Further details of the Proposed Disposal are set out in the ensuing sections.

Transcription

1 MEDA INC BERHAD ( MEDA OR THE COMPANY ) PROPOSED DISPOSAL OF 100% EQUITY INTEREST IN ZKP DEVELOPMENT SDN BHD ( ZKP ), COMPRISING 8,750,000 ORDINARY SHARES OF RM1.00 EACH IN ZKP FOR A CASH CONSIDERATION OF RM10,294,871 ( PROPOSED DISPOSAL ) 1. INTRODUCTION On behalf of the Board of Directors of Meda ( Board ), Hong Leong Investment Bank Berhad ( HLIB ) wishes to announce that the Company had on 24 July 2015, entered into a conditional share sale agreement ( SSA ) for the proposed disposal of 100% equity interest in ZKP comprising 8,750,000 ordinary shares of RM1.00 each in ZKP ( ZKP Shares ) ( Sale Shares )to Casa Andaman Sdn Bhd ( Purchaser or CASB ) for a cash consideration of RM10,294,871 ( Disposal Consideration ). Further details of the Proposed Disposal are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED DISPOSAL Subject to the terms and conditions of the SSA, Meda shall sell and the Purchaser agrees to purchase from Meda the ZKP Shares free from all encumbrances including any claim, charge, security, lien, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind or adverse interests and with all rights attaching thereto together with all dividends and distributions declared in respect thereof as from the Completion Date (as defined in Section 3.4 of this Announcement). ZKP is the beneficial owner of 138 individual strata titles for various floors, units and areas within the commercial mixed development known as The Summit Bukit Mertajam which is constructed on a piece of freehold land located at Jalan Arumugam Pillai, Bukit Mertajam, Pulau Pinang held under parent title Grant 71104, Lot 2028, Section 4, Town of Bukit Mertajam, Seberang Perai Tengah, Pulau Pinang ( Properties ). The Summit Bukit Mertajam comprises the following: (iii) (iv) a 5-storey retail podium with a total of 325 retail lots ( Retail Podium ) a 9-storey office tower located above the Retail Podium ( Office Tower ); a 10-storey 168-room 3 star rated hotel tower known as the Summit Hotel Bukit Mertajam ( Hotel ); and 664 car parking bays located within 2 basement levels ( Car Park ). It is to be noted that UDA Holdings Berhad ( UDA ) is the registered owner of the Properties. However, pursuant to terms of a Development Agreement dated 31 December 1994 entered into between UDA and Zeus Development-Kumpulan Pinang JV Sdn Bhd ( Zeus ) ( Development Agreement ), in relation to which subsequently transferred and novated all its rights and obligations in favour of ZKP vide a Novation Agreement dated 30 January 1995 ( Novation Agreement ) and granted a power of attorney in favour of ZKP vide a Power of Attorney dated 9 May 2000 ( POA ), ZKP is the beneficial owner of the Properties. For the avoidance of doubt, the Properties held under ZKP subject to the Proposed Disposal excludes the individual strata titles / lots in the Retail Podium and Office Tower which have been sold by ZKP prior to the date of the SSA. 1

