COUNTRY VIEW BERHAD ( CVB OR COMPANY )

Transcription

1 COUNTRY VIEW BERHAD ( CVB OR COMPANY ) PROPOSED ACQUISITION BY COUNTRY VIEW RESOURCES SDN. BHD. ( CVRSB ), A WHOLLY- OWNED SUBSIDIARY OF CVB, OF A PIECE OF LAND MEASURING APPROXIMATELY ACRES LOCATED IN MUKIM PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR FROM BANDAR NUSAJAYA DEVELOPMENT SDN. BHD., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF UEM SUNRISE BERHAD, FOR A TOTAL CASH CONSIDERATION OF RM310,000,000 ( PROPOSED LAND ACQUISITION ) 1. INTRODUCTION On behalf of the Board of Directors of CVB ( Board ), AmInvestment Bank Berhad ( AmInvestment Bank ) wishes to announce that CVRSB had on 30 October 2017 entered into a conditional sale and purchase agreement with Bandar Nusajaya Development Sdn. Bhd. ( BNDSB or Vendor ), a wholly-owned subsidiary of UEM Sunrise Berhad ( UEMS ), for the proposed acquisition of a piece of land located in Mukim Pulai, District of Johor Bahru, State of Johor measuring approximately acres ( Land ) for a total cash consideration of RM310,000,000 ( Purchase Consideration ) ( SPA ). 2. DETAILS OF THE PROPOSED LAND ACQUISITION The Proposed Land Acquisition entails an acquisition by CVRSB of the Land from BNDSB for a total cash consideration of RM310,000,000. CVRSB shall purchase the Land free from encumbrances on an as is where is basis with vacant possession, subject to the conditions of title, restrictions-in-interest relating to or affecting the Land and on terms and conditions set out in the SPA. 2.1 Background information of the Land The Land lies along Lebuh Kota Iskandar, adjacent to Kota Iskandar interchange exit from Lebuhraya Sultan Iskandar due north-west and opposite Raffles American School, Iskandar Puteri, Johor Darul Ta zim. The Land is located about 2 kilometres by road due north-east of Kota Iskandar (formerly known as Johor State New Administrative Centre). Whilst, Gelang Patah town and Johor Bahru city centre are located about 9 kilometres and about 20 kilometres by road due north-west and north-east of the Land, respectively. Details of the Land are as follows: Registered owner : BNDSB Title details : HSD , PTD 71080, Mukim of Pulai, District of Johor Bahru, State of Johor Existing use and description : Nil Category of land use : Nil Proposed Use : Zoned for commercial use 1

2 Restriction of interest : Tanah yang dikurniakan ini tidak boleh dijual, dicagar, digadai, dipajak atau dipindahmilik dengan apa cara sekalipun, termasuk dengan cara menggunakan segala surat perjanjian yang bertujuan untuk melepaskan/menjual tanah ini tanpa kebenaran Penguasa Negeri. Encumbrances : Nil Audited net book value as at 31 December 2016 : Not available as CVB is not privy to such information Tenure : Freehold interest Net land area : Approximately acres [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 2

3 The location map of the Land is set out below:- HORIZON HILLS Marlborough College Malaysia ECO BOTANIC PTD Raffles American School LEGOLAND MALAYSIA 3

4 2.2 Basis and justification of determining the Purchase Consideration The Purchase Consideration was arrived at between the parties on a willing-buyer willingseller basis after taking into consideration the following:- market value of the Land of RM320,000,000 as appraised by Rahim & Co International Sdn. Bhd., an independent registered valuer ( Valuer ), via its valuation certificate dated 25 October 2017 ( Market Value ) ( Valuation Certificate ); and the development potential and prospect of the Land. CVB had appointed the Valuer to undertake an independent valuation on the Land. The final valuation report will be issued in due course. The Market Value of the Land was arrived at using the Comparison Method which entails a critical analysis of recent evidence of values of comparable properties in the neighbourhood and making adjustments for differences. 2.3 Method of settlement of the Purchase Consideration In accordance with the terms of the SPA, CVRSB will pay the Purchase Consideration in the following manner:- Mode of settlement Date of settlement Consideration (RM) First part deposit equivalent to two percent (2%) of the Upon signing of the SPA 6,200,000 Purchase Consideration ( First Part Deposit ) Second part deposit equivalent to eight percent (8%) of the Purchase Consideration ( Second Part Deposit ) Balance of the Purchase Consideration ( Balance Sum ) Within two (2) months from the date of the SPA Within a period not later than eight (8) months from the date of the SPA or within a period not later than one (1) month from the Unconditional Date (as defined in Section of this announcement), whichever shall be later 24,800, ,000,000 Total 310,000,000 The First Part Deposit and Second Part Deposit are collectively referred to as Deposit. 4

