SHC CAPITAL LIMITED (Co Registration No: H)

Transcription

1 SHC CAPITAL LIMITED (Co Registration No: H) 302 Orchard Road, #09-01 Tong Building, Singapore , Tel: , Fax: /248 PROPOSED DISPOSAL OF PROPERTY AT 745 LORONG 5 TOA PAYOH, SINGAPORE INTRODUCTION 1 The board of directors ( Board ) of SHC Capital Limited (the Company ) wishes to announce that the Company has today entered into a conditional sale and purchase agreement with See Hoy Chan Industrial Pte. Ltd. (the Purchaser ) for the proposed sale (the Proposed Disposal ) of the Company s property (the Property ) known as 745 Lorong 5 Toa Payoh, Singapore (Lots 3258N and 3259X of Mukim 17) (the Sale and Purchase Agreement ). 2 The Proposed Disposal will constitute an interested person transaction and a major transaction within the meaning of Chapter 9 and Chapter 10 of the Singapore Exchange Securities Trading Limited Listing Manual Section B: Rules of Catalist ( Catalist Rules ) respectively. Accordingly, the Proposed Disposal is conditional upon the approval of shareholders of the Company ( Shareholders ) being obtained at an extraordinary general meeting of the Company to be convened ( EGM ). SALE CONSIDERATION 3 The sale consideration for the Property is S$12,500,000 payable in cash, which is exclusive of goods and services tax ( GST ) thereon, where applicable (the Consideration ). The Consideration was arrived at on a willing-buyer willing-seller basis after arms length negotiations after taking into account, inter alia, the latest available valuation on the Property (as further described under paragraph 8 of this announcement), the rationale for the Proposed Disposal and the method of payment of the Consideration (as further described under paragraph 4 of this announcement). 4 Pursuant to the terms of the Sale and Purchase Agreement:- (a) (b) the Purchaser shall pay the Company ten per cent. (10%) of the Consideration, being S$1,250,000, upon the signing of the Sale and Purchase Agreement (the Deposit ); the Purchaser shall pay the Company seventy per cent. (70%) of the Consideration, being S$8,750,000, upon completion of the Proposed Disposal (the Completion ); and

2 (c) the remaining twenty per cent. (20%) of the Consideration (the Deferred Consideration ), being S$2,500,000, shall be deemed and constitute a debt owing from the Purchaser to the Company as from Completion, and shall be paid by the Purchaser to the Company as follows:- (i) (ii) fifty per cent. (50%) of the Deferred Consideration, being S$1,250,000, shall be due and payable on the date falling twelve (12) months from (and excluding) the date of Completion; and the remaining fifty per cent. (50%) of the Deferred Consideration, being S$1,250,000, shall be due and payable on the date falling twenty-four (24) months from (and excluding) the date of Completion. 5 As at 31 December 2009, the net book value of the Property is S$12,500,000 and the net profits attributable to the Property for the financial year ended 31 December 2009 ( FY2009 ) is S$949,000. The Consideration is equivalent to the net book value of the Property as at 31 December 2009 and accordingly, there is no gain or loss on disposal of the Property for the Company. It is intended that the proceeds from the Proposed Disposal will be deployed as working capital of the Company and its subsidiaries (the Group ), in particular, for the expansion of the Company s insurance business. INFORMATION ON THE PROPERTY 6 The Property is a four-storey industrial building located at 745 Lorong 5 Toa Payoh, Singapore , with a 60-year leasehold tenure from the Housing & Development Board ( HDB ) commencing from 19 January 1970 and a gross floor area of 7,743 square metres. As at the date of this announcement, the Company occupies about 0.8% of the gross floor area, for use as property management office and server room. Of the lettable floor area of 5,635 square metres, about 39% is currently tenanted, with the remaining left vacant. The tenancies range between 6 months and 36 months and the balance of the tenancy periods varies between 1 week and 33 months. The aggregate monthly rental income (exclusive of service charges, utilities charges and GST) of the tenanted area is approximately S$30,370. The Purchaser will take over the existing tenancies from the Company pursuant to the Proposed Disposal. 7 The Property is currently mortgaged to Malayan Banking Berhad to secure a bankers guarantee facility granted to the Company. The Proposed Disposal will have no material impact on the Company s financing requirements as the Company has replacement collateral to secure the said facility upon Completion. RATIONALE FOR THE PROPOSED DISPOSAL 8 The Proposed Disposal would allow the Company to sell and dispose of the Property at a price which is at a premium to the average of the market value of the Property based on two valuations, the details of which are set out below. 2