2 A summary of the salient information on the Properties is set out as follows: Title Details of the Properties : Car Park: Strata titles Geran 71104/M1/B3/1 together with Accessory Parcels (A1, A16 and A17). Retail Podium: Geran 71104/M1/B1/3, Geran 71104/M1/B1/5, Geran 71104/M1/B1/16, Geran 71104/M1/B1/18 - Geran 71104/M1/B1/21, Geran 71104/M1/B1/23 - Geran 71104/M1/B1/31, Geran 71104/M1/B1/33, Geran 71104/M1/B1/51, Geran 71104/M1/B1/54, Geran 71104/M1/B1/55, Geran 71104/M1/B1/60 - Geran 71104/M1/B1/63, Geran 71104/M1/B1/65, Geran 71104/M1/B1/67, Geran 71104/M1/B1/68, Geran 71104/M1/B1/70 - Geran 71104/M1/B1/72, Geran 71104/M1/1/82, Geran 71104/M1/1/83, Geran 71104/M1/1/86, Geran 71104/M1/1/87, Geran 71104/M1/1/90, Geran 71104/M1/1/91, Geran 71104/M1/1/105, Geran 71104/M1/1/115, Geran 71104/M1/1/119 - Geran 71104/M1/1/125, Geran 71104/M1/1/128 - Geran 71104/M1/1/131, Geran 71104/M1/1/133, Geran 71104/M1/1-N1/134 - Geran 71104/M1/1-N1/136, Geran 71104/M1/2/138, Geran 71104/M1/2/154, Geran 71104/M1/2/181, Geran 71104/M1/2/182, Geran 71104/M1/2/185, Geran 71104/M1/2/201 - Geran 71104/M1/2/230, Geran 71104/M1/3/231, Geran 71104/M1/3/234, Geran 71104/M1/3/235, Geran 71104/M1/3/245, Geran 71104/M1/3/246, Geran 71104/M1/3/248, Geran 71104/M1/3/250, Geran 71104/M1/3/277 - Geran 71104/M1/3/279, Geran 71104/M1/3/297 - Geran 71104/M1/3/300, Geran 71104/M1/4/301 - Geran 71104/M1/4/305, Geran 71104/M1/4/311, Geran 71104/M1/4/313 - Geran 71104/M1/4/317, Geran 71104/M1/4/319, Geran 71104/M1/4/330 - Geran 71104/M1/4/334, Geran 71104/M1/4/340, Geran 71104/M1/4/343, Geran 71104/M1/4/344, Geran 71104/M1/4/346 - Geran 71104/M1/4/348. Office Tower: Geran 71104/M1/5/353 together with Accessory Parcels (A6 and A18) (1), Geran 71104/M1/5/354, Geran 71104/M1/5/355, Geran 71104/M1 MENARA A/8/359, Geran 71104/M1 MENARA A/9/360, Geran 71104/M1 MENARA A/10/361, Geran 71104/M1 MENARA A/11/362, Geran 71104/M1 MENARA A/12/362, Geran 71104/M1 MENARA A/13/364. Hotel: Geran 71104/M1/B2/2, Geran 71104/M1/1/132 together with Accessory Parcels (A5) and Geran 71104/M1/5/356 together with Accessory Parcels (A2 A4 and A7 A15). Tenure : Freehold The Properties are sited on Parent Title Grant 71104, Lot 2028, Section 4, Town of Bukit Mertajam, Seberang Perai Tengah, Pulau Pinang. 2

3 Category of land use Description and existing use : Building : The units in the Retail Podium and Office Tower are rented out to generate rental income while the car park generates fee income. The Hotel is used to generate income through bookings of the hotel rooms and utilisation of its facilities as well as sale of food and beverages. Age of building : Car Park, Retail Podium : Approximately 18 years and Office Tower Hotel : Approximately 15 years Land area : 17,196 square meters ( sqm ) (185,096.2 square feet ( sq ft )) Strata area owned by ZKP Total net lettable area of the Properties Occupancy rate of the Properties as at 30 June 2015 Rental income received during the financial year ended ( FYE ) 31 December 2014 Amount of lettable space of the Properties available for letting as at 30 June 2015 : Car Park : 20,692 sqm (222, sq ft) Retail Podium : 28,522 sqm (307, sq ft) Office Tower : 5,576 sqm (60, sq ft) Hotel : 14,967 sqm (161, sq ft) : Retail Podium : 28,492 sqm (306, sq ft) Office Tower : 5,576 sqm (60, sq ft) : Retail Podium : 38.86% Office Tower : 14.47% : Retail Podium : RM2.79 million Office Tower : RM0.17 million : Retail Podium : 17, sqm (187, sq ft) Office Tower : 4, sqm (51, sq ft) Express condition : Tanah yang diberimilik ini hendaklah digunakan untuk tujuan perniagaan sahaja. Restriction-ininterest : Tanah yang diberi milik tidak boleh dicagar, pajak, pajakan kecil atau sebarang urusniaga tanpa mendapat kebenaran Pihak Berkuasa Negeri. Encumbrances : Nil Net carrying amounts as at 31 December 2014 : RM84.84 million Note: (1) Premised on the Development Agreement, the Accessory Parcels to Geran 71104/M1/5/353, namely A6 and A18, forms part of the compensation due to UDA. 3

