BRAHIM S HOLDINGS BERHAD (FORMERLY KNOWN AS TAMADAM BONDED WAREHOUSE BERHAD) ( THE COMPANY

Transcription

1 BRAHIM S HOLDINGS BERHAD (FORMERLY KNOWN AS TAMADAM BONDED WAREHOUSE BERHAD) ( THE COMPANY ) - PROPOSED DISPOSAL OF THE COMPANY S WHOLLY-OWNED SUBSIDIARY, TAMADAM INDUSTRIES SDN BHD AND ITS BUSINESS TO NICHE PROPERTY MANAGEMENT SDN BHD 1. INTRODUCTION The Board of Directors of the Company wishes to announce that the Company had, on 10th February 2012, entered into the following inter-conditional agreements ( collectively referred to as the Agreements ) with Niche Property Management Sdn Bhd ( the Purchaser ) for the sole and entire consideration of RM18,000, ( Total Consideration ): (a) Share Sale Agreement ( SSA ) to dispose 34,628,000 ordinary shares of RM1.00 each ( Sale Shares ) being 100% of the entire issued and paid up share capital in Tamadam Industries Sdn Bhd ( TISB ) free from all liens, options and encumbrances together with all rights, benefits and advantages attaching thereto and accruing thereon for RM17,000, subject to such deductions as may be provided for in the Business Transfer Agreement ( BTA ); and (b) BTA to divest, dispose and sell the business of logistics, freight forwarding, transportation and bonded as well as non bonded warehousing services ( the Business ) as a going concern and all assets (but not the liabilities) relating to the Business including the core asset of the bonded warehouse at Lot Jalan Pelabuhan Utara Mukim of Klang District of Klang ( T2 Warehouse ) and the sub-lease thereof together with all rights, title and interest therein and thereto free from encumbrances (collectively, Business Assets ) on an as is where is basis for RM1,000,000.00, collectively referred to as the Proposed Disposals. The completion for the sale and purchase of the Business and Business Assets shall be conditional upon the simultaneous completion of the Purchaser s acquisition of the Sale Shares from the Company and vice versa. Subsequent to the signing of SSA and BTA, a Supplementary Redeemable Term Debt Agreement ( SRTDA ) was entered into on 13th February 2012 into between the Company and Purchaser, to assist the completion of the acquisition of the Business Assets and Sale Shares. 2. DETAILS OF PROPOSED DISPOSALS 2.1 Information on TISB TISB (Company No H) is a wholly owned subsidiary of the Company, was incorporated in Malaysia under the Companies Act, 1965 on 23 January The authorised share capital of TISB is RM50,000,000 comprising 50,000,000 ordinary shares of RM1.00 each

2 and its issued and paid-up share capital is RM34,628, comprising 34,628,000 ordinary shares of RM1.00 each fully paid. The principal activity of TISB is engaged in the business of warehouse rental. The Company s date and original cost of investments in TISB are as below: Date Cost of Investment (RM) No. of Shares in TISB 23 January ,000 1, February ,627,000 34,627,000 34,628,000 34,628,000 The financial information of TISB based on the audited financial statements as at 31 December 2010 is tabulated below: RM Revenue 1,041,600 Profit/(Loss) before taxation (1,169,598) Profit/(Loss) after taxation (1,169,598) Shareholders funds (7,765,561) Amount owing to holding company/director 34,245,035 Gearing (times) 1.29:1 2.2 Information on Business Assets Business Assets include T2 Warehouse, trucks, forklifts, racks and fire system but excluding cash and deposits in bank and the accounts receivables as at the Completion Date. The T2 Warehouse measuring approximately area presently of acres situated at Lot Jalan Pelabuhan Utara Mukim of Klang District of Klang ( the Parcel ) is sub-leased by KTM Warehouse Management Sdn Bhd ( KTM ), a company limited by shares incorporated under the Companies Act, 1965 in consideration of TISB s agreeing to construct and build on the Parcel such warehouse/godown/factory, in turn, sub-leased the Parcel to the Company for a back to back equivalent term of 30 years commencing from the 11 December 1997 and expiring on 10 December 2027, with an option granted to TISB to renew the sub-lease for a further second term of 30 years commencing from the 11 December 2027 to 10 December 2057 at a total rental of RM9, per quarter year or RM39, per annum. TISB has charged ( AmBank s Charge ) the benefit of Sub-Lease of T2 Warehouse to AmBank (M) Berhad (Co. No 8515-D) ( AmBank ) as

3 security for credit and banking facilities granted by AmBank to the Company ( AmBank s Loan ). There is also presently due and owing from TISB to the Company Inter-Co Loans amounting to RM34,627, as at 30 June The financial information of Business Assets (excluding cash and deposits in bank and the accounts receivables) based on the audited financial statements as at 31 December 2010 is tabulated below: Net Book Value of Business Assets (excluding cash and deposits in bank and the accounts receivables) RM 26,857, Information on the Purchaser Niche Property Management Sdn Bhd (Company No P) is a company limited by shares, incorporated in Malaysia under the Companies Act 1965 on 8 August The authorised share capital of the Purchaser is RM100, comprising 100,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM2.00 comprising 2.00 ordinary shares of RM1.00 each fully paid. The principal activity of the Purchaser is investment holding. The Directors of the Purchaser are Tan Sri Abdul Aziz bin Shamsuddin and Dato Liew Man Kwong. The substantial shareholders of the Purchaser are Tan Sri Abdul Aziz bin Shamsuddin and Dato Liew Man Kwong. 2.4 Basis and justification for Total Consideration The Total Consideration of RM18,000,000 for the Proposed Disposals was arrived at on a willing buyer willing seller basis after taking into consideration: (a) the non-core business to the Company in TISB;and (b) losses incurred by the operations of TISB in relation to the warehousing business.

4 2.5 Mode of Satisfaction of the Total Consideration The Total Consideration shall be satisfied in the following manner: a) A total sum of Deposit of RM360, will be paid by the Purchaser to the Purchaser's Solicitors in their capacity as stakeholders as deposit and part payment towards the Total Consideration. b) The Balance Total Consideration which shall be paid by cash in the form of the loan to be secured by the Purchaser from the duly licensed commercial bank or financial institution not later than 31 December 2011 or 3 months from the date when the last of the Conditions Precedent (as set out hereinafter) is fulfilled ( Unconditional Date ), whichever is the later date (or, where applicable, such extension thereof as may be mutually agreed in writing between the Parties) c) In the event that difficulties facing in raising financing from traditional sources of financial institutions and banks, the Purchaser is allowed pursuant to the SRTDA to satisfy the balance of the Total Consideration/Price within a longer period not exceeding Six (6) years and Four (4) months in consideration of the Purchase Consideration/Price being increased, by factor of time value of money, from RM18,000, as provided in the BTA and SSA to RM20,000, which is thereafter reconstituted to a redeemable term debt of equivalent amount ( RTD ) due and owing from and repayable by the Purchaser to the Company by a series of installment payments over a tenure of Six (6) years and Four (4) months commencing from the Issue Date of the RPS (as such terms are hereinafter defined) ( RTD Period ). 2.6 Liabilities to be assumed Save for the obligations and liabilities in and arising from, under pursuant to or in connection with the SSA and BTA for the Proposed Disposals, there are no other liabilities including contingent liabilities and guarantee to be assumed by the Purchaser arising from the Proposed Disposals. 2.7 Expected loss on the Proposed Disposals No impact on 2011 results. 2.8 Proposed utilisation of Proceeds The Company is proposing to utilise the total cash proceeds from the Proposed Disposals amounting to RM18,000,000 as follows:

5 Description Note Amount allocated RM million Timeframe for the proposed utilisation of proceeds Satisfaction of AmBank s Charge Repayment of shareholders advances Other creditors in relation to the warehousing business Other banking facilities settlement Estimated expenses to be incurred for the Proposed Disposals 7.4 Upon receipt of the proceeds (1) 0.6 Within 1 month from the receipt of the proceeds Total 18.0 Notes: (1) The estimated expenses include professional fees and other related expenses incurred on the Proposed Disposal. Any shortfall or excess in funds allocated for estimated expenses will be funded from or used for working capital purposes. 2.9 Salient features of the Agreements (a) SSA (i) Sale of TISB The Company has agreed to sell and the Purchaser has agreed to purchase the Sale Shares free from all liens, options and encumbrances together with all rights, benefits and advantages attaching thereto and accruing thereon for the aggregate purchase price of RM17,000, subject to such deductions as may be provided for in the BTA and upon the terms and conditions set out therein. (ii) Company s Covenants As from the date of SSA to the Completion Date, the Company shall ensure and procure that the issued and paid-up capital of TISB shall be maintained at RM34,628,000.00, TISB will abide strictly and discharge all obligations and covenants on its part in the Sub-Lease to be performed thereby giving

6 KTM no cause to repudiate the Sub-Lease, and that TISB will not, without the prior consent of the Purchaser in writing being first obtained and matters referred to Clauses to as stated in the SSA. (b) BTA For the Total Consideration thereof, the Company agrees that it will:- (i) (ii) transfer, assign, convey and deliver the Business Assets together with full rights, title and interest of legal and /or beneficial ownership thereof to and in favour of the Purchaser free from encumbrances; transfer, assign and convey to and divest more specifically in favour of the Purchaser the T2 Warehouse and the Sub-Lease thereof free from encumbrances via the sale and transfer of its entire equity interest and stake in TISB for RM17,000, subject to: (a) (b) the Inter-Co Loans owing by TISB to the Company to the extent of RM34,627,000 as at 30 June 2011 being prior converted to 34,627,000 ordinary shares of RM1.00 each in TISB allotted to the Company ( Capitalisation ); and the entitlement on the Purchaser s part to deduct out from the Purchaser Consideration an amount equivalent to the liabilities incurred by TISB pursuant to the Business not transferred to nor assumed by the Purchaser at the time of completion hereof subject to and upon the terms and conditions contained in the BTA; (iii) (iv) (v) immediately after Capitalisation, enter contemporaneously into the SSA for the sale and transfer by the Company of all Sale Shares legally and beneficially owned by it to the Purchaser free from encumbrances at a portion of the Total Consideration of RM17,000,000 less such deductions as stated in (v) below; utilise a portion of the Total Consideration to settle first the AmBank s Loan in full to secure AmBank s discharge of AmBank s Charge thereof in redemption of the Sub-Lease of T2 Warehouse upon the terms and conditions set out in the BTA; deduct from and utilise a portion of the Total Consideration to either settle for TISB the liabilities incurred by TISB in relation to the Business as at the Completion Date but not transferred to or assumed by the Purchaser as shown in the Completion Accounts and/or to provide for the contingent liability thereof in the period thereafter, such liability would also additionally include, without limitation, any other sum which any provision either of the BTA or the SSA entitles the Purchaser to set off against or which the Real Property Gains Tax Act 1976 (if applicable) require the Purchaser to retain for remittance to the Director General of Inland Revenue incidental to the Company disposal of its shares in TISB, if determined a Real Property Company.

7 (vi) Non-Competition With effect from the Completion Date and for a period of 3 years thereafter the Company hereby covenants with the Purchaser that it will not either directly on its own account or indirectly via (a) its subsidiary, related or affiliate companies; or (b) any other companies or other form of business organization (firm or partnership) managed, participated or controlled by other third parties but in which the Company or any of its subsidiary, related or affiliate companies or any of the present directors or officers of the Company are or will become shareholders (whether controlling, minority or substantial) or partners or directors, consultants or advisors, or any other relationship or capacity thereof, engage in any business operating in the vicinity of the state of Selangor and the Federal Territory of Kuala Lumpur which is competitive with the Business presently acquired by the Purchaser upon terms therein BTA contemplated Provided however that nothing contained in this paragraph shall be deemed to prohibit the Company from acquiring or holding or continue holding solely, as an investment, public quoted shares of any public company listed on Bursa Malaysia Securities Berhad ( Bursa Securities ) engaged in such business competitive with the Business; or engaging in bona fide activity of speedily winding up the Business at its end. (c) SRTDA The Purchaser and the Company agreed to enter into the SRTDA to amend the BTA and SSA to the extent necessary to incorporate the mutual intents and aforesaid arrangement. The SSA and BTA shall continue to subsist in full force and binding effect in accordance to their respective terms, save to the extent varied or modified in the SRTDA. Subject to SRTDA having become unconditional, the Company and the Purchaser hereby agree that the Purchase Consideration/Price for the Business Assets and the Sale Shares stated in the BTA and the SSA shall be revised to the aggregate sum of Ringgit Twenty Million only (RM20,000,000-00) and reconstituted to a redeemable term debt ( RTD ) of equivalent amount owed by the Purchaser to the Company, which the Purchaser shall cause to repay to the Company by the issuance of 18,000,000 RPS with a 11% coupon to the Company and a final payment/installment of 12% coupon for rounding up purposes, redeemable progressively by the Purchaser on a monthly basis over a period up to Six (6) years and Four (4) months commencing from the Issue Date of the RPS ( RTD Period ) in the manner and by the time as more particularly set out in Redemption Schedule as set out in the SRTDA. (d) Conditions Precedent to SSA The Company and the Purchaser hereby agree that the sale and purchase of the Sale Shares shall be subject to the following Conditions Precedent being fulfilled within the Conditional Period:-

8 (i) (ii) (iii) (iv) (v) the approvals of the shareholders of the Purchaser being obtained; the Company s shareholders approval in its extraordinary general meeting only if it is required either under section 132C and/or the Main Market Listing Requirements of Bursa Securities; the approvals (where applicable or mandatory) of KTM as the Lessor and/or any regulatory agency or authority, in particular, the Bursa Securities to which the Company or the transaction hereby contemplated is subject; the BTA has become unconditional due to fulfillment of the conditions precedent therein stipulated; and the Due Diligence is confirmed satisfactory by the Purchaser in writing to the Company. (e) Conditions Precedent to BTA BTA is subject to the following conditions precedent being prior fulfilled prior to the Completion Date: (i) (ii) (iii) if the respective Parties so determine as being necessarily required, the Parties obtaining the approval from their respective shareholders in a general meeting for the entering into of the BTA and the transactions therein in accordance with the terms thereof contemplated ( Shareholders Approval ); the Due Diligence is confirmed satisfactory by the Purchaser as stated in Clause 2.05(a) of the BTA; if the respective Parties so reasonably determine as being necessarily required (where applicable or mandatory), the approvals of KTM as the Lessor, Bursa Securities or any regulatory agency or authority to which any of the Parties is subject in executing the transactions hereby contemplated; (f) Conditions Precedent to SRTDA SRTDA and the transactions hereby contemplated is subject to the following Conditions Precedent (in addition to the relevant or applicable conditions precedent as stated in the BTA and the SSA) being fulfilled within Three (3) months of the date of SRTDA (or such later date as the Parties hereto may mutually agree in writing to extend) ( Conditional Period ):- (a) the approvals of the Board of Directors of the Company being obtained in respect to its entering into the SRTDA; (b) the approvals of the Board of Directors and shareholders/members of the Purchaser in respect to its entering into the SRTDA;

9 (c) the approval in writing of AmBank as a creditor subsequent for the transactions thereby contemplated to be entered into by the Company and the Purchaser; and (d) the approval by the relevant authorities if any of such were required. (g) Termination if Conditions Precedent unfulfilled In the event that any of the Conditions Precedent (not otherwise waived by the affected party) is/are not fulfilled by the 31 December 2011, either Party shall be entitled by written notice to the other to terminate the BTA, whereupon the Stakeholders are authorised to refund the Deposit and the Company shall refund all other monies, if any, earlier paid by or on behalf of the Purchaser towards the Total Consideration ( Other Monies ) to the Purchaser within 10 business days from the date of the other Party s receipt of such written notice of termination, failing which the Company shall further be liable to pay to the Purchaser late payment interest at the rate of 8% per annum calculated on a non-compounding daily rest basis on any outstanding sum not refunded from the date such refund is due until the date of full refund or payment thereof. Upon the receipt in full by the Purchaser of such refund of the Deposit and/or the Other Monies together with interest if any accrued thereon, the BTA shall terminate and be deemed null and void and neither Party shall have any further rights whatsoever whether legal or otherwise against the other thereunder save for any antecedent breach. (h) Condition Subsequent Where the condition precedent as set out in the SSA, BTA and SRTDA above have by the mutual agreement of the Company and the Purchaser been converted to a condition subsequent ( Condition Subsequent ) the Condition Subsequent has to be complied and fulfilled within six (6) months (or such longer period as may be mutually agreed by the Parties hereto in writing) from the revised Completion Date, failing which the same consequences as stated in SRTDA will ensue and accordingly all balance of outstanding RPS hitherto issued by the Purchaser to the Company not redeemed yet as at the end of the said 6 months, will be deemed to be redeemed/satisfied by the Purchaser by its re-delivery of possession of the T2 Warehouse and re-vesting and re-transferring of the Business Assets back to the Vendor pursuant to the termination of SRTDA, the BTA and the SSA. (i) Due Diligence Pursuant to the Agreements, the Company shall allow the Purchaser s employees consultants and/or professional advisers reasonable access to the Company and TISB s business premises including the T2 Warehouse and persons to inspect the Company s and TISB's statutory, legal and tax records, financial accounts, the Business Assets, clients list and contracts with customer(s), employment records and other documents in so far as they are relevant and pertinent to the Purchaser s assessment and evaluation of the Business Assets and their value to verify and/or confirm the Company s various warranties and representations provided in SSA.

10 At or before the end of Due Diligence Period (which is 1 month from the date of the BTA), the Purchaser shall confirm in writing to the Company whether it is satisfied or otherwise with the Due Diligence. (j) Unconditional Date The Agreements shall become unconditional on the date when the last of their Conditions Precedent (not otherwise waived by the affected party) is fulfilled ( Unconditional Date ), which Unconditional Date shall be confirmed in writing by the Party satisfied with such fulfillment to the other Party. (k) Risk factors The completion of the SSA is subject to inter-alia, the fulfillment of various conditions precedent as set out in Section 2.10 above, which includes, among others, the Due Diligence to the satisfaction of the Purchaser. The non-fulfillment of any conditions precedent may result in the SSA being terminated. 3. RATIONALE OF THE PROPOSED DISPOSAL The Board of Directors of the Company is desirous of divesting the Business due to its operational difficulties and to concentrate instead on its other growing and more profitable business of operating a flight kitchen, in-flight catering and cabin handling services and franchise (both foreign and local) food and beverage outlets at the Kuala Lumpur International Airport and Low Cost Carrier Terminal. 4. EFFECTS OF THE PROPOSED DISPOSAL 4.1. Share capital and substantial shareholders shareholding The Proposed Disposal will not have any effect on the issued and paid-up share capital and substantial shareholders shareholding of the Company as the Proposed Disposal do not involve any issuance of shares in the Company Earnings per share The Company had recorded audited consolidated profit after tax (PAT) of RM12,243,790 representing EPS of 3.66 sen for the financial year ended 31 December The proforma effect on the combined LAT of the Company after the Proposed Disposal would be approximately RM11.2 million. The EPS of the Company will reduce from EPS of 3.66 sen to net EPS approximately (-6.25) sen.

11 4.3 Net assets per share The Proposed Disposal is not expected to have any material effect on the net assets per share of the Company for the financial year ending 31 December Impact from proforma profit 2010 RM0.89 drop to RM0.79 (11.2% drop). 4.4 Gearing The proposed proposals are expected to have no material effect on gearing of the Group for the financial year ending 31 December The proforma effect on the combined debts against total share of the Group is expected to reduce from 0.48 to APPROVAL OF SHAREHOLDERS AND RELEVANT GOVERNMENT AUTHORITIES The Proposed Disposal is not subject to approval of the shareholders of the Company and any government authorities. 6. DEPARTURE FROM THE GUIDELINES ON THE OFFERING OF EQUITY AND EQUITY-LINKED SECURITIES ISSUED BY THE SECURITIES COMMISSION ( SC S EQUITY GUIDELINES ) This is applicable as the Proposed Disposals do not fall within the purview of the SC s Equity Guidelines. 7. DIRECTORS, MAJOR SHAREHOLDERS AND PERSON CONNECTED TO DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors and major shareholders of the Company or persons connected to them have any interest, direct and/or indirect, in the Proposed Disposals. 8. STATEMENT BY THE BOARD OF DIRECTORS The Board of Directors, having considered all aspects of the Proposed Disposals, is of the opinion that the transaction is in the best interest of the Company. 9. ESTIMATED TIME FRAME FOR THE COMPLETION OF THE PROPOSED DISPOSAL The Proposed Disposals are expected to be completed by 1 March 2012 or the Unconditional Date of the SRTDA, whichever is the later date. 10. HIGHEST PERCENTAGE RATIO APPLICABLE Based on the latest audited consolidated financial statements of the Company for the financial year ended 31 December 2010, the highest percentage ratio is Paragraph 10.02(g)(iii) of the Main Market Listing Requirements of Bursa

12 Securities applicable to the Proposed Disposals is 17.85%, being the aggregate value of the consideration given or received in relation to the transaction, compared with the net assets of the listed issuer. 11. DOCUMENTS FOR INSPECTION The Agreements may be inspected at the Registered Office of the Company at 10th Floor, Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee, Kuala Lumpur, during normal business hours from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 13 February 2012.