3 A valuation report dated 1 February 2010 prepared by Chesterton Suntec International Pte Ltd for the Company ascribed an open market value of S$11,500,000 for the Property as at such date. This was following an earlier valuation report dated 5 November 2009 prepared by DTZ Debenham Tie Leung (SEA) Pte Ltd for the Company which had then ascribed an open market value of S$12,500,000 for the Property. 9 The core business of the Company is in insurance. The Property is mainly approved for industrial purposes, and the Company currently occupies only a small portion of the Property for its property management office and server room requirements, with the rest of the Property either tenanted or left vacant. Accordingly, the Company s ownership and holding of the Property is currently mainly for investment and rental purposes. 10 The Proposed Disposal will realise cash for the Company which can be deployed for its core business as well as strengthen the financial position of the Group. 11 Accordingly, the Board is of the view that the Proposed Disposal is an opportunity for the Company to realise a property investment on which, in view of its slated industrial usage, returns on rental and investment for the Property may be restricted or limited. OTHER SALIENT TERMS OF THE SALE AND PURCHASE AGREEMENT 12 Other key salient terms of the Sale and Purchase Agreement are summarised as follows: Title to Property Title to the Property shall pass to the Purchaser at Completion, free of all mortgages, liens and encumbrances. As twenty per cent. (20%) of the Consideration will remain outstanding at Completion, the Company is entitled by operation of law to a vendor s lien in respect of the Deferred Consideration. Under the Sale and Purchase Agreement, the Company agrees to waive its rights to the vendor s lien or any charge, lien, encumbrance or any other claim, right, benefit or entitlement on the Property in respect of the Deferred Consideration pending full payment of the Consideration by the Purchaser (the Vendor s Lien ). In addition, the Company has also agreed to furnish an undertaking, inter alia, not to deal with the Vendor s Lien in favour of the Purchaser s bank(s) providing financing for the Property on terms and conditions as may be agreed upon between the Company, the Purchaser and the said bank(s) Deferred Consideration The Deferred Consideration will be non-interest bearing, save that the Purchaser shall pay default interest at the rate of five per cent. (5%) per annum above the then prevailing prime lending rate of DBS Bank Ltd. in the event the Purchaser fails to pay the Deferred Consideration or any part thereof when due. To secure the Purchaser s obligations in respect of the Deferred Consideration, the Purchaser shall procure its holding company, See Hoy Chan Holdings Pte Ltd ( SHC Holdings ), to extend a guarantee in favour of the Company at Completion, such guarantee to be in form and substance satisfactory to the Company. 3

4 12.3 Conditions Precedent Completion shall be conditional upon the following conditions precedent ( Conditions Precedent ) having been fulfilled or waived:- (a) (b) (c) the approval of Shareholders being obtained at the EGM for the Proposed Disposal on the terms set out in the Sale and Purchase Agreement; the approval of the HDB being obtained by the Company and the Purchaser in relation to sale and purchase of the Property; and all other relevant approvals, authorisations, clearance, confirmations, consents and/or waivers, as may be required, in connection with the sale and purchase of the Property on the terms set out in the Sale and Purchase Agreement being obtained and not withdrawn or revoked. If any of the Conditions Precedent are not fulfilled (or waived) on or before 30 June 2010, the Company or the Purchaser shall be at liberty to rescind the Sale and Purchase Agreement where the Deposit shall be refunded to the Purchaser without interest, the Sale and Purchase Agreement shall be treated as cancelled and of no effect and neither party shall have any claim of any nature whatsoever against the other under the Sale and Purchase Agreement, save as provided in the Sale and Purchase Agreement Other Conditions The sale and purchase of the Property is subject to The Singapore Law Society s Conditions of Sale 1999 so far as the same are applicable to a sale by private treaty and are not varied by or inconsistent with the special conditions contained in the Sale and Purchase Agreement. INTERESTED PERSON TRANSACTION 13 The Purchaser, a private company limited by shares incorporated in Singapore with its registered office at 302 Orchard Road, Tong Building #10-01, Singapore , is a whollyowned subsidiary of SHC Holdings. Each of SHC Holdings and SHC Capital Holdings Pte Ltd ( SHC Capital Holdings ) is a wholly-owned subsidiary of See Hoy Chan Sdn. Berhad ( SHC ). SHC Capital Holdings, in turn, holds approximately 85% of the issued share capital of the Company. 4