5 2.4 Sources of funding The Deposit was and will be funded via a combination of internally generated funds and bank borrowings whilst the Balance Sum is expected to be funded through a combination of internally generated funds, bank borrowings and/or issuance of debt securities, the breakdown of which has not been determined at this juncture. 2.5 Liabilities to be assumed CVB will not be assuming any liabilities, contingent liabilities or guarantees pursuant to the Proposed Land Acquisition. 2.6 Other salient terms of the SPA Adjustments to the Purchase Consideration In accordance with the terms and conditions of the SPA:- if the measurements and nett area of the Land shown and described in the SPA are different from what are shown in the report by the land surveyor appointed to conduct a survey on the Land to determine the exact measurements and nett area of the Land, the Purchase Consideration calculated at the rate of RM43.42 per square foot shall be adjusted accordingly ( Adjustment ); and any payment resulting from the Adjustment and required to be paid by BNDSB or CVRSB, as the case may be, shall be paid together with the payment of the Balance Sum Conditions Precedent of the SPA The SPA is conditional upon the satisfaction (or waiver, as the case may be) of the following conditions ( Conditions Precedent ) before the date falling six (6) months from the date of the SPA or such other extended period as may be agreed by CVRSB and BNDSB in writing as the last date by which the Conditions Precedent must be fulfilled ( Cut-Off Date ):- (iii) (iv) BNDSB procuring the written consent and approval of the Johor State Authority for the Proposed Land Acquisition at its own cost and expense ( State Authority Consent ); CVRSB procuring the written consent and approval of the Economic Planning Unit of the Prime Minister s Department for the Proposed Land Acquisition at its own cost and expense ( EPU Consent ); BNDSB and CVRSB procuring the written approval of the Estate Land Board under the National Land Code at the cost and expense of CVRSB ( Estate Land Board Approval ); the approval of the shareholder of CVRSB at general meeting and the approval of the shareholders of CVB at an extraordinary general meeting ( EGM ) to be convened for the Proposed Land Acquisition; and (v) BNDSB has issued notices of termination to the respective tenants of the three (3) existing tenancy agreements on several parts of the Land and has provided CVRSB with the respective notices of termination evidencing the same. 5

6 The SPA shall become unconditional on the date on which the Conditions Precedent have been fulfilled or waived in accordance with the terms and conditions of the SPA ( Unconditional Date ) Extended Cut-Off Date In the event the Conditions Precedent cannot be obtained by the Cut-Off Date, CVRSB and BNDSB agreed to automatically extend the Cut-Off Date for a period of one (1) month from the expiry of the Cut-Off Date to fulfil the Conditions Precedent ( Extended Cut-Off Date ). Any further extension after the Extended Cut-Off Date shall be by mutual agreement of the parties in writing Non-Fulfillment of Conditions Precedent Either CVRSB or BNDSB will be entitled to terminate the SPA by giving notice to that effect, if on expiry of he Extended Cut-Off Date, any Conditions Precedent:- are not obtained or waived and any appeals have not been successful; or have been granted subject to terms and conditions which are not acceptable to the affected party. Upon such termination, CVRSB or BNDSB as applicable shall, amongst others, refund the Deposit within thirty (30) days of termination, withdraw all caveats lodged and redeliver vacant possession of the Land, and thereafter the SPA will be null and void and have no further effect. Neither CVRSB or BNDSB will have any claims or actions against the other save for any antecedent breach and as set out in the SPA Termination Default by CVRSB If CVRSB fails to pay any part of the Purchase Consideration and/or any monies due under the SPA in accordance with the terms and conditions of the SPA, or fails to perform or observe any undertaking, obligation or agreement expressed in the SPA and fails within fourteen (14) days of receipt of a written notice from BNDSB to remedy the breach or matter, BNDSB shall be entitled to terminate the SPA by giving a notice in writing to CVRSB and in such event:- BNDSB shall be entitled to forfeit the Deposit as agreed liquidated damages; and all other monies paid by CVRSB towards the Purchase Consideration shall be refunded to CVRSB free of interest within thirty (30) business days from the date of such notice terminating the SPA in exchange for the delivery by CVRSB of the vacant possession of the Land and the relevant documents as stipulated in the SPA; and thereafter, the SPA shall be terminated and be of no further effect and neither CVRSB and BNDSB shall have any claim against the other, save in respect of any antecedent breach of the SPA. 6

7 Default by BNDSB Save and except for the non-compliance by CVRSB of the terms and conditions of the SPA, if BNDSB:- fails to complete the sale and purchase in accordance with the provisions of the SPA without any default and/or delay being attributable to CVRSB or breaches any material term or condition of the SPA (including warranties of BNDSB); or fails within fourteen (14) days of receipt of a written notice containing details of such breach, from CVRSB to remedy the breach or matter; CVRSB shall be entitled to terminate the SPA by giving a notice in writing to BNDSB and in such event all other monies paid by CVRSB pursuant to the SPA shall be refunded to CVRSB free of interest together with the sum equivalent to ten percent (10%) of the Purchase Consideration as liquidated ascertained damages, within thirty (30) business days from the date of such notice terminating the SPA in exchange for the delivery by CVRSB of the vacant possession of the Land and the relevant documents stipulated in the SPA and thereafter, the SPA shall be terminated and be of no further effect and neither CVRSB or BNDSB shall have any claim against the other save in respect of any antecedent breach of the SPA. 2.7 Specific Performance Either CVRSB or BNDSB will be at liberty to take action in law as may be necessary to compel the other by way of specific performance to complete the Proposed Land Acquisition in accordance with the terms and conditions of the SPA (in which respect the alternative remedy of monetary compensation will not be regarded as compensation or sufficient compensation for any default of either CVRSB or BNDSB in the performance of the terms and conditions of the SPA) and for damages for CVRSB s or BNDSB s breach of the SPA. 2.8 Estimated financial commitment Save for the Deposit and Balance Sum to be paid to BNDSB and the future project development costs, the exact quantum of which has yet to be determined at this juncture, the Company does not foresee any additional material financial commitment arising from the Proposed Land Acquisition. 3. INFORMATION ON BNDSB BNDSB, an indirect wholly-owned subsidiary of UEMS, was incorporated in Malaysia under the name of Pembangunan Lintasan Kedua Sdn Bhd and is deemed registered under the Companies Act It subsequently changed its name to Prolink Development Sdn Bhd on 3 May 1994 and assumed its present name on 13 August The principal activities of BNDSB are investment holding, property development, land trading and an agent for its subsidiaries. As at 26 October 2017, the issued share capital of BNDSB is RM100,000,000 comprising 100,000,000 ordinary shares. The current directors of BNDSB are Anwar Syahrin bin Abdul Ajib, Dato Roslan bin Ibrahim and Mohamed bin Rastam Shahrom. 7