4 2.1 Background information on ZKP ZKP was incorporated as a private company under the Companies Act, 1965 ( Act ) under the name of Orion Atur (M) Sdn Bhd on 16 August Subsequently, on 24 September 1994, it changed its name to ZKP. The principal activity of ZKP is that of property investment and the operation of a hotel and car park. As at 30 June 2015, ZKP has an authorised share capital of RM10,000,000 divided into 10,000,000 ZKP Shares of which 8,750,000 ZKP Shares have been issued and fully paid up. The original cost of investment in ZKP of RM47.0 million was made by Meda on 28 December As at 30 June 2015, ZKP is a wholly-owned subsidiary of Meda. The Directors of ZKP are Dato Teoh Seng Kian and Dato (Dr.) Teoh Seng Foo. A brief summary of ZKP s historical financial information for the past 3 years up to the financial year ended ( FYE ) 31 December 2014 are disclosed in Appendix I of this Announcement. 2.2 Background information on the Purchaser CASB was incorporated as a private company under the Companies Act, 1965 ( Act ) under the name of Agam Unggul Sdn Bhd on 24 March Subsequently, on 10 August 2004, it changed its name to CASB. The principal activity of CASB is that of construction. As at 30 June 2015, CASB has an authorised share capital of RM1,000,000 divided into 1,000,000 ordinary shares of RM1.00 each in CASB ( CASB Shares ) of which all CASB Shares have been issued and fully paid up. As at 30 June 2015, the respective shareholdings of the Directors and substantial shareholders of CASB in CASB are set out as follows: Name of Directors and Substantial Shareholders < Direct >- No. of CASB Shares held % < Indirect >- No. of CASB Shares held % Teoh Seng Aun 400, Dato Teoh Seng Kian 300, Othman Bin Merah 300, Total 1,000, Mode of settlement of the Disposal Consideration The Disposal Consideration is proposed to be satisfied by cash in accordance with the terms of the SSA, in the following manner: Breakdown of payment Terms of payment RM 000 Deposit and part payment Upon execution of the SSA 2,059 in cash ( Deposit ) Balance payment in cash On the Completion Date (as defined in Section 8,236 ( Balance Payment ) 3.4 of this Announcement) Total 10,295 In the event that the Balance Payment or any part thereof is not paid within 12 months from the Unconditional Date (as defined in Section 3.3(iii) of this Announcement) ( Initial Period ), the Purchaser shall be granted an extension of three (3) calendar months from the expiry of the Initial Period to pay the Balance Payment with interest of 10% per annum on the amount of the Balance Payment remaining outstanding commencing from the expiry of the Initial Period until the date of full payment of the Balance Payment or such extended date as the parties may mutually agree upon. The Initial Period and the extension thereof shall be collectively referred to as the Completion Period. 4

5 In addition to the Disposal Consideration, the Purchaser has also undertaken to settle all net inter-company debt owed by ZKP to its holding company and its related companies on the Completion Date (as defined in Section 3.4 of this Announcement) ( Net Amount Owing ). As the Net Amount Owing owed by ZKP may vary up till the Completion Date, a completion audit shall be carried out to determine the final Net Amount Owing owed by ZKP to be settled by the Purchaser on the Completion Date. If the Net Amount Owing is not settled within the Initial Period, interest of 10% per annum calculated on daily basis on the outstanding Net Amount Owing shall be chargeable commencing from the expiry of the Initial Period till the date of full settlement. Based on the audited financial statements of ZKP as at 31 December 2014, the details of the Net Amount Owing in the books of ZKP are as follows: RM 000 Amount due from related companies 2,170 Less: Amount due to related companies (21,711) Less: Amount due to Meda (48,032) Net Amount Owing as at 31 December 2014 (67,573) 2.4 Basis and justification for arriving at the Disposal Consideration The Disposal Consideration, which is equivalent to the audited net assets ( NA ) of ZKP as at 31 December 2014, was arrived at following negotiations between the Meda and the Purchaser on a willing-buyer willing-seller basis after taking into consideration the following: The audited NA of ZKP as at 31 December 2014 of approximately RM10.30 million; The adjusted net liabilities ( Adjusted NL ) of ZKP as illustrated as follows: RM 000 Audited NA of ZKP as at 31 December ,295 Less: Revaluation deficit (a) (19,880) Adjusted NL (9,585) Note: (a) The revaluation deficit is calculated based on the difference between the audited net carrying amounts of the Properties as at 31 December 2014 of approximately RM84.84 million and the market value indication of RM65 million for the Properties as ascribed by Laurelcap Sdn Bhd ( Valuer ), an independent firm of registered valuers, after adopting the Comparison method and Income approach method. Based on the Adjusted NL of ZKP of RM9.59 million, the Disposal Consideration is a premium of RM19.88 million over the Adjusted NL; and (iii) The rationale of the Proposed Disposal as set out in Section 4 of this Announcement. 5

6 2.5 Utilisation of proceeds The total proceeds from the Proposed Disposal are estimated to be RM77.87 million, which includes the Disposal Consideration and the Net Amount Owing (based on the audited financial statements as at 31 December 2014), are expected to be utilised as follows: Purposes Note RM 000 Timeframe for the utilisation of proceeds from completion of the Proposed Disposal Part payment for the proposed 77,395 Within 1 year acquisition of BCM Holdings Sdn Bhd ( BCM ) and/or other future investments and/or funding for working capital within the property development industry Defraying expenses incidental to the 474 Within 1 month Proposed Disposal Total 77,869 Notes: As announced on 25 June 2015, Meda intends to undertake the proposed acquisition of 100% equity interest in BCM comprising 2,000,000 ordinary shares of RM1.00 each and 4,000,000 redeemable convertible preference shares of RM1.00 each in BCM for an aggregate purchase consideration of RM180.0 million, of which RM139.8 million is to be settled in cash and RM40.2 million is to be settled via the issuance of new ordinary shares of RM0.50 each in Meda ( Meda Shares ) ( Proposed Acquisition ). The proceeds raised from the Proposed Disposal are intended to be utilised to partially finance the cash portion of the purchase consideration in respect of the Proposed Acquisition. Nonetheless, should the proceeds raised from the Proposed Disposal not be required for the Proposed Acquisition, Meda and its subsidiaries ( Meda Group ) will utilise the proceeds raised from the Proposed Disposal for other investment / business opportunities to be identified within the property development industry, with a view to strengthen and grow its business. These may include other acquisitions, strategic investments and/or strategic collaborations, joint ventures or alliances in the property development industry. Further, part of the proceeds arising from the Proposed Disposal may be utilised to fund working capital requirements for the Meda Group to finance its day-to-day operations, including payment to creditors, such as contractors and consultants, purchase of raw materials, administrative expenses, such as salaries and wages and other operating expenses, such as advertising and promotional activities. The actual utilisation has not been determined at this juncture and may differ at the time of utilisation. Expenses in relation to the Proposed Disposal comprise, among others, professional fees for advisers and lawyers, fees payable to authorities, expenses to convene the extraordinary general meeting ( EGM ) and printing, despatch and advertising expenses. Any difference in the actual amount utilised for defraying the estimated expenses relating to the Proposed Disposal would be adjusted to/from the proceeds allocated for the part payment of the Proposed Acquisition and/or other future investments and/or funding for working capital within the property development industry. Pending the utilisation of proceeds by the Group, the proceeds will be placed in interestbearing deposit accounts with financial institutions or short-term money market instrument(s) as the Board may deem fit. 2.6 Liabilities to be assumed Save for the Purchaser s obligation under the SSA to settle the Net Amount Owing and liabilities incurred in the ordinary course of business of ZKP, there are no liabilities, including contingent liabilities and guarantees, to be assumed by the Purchaser arising from the Proposed Disposal. 6

7 3. SALIENT TERMS OF THE SSA 3.1 Sale and purchase of Sale Shares Subject to the provisions of the SSA, Meda, as registered and beneficial owner of the Sale Shares, shall sell, and the Purchaser shall purchase the Sale Shares free from all encumbrances including any claim, charge, security, lien, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind or adverse interests and with all rights attaching thereto together with all dividends and distributions declared in respect thereof as from the completion date of the sale and purchase transaction, for the Disposal Consideration which shall be paid in the payment manner as set out in the section 2.3 of this Announcement. 3.2 Adjustment to Purchase Consideration The parties agree and acknowledge that the Disposal Consideration is derived and based on the audited shareholders funds of ZKP of RM10,294,871 (as at 31 December 2014), where the audited net book value of the Properties are valued at RM84,842,216 ( Book Value ). The parties further agree that prior to the Completion Date (as defined in Section 3.4 of this Announcement), a special valuation shall be carried out by an independent valuer appointed by Meda to confirm the market value of the Properties ( Market Value ). Where the Market Value is more than the Book Value, the parties agree and acknowledge that the Disposal Consideration shall be adjusted and increased by such difference between the Market Value and the Book Value. In such an event, the differential amount between the Market Value and the Book Value shall be made at the time of payment of the Balance Payment. For purpose of clarification, the parties agree and acknowledge that there shall be no deduction of the Disposal Consideration if the Market Value is less than the Book Value. 3.3 Conditions precedent to Completion The sale and purchase of the Sale Shares as set out in the SSA is conditional upon the following conditions precedents being fulfilled on terms and conditions acceptable to the parties ( Conditions Precedent ) within a period of six (6) months from the date of the SSA or such extended period(s) as the parties may agree in writing ( Approval Period ): (a) (b) The approval of the shareholders of Meda for the disposal of the Sale Shares; and the approval of the shareholders of the Purchaser for the purchase of the Sale Shares (iii) If any or all of the Conditions Precedent is not fulfilled within the Approval Period, the sale and purchase of the Sale Shares as set out in the SSA shall be deemed terminated and be null and void and of no effect and Meda is to refund the Deposit free of interest forthwith to the Purchaser and thereafter no party shall have any claims of whatsoever nature against the others save and except in respect of any antecedent breach. The SSA shall cease to be conditional on the date all the Conditions Precedent are fulfilled and the parties are duly notified of the same, within the Approval Period ( Unconditional Date ). 7

8 (iv) Notwithstanding anything to the contrary in the SSA, it is agreed that the party for whose benefit a Condition Precedent shall have the unfettered right to waive the said Condition Precedent. 3.4 Completion Completion of the sale and purchase of the Sale Shares as set out in the SSA shall take place on a date falling within the Completion Period to be determined by the Purchaser, in consultation with Meda or such later date, being a business day, as the parties may agree in writing on which Completion shall take place ( Completion Date ) at the office of the Purchaser or such other place the parties may agree in writing. 3.5 Parties covenants pending completion As from the date of the SSA and up to and including the Completion Date, Meda warrants that ZKP shall act in accordance with the ordinary course of business of ZKP. Meda agrees with the Purchaser that as from the date of the SSA to and including the Completion Date, Meda shall obtain the written consent of the Purchaser (the consent of which shall not be unreasonably withheld) if ZKP seeks to do any of the following: (a) (b) (c) increase the existing discretionary powers granted to any employee of ZKP; save and except for the increase in the remuneration of any of its employees of a sum equivalent of no more than 10% of the existing remuneration of such employee ( Agreed Limit ), change the terms and conditions of services of its employees or in the existing staff benefits; and save and except for the increase in the remuneration of any of its employees that is within the Agreed Limit, increase the salary or bonus/ex-gratia payments in excess of the existing collective agreement or employment contract of staff both in terms of amounts and frequency of increase of payment. 3.6 Warranties and Undertaking by the Purchaser The Purchaser warrants and undertakes to pay all the net inter-company debts between ZKP and Meda and its subsidiaries ( Interco Debts ) on or before the Completion Date. As the Interco Debts may vary during the period between the date of the SSA and the Completion Date, the parties agree that prior to the Completion Date, a completion audit shall be carried out by an accountant or professional appointed by both parties to confirm the outstanding net Interco Debts to be settled or paid by the Purchaser on the Completion Date. The Purchaser agrees that if the outstanding net Interco Debts are not paid or settled within the Initial Period, interest at the rate of ten percent (10%) per annum calculated on daily basis on the outstanding Interco Debts or any portion thereof shall be chargeable commencing from the expiry of the Initial Period till the date of full settlement. The Purchaser further warrants and undertakes that all existing corporate guarantees and/or indemnities extended and/or granted by Meda for the benefit of ZKP shall be fully discharged and extinguished on or before the Completion Date and the Purchaser shall procure letter(s) of discharge or written confirmation(s) ( Letters of Discharge ) from the beneficiary(ies) of the corporate guarantees and/or indemnities extended and/or granted by Meda for the benefit of ZKP affirming that Meda is fully discharged from the corporate guarantees and/or indemnities extended and/or granted by Meda to the beneficiary(ies) and the Purchaser shall deliver the Letters of Discharge to Meda on the Completion Date. 8

9 3.7 Parties Default If Meda (a) (b) (c) defaults in completing the sale of the Sale Shares in accordance with the terms of the SSA; fails to perform any of its obligations under the terms of the SSA; or breaches any of its warranties, representations and undertakings in the SSA, and the Purchaser lawfully elects to terminate and rescind the SSA, Meda shall then return the Deposit free of interest forthwith to the Purchaser and Meda shall be liable to pay to the Purchaser liquidated damages of an amount equivalent to the Deposit (without prejudice to any other rights and remedies available to the Purchaser in law) failing which late payment interest at the rate of 10% per annum shall be chargeable and calculated on daily basis from the date it is due and payable till the date of full payment. In the event that the Purchaser fails to pay any sum or payment (including but not limited to the Balance Payment, Interest, Interco Debts and/or any interest payable) under the SSA and/or fails to perform any of its obligations under the terms of the SSA and Meda elects to terminate the SSA, the Deposit shall forthwith be absolutely forfeited in favour of Meda. 4. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal (including the repayment of the Net Amount Owing) represents an opportunity for Meda to monetise its investment in ZKP at a fair price and allows the Meda Group to reinvest the capital in expanding its core business of property development with a view to enhance shareholders value and returns in the future. A majority of the proceeds from the Proposed Disposal will be used towards funding the Proposed Acquisition, and thus Meda will build on its core business of property development. In addition, the Proposed Disposal enables Meda to finance the Proposed Acquisition without significantly increasing the gearing level of the Meda Group. In addition, based on the present age of the Car Park, Retail Podium and Office Tower of approximately 18 years and the Hotel of approximately 15 years, the Properties current physical condition warrants refurbishment works to be carried on the Properties to ensure that the Properties remain competitive and ZKP is better able to better retain existing tenants as well as attract new ones. The Board is of the opinion that such asset enhancement initiatives require significant financial resources and may not yield reasonable return given the limited upside for the future rental growth of the Properties. Hence, the Proposed Disposal is in line with the Board s intention of reorganising the business operations of the Meda Group and to further align its focus on the Meda Group s core competency of property development. Furthermore, the financial performance of ZKP has been lacklustre for the past 3 FYEs up to FYE 31 December 2014 ( Past Financial Years ). After recording a profit after taxation ( PAT ) of RM0.37 million in the FYE 31 December 2012, ZKP incurred a loss after taxation ( LAT ) of RM2.41 million in the FYE 31 December 2013 before improving to a PAT of RM0.17 million in the FYE 31 December Please refer to Appendix I of this Announcement for further information on the financial information of ZKP. 9

10 5. RISK FACTORS The potential risk factors relating to the Proposed Disposal are as follows: 5.1 Failure / Delay in the completion of the Proposed Disposal The completion of the Proposed Disposal is conditional upon the conditions precedent being satisfied in accordance with the provisions of the SSA. There is no assurance that all such conditions precedent will be satisfied. Notwithstanding this, the Board will take reasonable steps to ensure that the conditions precedent are met in order to complete the Proposed Disposal in a timely manner. 5.2 Loss of potential future income from ZKP For the FYE 31 December 2014, the revenue of ZKP was RM8.38 million, representing 6.71% of the audited consolidated revenue of the Meda Group. In addition, ZKP recorded a PAT of RM0.17 million for the FYE 31 December 2014 as compared to the audited consolidated LAT of the Meda Group of RM3.09 million. Upon the completion of the Proposed Disposal, ZKP will cease to contribute to the future revenue and profit of the Meda Group. The Meda Group will, however, continue to be involved in property development through its other existing business operations. Nonetheless, the revenue contribution from ZKP during the FYE 31 December 2014 was not material. 5.3 Financial or legal risks Meda may be subject to certain financial or legal risks pursuant to the SSA or any related documents executed. Meda may also be subjected to contractual risks as a result of nonfulfilment of its obligations under the SSA. In this respect, Meda endeavours to ensure full compliance in relation to fulfilment of its obligations under the SSA. 6. EFFECTS OF THE PROPOSED DISPOSAL 6.1 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 shareholdings of Meda as the Proposed Disposal does not involve any issue of new Meda Shares. 6.2 NA per share and gearing For illustrative purposes, the proforma effects of the Proposed Disposal on the consolidated NA, NA per share and gearing ratio of Meda based on the audited consolidated statement of financial position of Meda as at 31 December 2014 are set out below: Proforma I Audited as at 31 (2) Adjusted as at After the Proposed December December 2014 Disposal RM 000 RM 000 RM 000 Share capital 246, , ,278 Share premium 12,880 12,880 12,880 Treasury shares (6,518) (2a) (6,592) (6,592) Warrants reserve 8,889 8,889 8,889 Revaluation reserve 6,011 Accumulated losses (54,718) (2b)(2c) (72,371) (2c) (3) (52,965) Shareholders equity / NA 212, , ,105 10