5 To illustrate, a diagrammatic representation of the SHC group of companies is as follows:- SHC 100% SHC Holdings 100% SHC Capital Holdings 100% Purchaser 85% The Company SHC Capital Holdings is a controlling shareholder of the Company and the Purchaser is an associate of SHC Capital Holdings as defined under the Catalist Rules, and hence the Purchaser is an interested person of the Company. The Consideration for the Proposed Disposal of S$12,500,000 represents approximately 40.38% of the Group s audited net tangible assets as at 31 December 2009* of approximately S$30.96 million. Accordingly, the Proposed Disposal constitutes an interested person transaction within the meaning of Chapter 9 of the Catalist Rules and is subject to Shareholders approval pursuant to Rule 906(1) of the Catalist Rules. MAJOR TRANSACTION 14 The relative figures computed on the bases pursuant to Rule 1006 (a) to (d) of the Catalist Rules in relation to the Proposed Disposal (based on the audited consolidated accounts of the Group for FY2009*) are set out as follows:- In relation to the Proposed Disposal Rule 1006(a) Rule 1006(b) Rule 1006(c) Rule 1006(d) The net asset value of assets to be disposed of, compared with the group's net asset value. The net profits (2) attributable to the assets disposed of, compared with the group's net profits. The aggregate value of the consideration received, compared with the issuer's market capitalisation based on the total number of issued shares excluding treasury shares. The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue % (1) 26.69% (3) 53.88% (4) Not applicable 5

6 Notes:- (1) Determined based on the net asset value of the Property of S$12,500,000 and the Group s net asset value of S$30,955,000, both as at 31 December (2) Under Rule 1002(3)(b), net profits means profit or loss before income tax, minority interests and extraordinary items. (3) Determined based on the net profits in FY2009 attributable to the Property of S$949,000 and the Group s net profits in FY2009 of S$3,556,000. (4) The market capitalisation of the Company, being S$23,198,607, is determined by multiplying the total number of issued shares in the capital of the Company ( Shares ) of 289,982,583 Shares by the volume-weighted average price of the Shares of S$0.08 as at 31 March 2010, being the date of the Sale and Purchase Agreement. As the relative figure calculated on the basis pursuant to Rule 1006(c) exceeds 50%, the Proposed Disposal will constitute a major transaction within the meaning of Chapter 10 of the Catalist Rules. Accordingly, pursuant to Rule 1014 of the Catalist Rules, the Proposed Disposal is conditional upon the approval of Shareholders in a general meeting. FINANCIAL EFFECTS 15 For illustration purposes only, the table below sets out the financial effects of the Proposed Disposal based on the following bases and assumptions:- (i) (ii) The audited consolidated financial statements of the Group for FY2009*; and The financial impact on the Group s net tangible assets ( NTA ) per Share is computed based on the assumption that the Proposed Disposal was completed on 31 December 2009 and in relation to the Group s earnings per Share ("EPS"), computed based on the assumption that the Proposed Disposal was completed on 1 January Share Capital Issued and paid up share capital (S$) Before the Proposed Disposal After completion of the Proposed Disposal 43,858,000 43,858,000 Number of Shares 289,982, ,982,583 NTA per Share (cents) EPS (cents) The financial effects of the Proposed Disposal on the Group are for illustrative purposes only and are, therefore, not indicative of the actual financial performance or position of the Group after the completion of the Proposed Disposal. 6

