Further details on the Proposed Acquisition are set out in the following sections.

Transcription

1 Submitting Merchant Bank : OSK INVESTMENT BANK BERHAD Company Name : MAGNA PRIMA BERHAD Stock Name : MAGNA Date Announced : 23/3/2009 MAGNA PRIMA BERHAD ( MPB OR THE COMPANY ) PROPOSED ACQUISITION OF ALL PIECES OF LAND HELD UNDER GERAN 4628, 4629, 4630, 4631 AND 4632, LOTS 124, 125, 126, 127 AND 128 ALL IN SECTION 44, TOWN AND DISTRICT OF KUALA LUMPUR, NEGERI WILAYAH PERSEKUTUAN TOGETHER WITH THE BUILDING(S) ERECTED THEREON ( PROPOSED ACQUISITION ) Contents: 1. INTRODUCTION On behalf of the Board of Directors of MPB ( Board ), OSK Investment Bank Berhad ( OSK ) wishes to announce that Twinicon (M) Sdn Bhd ( TSB or the Purchaser ), a wholly-owned subsidiary of MPB, had on 23 March 2009 entered into a conditional sale and purchase agreement ( SPA ) with Lai Meng Girls School Association ( LMGSA or the Vendor ) for the proposed acquisition of all pieces of land measuring an aggregate area of approximately 10, square metres held under Geran 4628, 4629, 4630, 4631 and 4632, Lots 124, 125, 126, 127 and 128 all in Section 44, Town and District of Kuala Lumpur, Negeri Wilayah Persekutuan together with the building(s) erected thereon (the Said Property ), for a cash consideration of RM148,151,380 ( Purchase Price ). Further details on the Proposed Acquisition are set out in the following sections. 2. THE PROPOSED ACQUISITION 2.1 Details of the Proposed Acquisition The Proposed Acquisition involves the acquisition of the Said Property by TSB for a cash consideration of RM148,151,380, with the condition that TSB shall cause the transfer of all the freehold land measuring 22,280 square metres held under Geran 55267, Lot 38474, Mukim Petaling, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan (the Swapped Land ) from Bukit Jalil Development Sdn Bhd (the Swapped Land Proprietor ) in the Vendor s favour free from all encumbrances, for the purpose of relocating the existing Lai Meng Primary School and Lai Meng Kindergarten currently located at the Said Property ( Existing School ) to the Swapped Land ( New School ). Pursuant to the SPA, the Said Property shall be acquired free from all encumbrances (save and except for any encumbrances created or caused to be created by the Purchaser, the Purchaser s financier and/or their agents and/or solicitors) at the Purchase Price and subject to:- (a) (b) all conditions of title and category of land use, expressed or implied and all unregistered easement (if any), upon relating to or affecting the same; and the terms and conditions as contained in the SPA. 2.2 Description of the Said Property The Said Property is erected on five (5) adjoining parcels of land ( Lands ) with commercial development potential presently occupied by Lai Meng Primary School and Lai Meng Kindergarten located along Jalan Ampang, Kuala Lumpur. It lies on the north-west side of Jalan Ampang and is only a short walking distance to the west of the iconic Petronas Twin Towers. The present approach to the Said Property from the City Centre of Kuala Lumpur is directly by way of Jalan Ampang. Page 1 of 12

2 Broadly, the Said Property is bounded by Hotel Maya, Plaza 138 and Menara Chan on the northeast and Jalan Ampang on the south-east. The immediate neighbourhood is part of the prestigious Golden Triangle of the City Centre of Kuala Lumpur. The designation of the neighbourhood as the Golden Triangle is the direct result of the zoning of the area broadly bounded by Jalan Ampang, Jalan Sultan Ismail and Jalan Raja Chulan for limited commercial development. The zoning of such lands as limited commercial has resulted in the transformation of the neighbourhood during the 1970 s and the 1980 s into the preferred locality for major corporate offices in the country. Some of the notable commercial developments within the vicinity include the Petronas Twin Towers, Suria KLCC, Ritz-Carlton Residences Kuala Lumpur, Menara TA, Menara Public Bank, Wisma Selangor Dredging, Plaza 138, Menara Chan, Bank Simpanan Nasional, Angkasa Raya, Bangunan Getah Asli, Wisma Equity, Hard Rock Café, Malaysia Tourism Centre, Zouk, Avenue K and Menara AmBank to name a few. This area also boosts the existence of a number of international hotels such as Maya Hotel, Renaissance Hotel, Concorde Hotel, Shangri-La Hotel, Corus Hotel, Crown Regency, Equatorial Hotel, Nikko Hotel and Mandarin Oriental Hotel. Luxury condominiums in the neighbourhood include Park View, K-Residence, Marc Service Residence, The Ascot, Kirana Condominiums, The Crest, Cendana, Idaman Residences, One KL and D Mayang Condominiums. Details of the Lands are set out below:- Location : Geran 4628, 4629, 4630, 4631 and 4632, Lots 124, 125, 126, 127 and 128 all in Section 44, Town and District of Kuala Lumpur, Negeri Wilayah Persekutuan Total land area : 10,587.5 square metres (or 113,962.6 square feet) Tenure : Freehold Category of land use : Not stated Registered Proprietor : Lai Meng Girls School Association Existing and proposed use : Currently, all the buildings on the Lands are occupied by the Vendor for the operation of a primary school and a kindergarten. Following the completion of the Proposed Acquisition, the buildings on the said Lands will be demolished to make way for MPB s and/or its subsidiaries ( MPB Group or the Group ) future property development projects. Net book value : Market value : (1) Not available (2) RM194,000,000 Restriction in interest : Nil Notes:- (1) The Purchaser is not privy to such information which belongs to the Vendor. (2) Based on the valuation letter dated 27 February 2009 issued by the independent valuer, Messrs Khong & Jaafar Sdn Bhd, using the comparison approach. Page 2 of 12

3 Further details of the Said Property are set out below:- Lot number Title number Land area (square metres) Encumbrances 124 Geran No , Nil 125 Geran No , Nil 126 Geran No , Nil 127 Geran No , Nil 128 Geran No , Nil The Said Property is presently built upon with buildings and structures specifically designed for use as school premises. However, there is no information on the buildings erected thereon, as the Said Property shall be redeveloped into a mixed development project comprising commercial and/or residential units other than as a school. 2.3 Salient terms and conditions of the SPA The salient terms and conditions of the SPA include, amongst others, the following:- (a) Design, construction, completion and relocation of the New School The Purchaser shall and is hereby authorised so long as the SPA remains valid and subsisting, to design, arrange and organise the construction and completion of the New School in accordance with the approved plans within thirty-six (36) months from the date of the SPA or such other longer period as may be mutually agreed upon in writing ( Construction Period ) in a good workmanlike manner by using materials and workmanship of the quality and standards in accordance with the approved plans and the relevant approvals and all applicable laws and the requirements of all governmental agencies having jurisdiction over the construction work for the New School subject to, amongst others, the following obligations:- (i) (ii) the Purchaser shall with the Vendor s prior consent appoint the architect, quantity surveyor, engineer, electrical engineer, or such other firm, individual or company or consultant as shall be deemed necessary by the Vendor and as may be appointed by the Purchaser as approved by the Vendor from time to time in substitution or addition to them in connection with inter alia the design of and supervision and management over the construction of the New School ( Professional Team ) and the Purchaser shall be solely responsible for the payment of all fees, costs and expenses of the Professional Team; the Purchaser shall upon obtaining the relevant approvals and at the Purchaser s sole costs and expenses, arrange and call for the tender provided always that the Vendor has first approved the list of tenderers on the Vendor s behalf provided that such authority given to the Purchaser is still valid and subsisting at that point in time for the construction of the New School and shall at the time of opening of the tenders, call upon the Vendor or its authorised representative to attend and witness the opening of such tenders and to let the Vendor have all the information and costing with regards to the tender and with the Vendor s consent, award the construction contract to the successful tenderer; Page 3 of 12

4 (iii) (iv) (v) (vi) (vii) the Purchaser shall upon obtaining the relevant approvals and subject to the Vendor s agreement to pay all sums payable by the Vendor to the successful tenderer and/or where applicable, the other contractor(s), for and in respect of the due construction of the New School on the Swapped Land in accordance with the approved plans ( Construction Costs ), arrange with the Professional Team and/or successful tenderer for the commencement, erection and building on the Swapped Land of the New School and to do and perform all acts, deeds and things as shall be necessary for the completion of the New School in accordance with the approved plans or as may be requested or as directed by the Appropriate Authorities (being the relevant governmental, semi or quasi government and/or statutory departments, agencies or bodies) but with the Vendor s prior consent and the Purchaser shall at the Purchaser s sole costs and expense, deliver or cause to be delivered to the Vendor, the vacant possession of the New School together with the Original Certificate of Practical Completion and the Certificate of Completion and Compliance or its equivalent to the Vendor within the Construction Period; the Purchaser shall cause and procure the Professional Team to prepare, submit and obtain the Appropriate Authorities endorsement of the approved plans for the New School, at the Purchaser s sole costs and expenses; the Purchaser shall bear all costs, fees and expenses for the Professional Team, submission costs and project and managerial fees in respect of the construction of the New School (save and except the Construction Costs and all other costs agreed to be paid by the Vendor as set out in the SPA); the Construction Costs and Additional Sums (as defined below) payable shall be borne and paid by the Vendor to the successful tenderer and the other contractor(s) (if applicable) at the times and in the manner respectively stipulated in the construction contract and other contract(s) (if applicable); and the Vendor shall upon execution of the SPA grant the Purchaser the limited powers contained therein the form and substance found in the appendix annexed in the SPA (hereinafter referred to as the Power of Attorney ) in respect of or in connection with the following:- application(s) to the Appropriate Authorities for the Approval (as defined in clause (c) below), other approvals, the approval(s) for the approved plans and the relevant approval provided always that the consent of the Vendor have first been obtained in writing; arranging and calling for tender vis-à-vis construction of the New School on the Swapped Land for the Vendor s consideration; carrying out supervisory and project managerial duties on and in respect of the construction of the New School upon the approved instructions of the Vendor; and entering into and amending and terminating the construction contract and other contract(s) with the Vendor s approval, provided always that the Vendor shall be entitled at its sole and absolute discretion and at any time and without any reference to the Purchaser, to revoke the Power of Attorney in the event of any non-completion of the sale and purchase transaction, any refusal by the Purchaser to rectify any breach of terms of the SPA by the Purchaser and/or any mishandling or abuse of powers contained in the Power of Attorney. Any costs and expenses arising from the Power of Attorney shall be solely borne by the Purchaser. Page 4 of 12

5 It is hereby mutually agreed that where there are variation, alteration or modification of any or all of the approved plans after the construction contract has been duly awarded to and accepted by the successful tenderer and/or the other contract(s) awarded to and accepted by the other contractor(s) for reasons due to the Vendor s requirements or the Appropriate Authorities requirements which are acceptable by the Vendor, then:- (i) (ii) any additional sum(s), cost(s) and fees (hereinafter called the Additional Sums ), which shall be required to be paid as per the Professional Team s advice and confirmation and accepted by the Vendor for and in respect of the construction and completion of the New School, shall be paid by the Vendor to the successful tenderer and/or the other contractor(s) in the manner and at the times as the Vendor may agree with the successful tenderer and/or the other contractor(s); and if such variation, alteration or modification shall in any way cause a delay in or to the progress of the construction of the New School or the obtaining of approvals as set out in clause (c) below, then the Construction Period and/or the approval deadlines as set out in clause (c) below shall be extended by the period of such delay. (b) The Swapped Land transfer The Purchaser covenanted and agreed with the Vendor that the Purchaser shall cause the Swapped Land to be transferred to the Vendor free from all encumbrances to be executed, adjudicated, stamped and delivered to the Vendor s solicitors for presentation together with the prescribed registration and penalty fees (if any) on the transfer of the Swapped Land and all relevant documents (including the current year quit rent and assessment receipts required for such presentation) to the relevant land office/registry and the full payment of the purchase price, all apportioned outgoings and all monies due under the Swapped Land agreement shall be paid to the Swapped Land Proprietor in respect of the Swapped Land within three (3) months from the date of the SPA with a further three (3) months extension (if required). (c) Conditions subsequent The SPA is conditional upon the following being obtained within the times set out below:- (i) (ii) (iii) (iv) the approval of the State Education Authority or any authority authorised by it for such purpose to relocate the Existing School from the Said Property to the Swapped Land ( Approval ) within six (6) months from the date of the SPA with an option to extend for a further three (3) months therefrom or such longer period as may be mutually agreed upon in writing; the approval of the Foreign Investment Committee ( FIC ) on the Vendor s sale and the Purchaser s purchase of the Said Property within three (3) months from the date of the SPA with an option to extend for a further three (3) months therefrom; the Appropriate Authorities approval for the planning approval, development order, building permission and generally to obtain approvals for the construction of the New School from the Appropriate Authorities in accordance to the existing law and by-laws and regulations with terms and conditions acceptable to the Vendor within twelve (12) months from the date of the SPA with an option to extend a further three (3) months thereform or such longer period as may be mutually agreed upon in writing; and the Appropriate Authorities approval for the approved plans and the construction and building of the New School with terms and conditions acceptable to the Vendor within twelve (12) months from the date of the SPA with an option to extend a further three (3) months therefrom or such longer period as may be mutually agreed upon in writing. Page 5 of 12

6 The Purchaser shall at its sole costs and expenses endeavour to obtain the abovementioned approvals. 2.4 Basis of arriving at the Purchase Price The Purchase Price for the Said Property was arrived at based on a willing buyer-willing seller basis after taking into consideration the market value of the Said Property as ascribed by an independent firm of registered valuers, Messrs Khong & Jaafar Sdn Bhd ( Valuer ), as set out in its letter dated 27 February The Valuer had determined the market value of the Said Property to be RM194,000,000, using the comparison approach in carrying out the valuation of the Said Property. As such, the Purchase Price represents a discount of approximately 23.63% or RM45.85 million to the market value of the Said Property. 2.5 Sources of funding and mode of satisfaction The Purchase Price for the Proposed Acquisition will be satisfied entirely in cash, which will be financed through a combination of internally-generated funds, external bank borrowings, and/or through joint-venture with equity partners. The exact manner in which the Purchase Price will be satisfied has not been finalised at this juncture. The Purchase Price of RM148,151,380 for the Proposed Acquisition shall be paid in the manner set out below:- Timing Purchase price (RM) (a) Earnest deposit Prior to the execution of the SPA 7,407, (b) Balance deposit Upon the execution of the SPA 7,407, (c) First payment Within seven (7) days from the date of the Purchaser s solicitors receipt of the Approval or such longer period as may be mutually agreed upon in writing 14,815, (d) Balance of the Purchase Price Within thirty (30) days from the date of the completed relocation of the Existing School to the New School or such longer period as may be mutually agreed upon in writing 118,521, ,151, Liabilities to be assumed by the MPB Group Save for TSB s obligations to design, arrange and organise the construction and completion of the New School upon the New School having been issued with the Original Certificate of Practical Completion and the Certificate of Completion and Compliance or its equivalent to the Vendor within the Construction Period, the MPB Group will not be assuming any liability, including contingent liabilities and guarantees pursuant to the Proposed Acquisition. 2.7 Date and original cost of investment The Board is unable to disclose the date and cost of investment made on the Said Property by the Vendor as this information is not privy to MPB and/or TSB. Page 6 of 12

7 2.8 Additional financial commitment and expected returns of investment As a principal condition required to be fulfilled prior to the completion of the SPA and as long as the SPA remains valid and subsisting, TSB is required to design, arrange and organise the construction and completion of the New School in accordance with the approved plans within the Construction Period in a good workmanlike manner. Furthermore, upon completion of the Proposed Acquisition and depending on the prevailing market conditions, the MPB Group intends to undertake an integrated commercial and/or residential development project, which is expected to comprise an office tower and/or a residential tower on the Said Property. The total estimated gross floor area of the said development project is approximately 1.2 million square feet with an estimated gross development value of up to RM1.3 billion. The development project is expected to commence in 2012 and scheduled for completion in As such, it is still too preliminary to ascertain the additional financial commitment required for designing, arranging and organising of the construction and completion of the New School, details of the future development of the Said Property, total development cost, as well as the expected profits to be derived from the development of the Said Property. 2.9 Information on LMGSA LMGSA was incorporated in Malaysia under the Companies Act, 1965 on 3 March 1967, as a company limited by guarantee, under its present name. LMGSA is principally involved in the provision, promotion and support of the education of Chinese pupils, scholars and students of the Lai Meng Primary School and Lai Meng Kindergarten. 3. RATIONALE FOR THE PROPOSED ACQUISITION The inflow of foreign investment generally from Singapore, the Middle East, United States and Europe has contributed to the expansion in the property market within the Kuala Lumpur City Centre ( KLCC ) area. As one of the Group s principal activities is property development, the Proposed Acquisition is intended to enable the Group to replenish and increase its land bank at strategic locations for its future property development projects with high gross development value potential, to drive earnings sustainability. The Proposed Acquisition also creates an opportunity for the Group to venture into the high-end property market seeing that lands within the KLCC area available for development are scarce. With its intention to undertake an integrated commercial and/or residential development project, the Proposed Acquisition is expected to contribute positively to the Group s earnings in the future. 4. EFFECTS OF THE PROPOSED ACQUISITION The effects of the Proposed Acquisition are as follows:- 4.1 Share capital and substantial shareholders shareholding The Proposed Acquisition will not have any effect on the issued and paid-up share capital and substantial shareholders shareholding of MPB as the Proposed Acquisition does not involve any issuance of shares in MPB. Page 7 of 12

8 4.2 Net assets and net assets per share The Proposed Acquisition is not expected to have any immediate material effect on the net assets and net assets per share of the MPB Group as the Proposed Acquisition shall only be completed and the development of the Said Property shall only be commenced, following the completion of the New School on the Swapped Land within thirty-six (36) months from the date of the SPA. Barring unforeseen circumstances, the development of the Said Property to be acquired pursuant to the Proposed Acquisition is expected to contribute positively to the Group s net assets and net assets per share in the future financial years. 4.3 Gearing As the balance of the Purchase Price as defined in Section 2.5 above, representing 80% of the Purchase Price, will be made within thirty (30) days from the date of the completed relocation of the Existing School to New School or such longer period as may be mutually agreed upon in writing and TSB is required to complete the relocation of the Existing School to the New School within thirty-six (36) months from the date of the SPA (or such other longer period as may be mutually agreed upon in writing), the Proposed Acquisition will not have any immediate effect on the gearing of the Group. As set out in Section 2.5 above, the Purchase Price is expected to be funded by the Group s internally-generated funds, external bank borrowings and/or equity participation. The exact manner in which the Purchase Price will be satisfied has not been finalised at this juncture and will be decided by the management of the Group at a later date. Hence, the effect of the Proposed Acquisition on the gearing of the Group cannot be ascertained at this juncture. However, it should be noted that any borrowings taken to finance the Proposed Acquisition shall temporarily increase the gearing of the Group. 4.4 Earnings and earnings per share The Proposed Acquisition is not expected to have any material effect on the earnings and earnings per share of the MPB Group for the financial year ending 31 December 2009 as the Proposed Acquisition shall only be completed and the development of the Said Property shall only be commenced following the completion of the New School on the Swapped Land within thirty-six (36) months from the date of the SPA. Barring unforeseen circumstances, the development of the Said Property to be acquired pursuant to the Proposed Acquisition is expected to contribute positively to the Group s earnings in the future financial years. 5. PROSPECTS 5.1 Overview and outlook of the Malaysian property market industry The property up cycle in 2007/2008 may have just peaked and will significantly lose momentum in 2009 to digest the sudden massive incoming supply of properties, a repercussion from the aggressive launches of mid- to high-end developments, especially in the luxury condominium segment in recent years. The recent demand destruction brought on by the softening economy may snowball into 2009, thus potentially increasing the severity of the down cycle. In other words, the combination of much subdued demand and intense competition as a result of the supply cycle may provide just the right ingredients for the perfect storm for the sector next year. Page 8 of 12

9 Ample excess liquidity and the fast rising affluent potential home buyers, coupled with the more resilient domestic economy post Asian crisis, have been the prime drivers of the Malaysian residential property market since early 21 st century it first began with mass housing market boom in 2003/2004 which subsequently led to high-end condominium boom in 2007/2008. With both of these segments now out of the picture for at least the next three (3) years and given the limited alternative investment choices, it is only natural to think that landed properties, particularly the mid-to-high end segment, should be the next prime leader for the next phase of Malaysian property up cycle, which may commence in early 2010 or In addition, OSK Research estimates that more than 5,000 units of high-end condominiums (priced more than RM400 per square feet) would come on stream in the Klang Valley by late Another wave of more than 5,000 units is expected to hit in 2009 before easing slightly to more than 2,000 units in There is recent evidence that higher-end landed properties in well-established locations could potentially outperform the overall property cycle in times of adversity. This hedging opportunity stems from the hypothesis that the fast-rising baby boomers of the 1950s, who are usually more affluent but risk-adverse, are likely to hedge their wealth in mid- to high-end landed properties during uncertain times. Coupled with the fact that household liquidity is still in abundance, this age group is unlikely to plough all their wealth back into the banking system given the low deposit rates amid the high inflationary environment. The Klang Valley office sub-sector has garnered a generous degree of interest since early this decade and became more pronounced since early 2007 as a result of the development of Real Estate Investment Trusts (REITs), the huge inflow of petrodollars and the pent-up demand from existing local and multinational companies such as oil and gas, financial and Information Technology (IT) firms. In addition, many companies are looking to relocate to larger offices but are constrained by the limited supply of prime space in both the Golden Triangle and Bangsar/Pantai enclave. Given the demand-supply imbalance, existing office space has become a landlord s market in most parts of the Klang Valley. However, the popular trend in year 2007 in which office space were purchased en blocs prior to physical completion, has dwindled significantly in the second half of 2008, reflecting the more cautious stance of institutional buyers amid the growing global financial turmoil and signs of softening in the domestic economy. On the other hand, this trend has recently been replaced by the growing number of en bloc acquisitions of existing prime office buildings at record-high valuations, especially those with quality long-term anchor tenants, a phenomenon that reflects the rising demand for safer quality assets during times of uncertainty. The mismatch between growing demand or quality space and limited supply will ensure that the current prime office space in Klang Valley continues to be a landlord s market for another three (3) to six (6) months or so. The top picks include locations in the Golden Triangle and Centralised Business District, which are expected to continue to be buoyed by pent-up demand from large multinational corporations and given the limited supply even until post Come next year, the fortune of prime office space in the Klang Valley will hinge largely on whether the economy is in good enough health to absorb the huge incoming supply commencing late 2008/mid (Source: Sector Update: Fulfilling The Peak-Trough Cycle Prophecy dated 6 November 2008 by OSK Research) As the integrated commercial and/or residential development project will be undertaken subsequent to the completion of the relocation of the Existing School to the New School three (3) years later, the Board is of the opinion that the Malaysian property market would recover by then. 5.2 Prospects of the Said Property The Said Property is strategically located along Jalan Ampang, surrounded by the neighbourhood of prestigious landmark buildings and within a short walking distance to the iconic Petronas Twin Towers which bestow an immense development potential. Page 9 of 12

10 The scarcity of land and the increasing demand for prime commercial and residential properties within the Golden Triangle region caused the Said Property to be a much sought-after location for high-end development projects. The Board is of the view that the Said Property will offer immense development potential upon commencement of the integrated commercial and/or residential development project apart from contributing to the Group s earnings beyond year Consequently, the Group s position in the property development market will be strengthen and at the same time, creating value for its shareholders. (Source: Management of MPB) 6. RISK FACTORS 6.1 General business risk The Proposed Acquisition is subject to certain risks inherent in the property development industry, of which the Group is already involved in. Factors that could affect the Proposed Acquisition may include amongst others, material and labour shortage, rising cost of material and labour, fluctuations in the demand for the developments on the Said Property, changes in governmental legislation and priorities, as well as competition within the property development industry. As a mitigating factor, the Group continues to keep abreast with the latest developments in the property development market and will strive to ensure that an experienced, dedicated and professional team manages the development of the Said Property. Although steps have been taken to mitigate these general business risks, no assurance can be given that any changes in these factors will not have any material adverse effect on the Group. 6.2 Interest rate risk The MPB Group intends to finance the Proposed Acquisition vide a combination of internallygenerated funds, bank borrowings and/or through joint venture with equity partners. As such, in the event if any borrowing is taken to finance the Proposed Acquisition, the MPB Group may be exposed to fluctuations of interest rate movements as well as the risk in generating sufficient funds to meet its financial repayment commitments on time. Significant increase in interest rate may adversely affect the financial performance of the Group. It may, to a certain extent affect the saleability of the development project when the purchase capability of the end purchasers is affected by increasing financing costs. The management takes cognisance of this and will take into consideration the gearing level, interest cost, as well as internal cash requirements for the business in determining the optimal combination of internally-generated funds, bank borrowings and/or enter into joint-venture to finance the Proposed Acquisition, continue to monitor closely the interest rate movements and hedge against interest rate exposure as it deems appropriate. It should also be highlighted that the abovementioned interest rate risk will be partly mitigated by the staggered payment terms where 80% of the Purchase Price will be made upon completion of the relocation of the New School. 6.3 Non-completion of the Proposed Acquisition In the event the conditions precedents in the SPA are not fulfilled and/or TSB has not caused the Original Certificate of Practical Completion and Certificate of Completion and Compliance of the New School to be issued to the Vendor, this will result in the non-completion of the Proposed Acquisition. The non-completion may result in the deposit paid being forfeited, and all incidental expenses incurred in relation to the design, arranging and organising the construction and completion of the New School on the Swapped Land forgone. It will also result in the Group not being able to acquire the Said Property and hence, the non-achievement of the objective of the Proposed Acquisition as set out in Section 3 above. Page 10 of 12

11 6.4 Risk relating to the Proposed Acquisition There can be no assurance that the anticipated benefits of the Proposed Acquisition will be realised, or that the Group is able to generate sufficient revenues from the Proposed Acquisition to offset associated acquisition cost incurred. However, the Group will seek to mitigate such risks by adopting prudent investment strategies and conducting feasibility assessment and review prior to making its investment decisions. 7. APPROVALS REQUIRED The Proposed Acquisition is subject to and conditional upon approvals being obtained from the following:- (a) (b) (c) (d) (e) the State Education Authority or any authority authorised by it for the purpose to relocate the Existing School from the Said Property to the Swapped Land; the FIC, for the acquisition of the Said Property; the Appropriate Authorities for the planning approval, development order, building permission and construction and building of the New School; the shareholders of MPB at an extraordinary general meeting to be convened; and any other relevant parties, if required. The applications to the State Education Authority or any authority authorised by it, the FIC and the Appropriate Authorities as set out above are expected to be made within six (6) months, twenty-one (21) days and twelve (12) months from the date of the SPA respectively. 8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors, major shareholders of MPB and/or persons connected to them, as defined in the Listing Requirements of Bursa Malaysia Securities Berhad, has any interest, direct or indirect, in the Proposed Acquisition. 9. DIRECTORS RECOMMENDATION The Board, having considered all aspects of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is in the best interest of the Company and its shareholders. 10. DEPARTURE FROM THE GUIDELINES ON THE OFFERING OF EQUITY AND EQUITY- LINKED SECURITIES ISSUED BY THE SECURITIES COMMISSION ( SC S EQUITY GUIDELINES ) The Proposed Acquisition does not fall under the ambit of the SC s Equity Guidelines. 11. ADVISER OSK has been appointed by MPB to act as the Adviser for the Proposed Acquisition. 12. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to the fulfilment of all conditions subsequent as set out in Section 2.3(c) above, the Directors of MPB expect the Proposed Acquisition to be completed by year Page 11 of 12

12 13. DOCUMENTS FOR INSPECTION The SPA, valuation report and valuation letter from the Valuer dated 30 July 2008 and 27 February 2009 respectively will be made available for inspection at the registered office of MPB at Lot No. C-G11 & C-G12, Block C, Jalan Persiaran Surian, Palm Damansara, Kota Damansara, Petaling Jaya, Selangor Darul Ehsan during normal office hours from Monday to Friday (except public holidays) from the date of this announcement up to and including the date of the forthcoming extraordinary general meeting to be convened. This announcement is dated 23 March Page 12 of 12