8 4. RATIONALE AND PROSPECTS The Proposed Land Acquisition is in line with CVB and its subsidiaries ( Group ) growth strategy of accumulating new suitable land to be included in the Group s landbank in order to sustain its core business as a property developer as well as enhance future earnings and revenue. The Land is planned for a mixed commercial development comprising resort linked villas, shopoffices and commercial plots of land. Subject to the approvals of the relevant authorities and based on the proposed preliminary development plan ( Proposed Development Plan ), the Group expects to generate a gross development value ( GDV ) of approximately RM1.26 billion. The Proposed Development Plan is expected to commence after all necessary approvals from the relevant authorities have been obtained and it is expected that the completion of the entire development will take a period of seven (7) years. However, it is too preliminary to ascertain the total development cost, the expected commencement and completion dates, number of units in respect of each type of development, as well as the expected profits to be derived from the Proposed Development Plan. The development cost is expected to be funded via internally generated funds, bank borrowings and/or issuance of debt securities. The Proposed Land Acquisition represents a strategic purchase as the Land is situated in Iskandar Puteri which is in close proximity to CVRSB s existing ongoing development project of Taman Nusa Sentral and will allow CVRSB to capitalise on its already established presence in Iskandar Puteri and Johor Bahru. The Group is expected to benefit from the developments, amenities and infrastructures in close proximity surrounding the Land, which include the followings:- (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) major highways surrounding the Land such as Lebuhraya Sultan Iskandar and Lebuh Kota Iskandar; international schools such as Raffles American School and Marlborough College Malaysia; established universities in EduCity Iskandar Malaysia; established housing estates; private hospitals Gleneagles Medini Hospital and Columbia Asia Private Hospital; international theme parks Legoland Malaysia and Sanrio Hello Kitty Town; golf course Horizon Hills Golf & Country Club; Pinewood Iskandar Studios; Puteri Harbour; Kota Iskandar (formerly known as Johor State New State Administrative Centre); major highway to the proposed High Speed Rail ( Proposed HSR ) station in Gerbang, Iskandar Puteri; and Medini Iskandar. The Proposed HSR link between Singapore and Kuala Lumpur is expected to have a stopover in Gerbang, Iskandar Puteri. The expected enhancement in connectivity between Malaysia and Singapore may bring about positive spin-off effects translating to increased population and tourist arrivals to Iskandar Puteri. This in turn is expected to drive the demand for properties developed on the Land. 8

9 The planned development of the resort linked villas will be a relatively new product with a fresh concept in Iskandar Puteri, which may be used for homestays and/or holiday homes. With its close proximity to Singapore via the Second Link Expressway, these resort linked villas will be attractive to both locals and foreigners alike. The shop-offices are expected to be launched after the resort linked villas and due to the close proximity of the Land with many existing developments to be completed over the next few years, the demand for commercial/retail/office space is expected to be on the rise in the Iskandar Puteri region. The commercial plots of land will be reserved for future development. 5. RISK FACTORS The Proposed Land Acquisition would subject the Group to certain risks, which include, amongst others, the following key risk factors:- 5.1 Non-completion risk If any of the Conditions Precedent is not fulfilled within the stipulated period as stated in the SPA, either CVRSB or BNDSB will be entitled to terminate the SPA, whereby all monies paid by CVRSB shall be refunded by BNDSB to CVRSB. Upon termination of the SPA, BNDSB shall be at liberty to sell or otherwise deal with the Land in such manner and to such persons as BNDSB shall deem fit, without prejudice to any other rights or remedies of either party under the SPA save for any antecedent breach under the SPA. In addition, if the Balance Sum is not paid by CVRSB within the stipulated time frame, BNDSB is entitled to terminate the SPA whereby the Deposit shall be forfeited. Nevertheless, the Board will take all reasonable steps to ensure that all the Conditions Precedent are met within the stipulated time frame and that every effort is taken to obtain the necessary approvals to complete the Proposed Land Acquisition in a timely manner. 5.2 Financing and interest rate risk The Group will seek external financing, via bank borrowings and/or issuance of debt securities, to finance the Proposed Land Acquisition. The Group s ability to arrange for external financing and the cost of such financing are dependent on various factors, including general economic and debt capital market conditions, interest rates or credit availability from banks or other lenders. There can be no assurance that the necessary financing will be available in amounts or on terms acceptable to the Group. In addition, the Group could potentially be exposed to fluctuations in interest rates on such external financing obtained, leading to higher borrowing costs which may adversely affect the Group s future results of operations and financial performance as well as its ability to service future loan repayment obligations. Nevertheless, the Group shall continuously monitor and review its capital structure, which includes taking into consideration its gearing level, interest costs as well as cash flows in achieving an overall optimal capital structure. 9

10 5.3 Business risk The Proposed Land Acquisition is subject to risks inherent in the property development industry of which the Group is already involved in. Such risks may include, adverse changes in real estate market prices, changes in demand for types of residential, commercial and industrial properties, competition from other property developers, changes in economic, social and political conditions, delay in completion of property development projects against the scheduled completion, risks of purchaser default, the cost of financing, performance of third-party contractors and sub-contractors, labour and material supply shortages, fluctuations in the prices of building materials and costs of labour charges, increase in real property gains tax (RPGT) and goods and services tax (GST) and adverse changes in property tax assessments and other statutory charges. Any adverse change in such conditions may have an adverse material effect on the Group. 6. EFFECTS OF THE PROPOSED LAND ACQUISITION 6.1 Share capital and substantial shareholders shareholdings The Proposed Land Acquisition will not have any effect on the share capital and substantial shareholders shareholdings as the Proposed Land Acquisition will be satisfied entirely in cash and does not involve any issuance of new ordinary shares in CVB. 6.2 Net assets ( NA ) and gearing of the Group For illustration purposes only, based on the latest audited consolidated financial statements of CVB as at 30 November 2016, assuming that the Purchase Consideration is entirely funded by bank borrowings and/or issuance of debt securities, the pro forma effects of the Proposed Land Acquisition on the NA and gearing of the Group are as follows:- As at financial year ending ( FYE ) 30 November 2016 (RM 000) After the Proposed Land Acquisition (1) (RM 000) Share capital 100, ,000 Share premium Retained earnings 201, ,432 NA/Shareholders' funds 301, ,556 Number of ordinary shares in CVB 100,000, ,000,000 NA per share (RM) (2) Total borrowings (RM 000) 66, ,785 Gearing (Times) (3) Notes:- (1) Comprising adjustments as follow: (a) estimated expenses relating to the Proposed Land Acquisition of approximately RM650,000 have been charged to the retained earnings; and (b) assuming that the Purchase Consideration is entirely funded by bank borrowings and/or issuance of debt securities. (2) NA/Shareholders funds divided by total number of ordinary shares in CVB. (3) Total borrowings divided by NA/shareholders funds. 10

11 6.3 Earnings The Proposed Land Acquisition is not expected to have any material effect on the earnings and earnings per share ( EPS ) of the Group for the FYE 30 November 2017 as the completion of the Proposed Land Acquisition is expected to be in the third quarter of FYE 30 November The Proposed Land Acquisition is expected to contribute positively to the future earnings and EPS of the Group pursuant to the Proposed Development Plan. 7. APPROVALS REQUIRED The Proposed Land Acquisition is subject to the following approvals being obtained:- (iii) (iv) (v) the approval of the shareholders of CVB at an EGM to be convened; the State Authority Consent; the EPU Consent; the Estate Land Board Approval; and any other relevant authorities and/or third parties, if required. 8. INTERESTS OF DIRECTORS AND/OR MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO DIRECTORS OR MAJOR SHAREHOLDERS None of the directors and/or major shareholders of CVB and/or persons connected to them have any interest, direct or indirect, in the Proposed Land Acquisition. 9. DIRECTORS STATEMENT The Board, after taking into consideration all aspects of the Proposed Land Acquisition, including amongst others, the terms and conditions of the SPA, the Market Value, location, rationale and prospects for the Proposed Land Acquisition, and after careful deliberation, all members of the Board are of the opinion that the Proposed Land Acquisition is in the best interest of CVB. 10. ADVISERS AmInvestment Bank has been appointed as the Principal Adviser for the Proposed Land Acquisition. Rahim & Co International Sdn. Bhd. has been appointed to conduct an independent valuation on the Land. 11. ESTIMATED TIMEFRAME FOR COMPLETION Barring unforeseen circumstances, the Proposed Land Acquisition is expected to be completed in the third quarter of FYE 30 November

12 12. HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the Proposed Land Acquisition pursuant to paragraph 10.02(g) of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad exceeds 100%. 13. APPLICATION TO THE AUTHORITIES Barring unforeseen circumstances, the applications by CVB and/or CVRSB to relevant authorities in relation to the Proposed Land Acquisition will be made within three (3) months from the date of this announcement. 14. DOCUMENTS FOR INSPECTION The SPA and Valuation Certificate are available for inspection at CVB s registered office during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 30 October