7 AUDIT COMMITTEE STATEMENT 16 Pursuant to Rule 921(4)(b)(ii) of the Catalist Rules, the opinion from an independent financial adviser is not required for the Proposed Disposal. Having considered the terms of the Proposed Disposal and the rationale thereof, the Audit Committee of the Company is of the opinion that the Proposed Disposal is on normal commercial terms and not prejudicial to the interests of the Company and its minority shareholders. OTHER INTERESTED PERSON TRANSACTIONS 17 Pursuant to Rule 917(5) of the Catalist Rules:- (a) the aggregate value of the Group s transactions for the financial period from 1 January 2010 to 31 March 2010 (the Financial Period ) of all transactions with persons who are interested in the Proposed Disposal (the Interested Persons ), excluding the Proposed Disposal, are as follows:- Interested person Amount (i) with the Purchaser - (ii) with SHC Holdings - (iii) with SHC - (iv) with SHC Capital Holdings - (b) the aggregate value of all interested person transactions of the Group for the Financial Period is S$164,808. For the purposes of the above, all transactions below S$100,000 have been disregarded. 18 Save as disclosed above, there are no disclosable interested person transactions for the Financial Period with the Interested Persons or with any other interested persons as at the date of this announcement. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS 19 Save as disclosed in this announcement, none of the directors or controlling shareholders of the Company has any interest, direct or indirect, (other than through their shareholdings in the Company) in the Proposed Disposal. 20 There is no director who is proposed to be appointed to the Company in connection with the Proposed Disposal. 7

8 ABSTENTION FROM VOTING 21 SHC and SHC Capital Holdings will abstain and have undertaken that their associates will abstain from voting at the EGM in respect of the ordinary resolution relating to the Proposed Disposal and will not accept nominations as proxy or otherwise for voting at the EGM in respect of the said ordinary resolution unless the independent shareholders appointing them as proxies give specific instructions in the relevant proxy form as to how their votes are to be cast for the ordinary resolution. 22 In this connection, Messrs Teo Soo Kiat, Teo Soo Chew and Teo Chiang Kai are deemed to be interested in the Shares held by SHC Capital Holdings by virtue of their respective interests in SHC and are accordingly deemed interested in the Proposed Disposal. Messrs Teo Soo Kiat, Teo Soo Chew and Teo Chiang Kai will not accept nominations as proxy or otherwise for voting at the EGM in respect of the said ordinary resolution unless the independent shareholders appointing them as proxies give specific instructions in the relevant proxy form as to how their votes are to be cast for the ordinary resolution. Messrs Teo Soo Kiat, Teo Soo Chew and Teo Chiang Kai, with their associates, will also abstain from making any recommendation regarding the Proposed Disposal. DIRECTORS RESPONSIBILITY STATEMENT 23 This announcement has been reviewed and approved by the Board of Directors (including those who may have been delegated detailed supervision of the preparation of this announcement) who have taken all reasonable steps to ensure that, to the best of their knowledge and belief, the facts stated and the opinions expressed in this announcement are fair and accurate, and that no material facts have been omitted from this announcement. Accordingly, the Board of Directors jointly and severally accepts responsibility in this connection. Where any information contained in this announcement has been extracted from published or otherwise publicly available sources, the sole responsibility of the Board of Directors has been to ensure that such information has been accurately and correctly extracted from these sources. CIRCULAR TO SHAREHOLDERS 24 A circular to shareholders of the Company setting out information on, inter alia, the Proposed Disposal and the notice of EGM will be despatched to Shareholders in due course. 25 Shareholders and investors of the Company are advised to exercise caution when trading in the Shares, pending the receipt of the circular. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor, accountant, or other professional advisers. 8

9 COPIES OF DOCUMENTS AVAILABLE FOR INSPECTION 26 Copies of the following documents are available for inspection during normal office hours at the Company s registered office for three (3) months from the date of this announcement:- (i) (ii) the Sale and Purchase Agreement; and the valuation reports referred to in paragraph 8 of this announcement. By Order of the Board Claire Choy Sock Yu Financial Controller / Joint Company Secretary 31 March 2010 *Endnote: Based on the audited FY2009 financial statements of the Company dated 19 March 2010 which will be set out in the annual report 2009 of the Company to be despatched to Shareholders on or about 9 April This announcement has been reviewed by the Company's sponsor, CIMB Bank Berhad, Singapore Branch ( Sponsor ), for compliance with the Singapore Exchange Securities Trading Limited ( SGX- ST ) Listing Manual Section B: Rules of Catalist. The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX- ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Ms Tan Cher Ting, Senior Vice President, Corporate Finance, CIMB Bank Berhad, Singapore Branch, at 50 Raffles Place, #09-01 Singapore Land Tower, Singapore , Telephone: