entitlements and thereafter fully convert the ICULS; the issuance of the ICULS does not have an immediate dilutive effect on the earnings per share of the Group as opposed to the issuance of new L&G Shares; and provide the Entitled Shareholders with an option to further participate in the equity of L&G at a predetermined Conversion Price during the tenure of the ICULS. Proceeds to be received from the conversion of the ICULS, if any, will provide an additional source of funds to be used for future working capital requirements and business expansion of the Group. 3.2 Proposed Acquisition The Proposed Acquisition is in line with the Group s investment objective and growth strategy to provide stable and sustainable income stream and potential capital growth in the long term. The Proposed Acquisition represents an opportunity for the Group to increase its property assets base and to expand its geographical location to include Putrajaya, given the growth potential and strategic location of the city within the central region of Peninsular Malaysia, conveniently access to major roads, public transportation network and proximity to major residential areas

23 The Proposed Acquisition is also expected to be synergistic whereby it can be further enhanced by leveraging on the Group s existing experience and competencies in property management. The aforesaid synergy could enhance the Group s existing property investment and management division with the completion of a twenty-one (21)-storey integrated business-retail-leisure concept Sri Damansara. Hence, the Board is of the view that the Proposed Acquisition will contribute positively to the future earnings and cash flows of the Group. 4. EFFECTS OF THE PROPOSALS For illustration purposes, the following sets out the proforma effects of the Proposals on the share capital of L&G, net assets ( NA ), gearing, earnings, earnings per share ( EPS ) of the Group and the substantial shareholder s shareholdings of L&G based on the following scenarios: Minimum Scenario: (a) The scenario that assumes that the Rights ICULS are fully subscribed by MPSB pursuant to the Irrevocable Undertaking; and (b) The RM77,779,589 nominal value of the ICULS issued pursuant to the Proposed Rights Issue of ICULS are all converted into 299,152,265 new L&G Shares by surrendering RM0.26 nominal value of ICULS for one (1) new L&G Share. Maximum Scenario: (a) The scenario that assumes that the Rights ICULS are fully subscribed by the entitled shareholders and/or renouncee(s)/transferee(s); and (b) The RM77,779,589 nominal value of the ICULS issued pursuant to the Proposed Rights Issue of ICULS are all converted into 598,304,530 new L&G Shares by surrendering RM0.13 nominal value of ICULS together with cash such that in aggregate it amounts to RM0.26 for one (1) new L&G Share. The Proposed Acquisition would not have any effect on the share capital of L&G and the substantial shareholder s shareholdings of L&G. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

24 4.1 Share capital The Proposed Rights Issue of ICULS is not expected to have any immediate effect on the issued and paid-up share capital of L&G, until such time when the ICULS are converted into new L&G Shares. Assuming the full conversion of the ICULS, the proforma effects on the issued and paid-up share capital of L&G are as follows: Par value RM Minimum Scenario No. of L&G Shares Share capital RM Maximum Scenario No. of L&G Shares Share capital RM Authorised share capital ,000,000,000 1,000,000,000 5,000,000,000 1,000,000,000 Issued and paidup share capital As at the LPD ,304, ,660, ,304, ,660,906 To be issued pursuant to the Proposed Rights Issue of ICULS ,304, ,660, ,304, ,660,906 To be issued pursuant to the full conversion of the ICULS ,152,265 59,830, ,304, ,660,906 Enlarged issued and paid-up share capital ,456, ,491,359 1,196,609, ,321,812 THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

25 4.2 NA and gearing Assuming the Entitled Shareholders fully subscribe for their rights entitlements of the ICULS and the full conversion of the ICULS, the proforma effects of the Proposals on the NA and gearing of the Group based on the audited consolidated financial statements of L&G as at 31 March 2012 are as follows: Minimum Scenario (I) (II) (b) (III) Audited After the Proposed After (I) and the After (II) and assuming full as at 31 March 2012 Rights Issue of ICULS Proposed Acquisition conversion of the ICULS RM 000 RM 000 RM 000 RM 000 Share capital 119, , , ,491 Share premium 17,036 (a) 16,074 16,074 34,024 Retained profits 126,010 (a) 125, , ,972 Other reserves 19,744 19,744 19,744 19,744 ICULS equity portion - 75,568 75,568 - Equity attributable to shareholders of the Company 282, , , ,231 No. of L&G Shares in issue ( 000) 598, , , ,457 NA per L&G Share (RM) Borrowings (RM 000) (c) 57,511 60,460 60,460 57,511 Gearing (times) Notes: (a) After deducting the estimated expenses in relation to the Proposals from the share premium account and retained profits, amounting to RM962,000 and RM38,000 respectively. (b) For illustrative purposes, assuming that the Office Building was completed as at 31 March (c) Comprise of all interest bearing borrowings and liability portion of ICULS