11 No. of Shares in issue ( 000) Proforma I Audited as at 31 (2) Adjusted as at After the Proposed December December 2014 Disposal RM 000 RM 000 RM 000 (1) 483,247 (2a) 483, ,123 NA per Share (RM) Borrowings (RM 000) 67,972 67,972 67,966 Gearing ratio (times) Notes: (1) Excluding treasury shares of 9,307,900. (2) After adjusting for the following: (a) Share buy-back of 124,000 Meda Shares from the open market at a cost totaling RM73,751 from the period 1 January 2015 to 30 June (b) The forfeiture of the deposits of RM3.17 million in relation to the termination of a sales and purchase agreement with Natwest Trading Sdn Bhd for the proposed acquisition by Meda Group of approximately 39, square metres of freehold land held under GM342, Lot 1022, Tempat Sungai Sekamat, Mukim Cheras, Daerah Hulu Langat, Negeri Selangor for a total considerations of RM31,689,900 (as announced by Meda on 8 July 2015). (c) Additional impairment provided on the Properties of ZKP amounting to RM19.88 million pursuant to the market value indication of the Properties as ascribed by the Valuer of which RM14.48 million is debited to the accumulated losses account and RM5.4 million is debited to the revaluation reserve account. (3) After adjusting for the accounting gain on the Proposed Disposal of RM19.88 million (as a result of the additional impairment of the Properties as per Note 2(c) above) and the defrayment of estimated expenses of RM0.47 million. 6.3 Earnings and Earnings Per Share ( EPS ) Based on the latest audited consolidated financial statements of the Meda Group for the FYE 31 December 2014 and assuming that the Proposed Disposal had been effected on 31 December 2014, the Meda Group expects to realise a non-recurring net loss arising from the Proposed Disposal of approximately RM0.47 million, due to the estimated expenses incurred for the Proposed Disposal. This represents a loss per share of approximately 0.10 sen based on 483,123,392 Meda Shares in issue (excluding treasury shares held by Meda) as at 30 June Upon completion of the Proposed Disposal, ZKP will cease to be a subsidiary of Meda. Hence, the future revenue and profit of ZKP will cease to contribute to the Meda Group. 6.4 Convertible securities As at 30 June 2015, save for the following, the Company does not have any outstanding convertible securities: 51,949,500 outstanding warrants 2011/2021 ( Warrant A ) which were issued on 16 August 2011 and expiring on 15 August 2021 with an exercise price of RM0.50 per Warrant A; 96,457,766 outstanding warrants 2012/2022 ( Warrant B ) which were issued on 24 April 2012, listed on 3 May 2012 and expiring on 23 April 2022 with a step-up exercise price mechanism whereby the base exercise price of RM0.60 for each Warrant B is adjusted upwards by RM0.10 at the expiry of every 2 anniversary years from 24 April 2012 in accordance with the memorandum of the deed poll constituting the Warrants B; and 11

12 (iii) 48,421,408 outstanding warrants 2014/2024 ( Warrant C ) which were issued on 25 August 2014 and expiring on 24 August 2024 with an exercise price of RM0.80 per Warrant C. 7. APPROVALS REQUIRED The Proposed Disposal is subject to the following approvals being obtained: the shareholders of Meda at an extraordinary general meeting to be convened in relation to the Proposed Disposal; and any other relevant regulatory authorities and/or parties, if required. The Proposed Disposal is not conditional upon any other corporate proposals undertaken or to be undertaken by the Company. 8. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED Save as disclosed below, none of the Directors and/or major shareholders of Meda and/or any persons connected to them have any interests, whether direct or indirect, in the Proposed Disposal. Dato Teoh Seng Kian ( DTSK ), a Director and major shareholder of Meda and a Director of ZKP, is a Director and substantial shareholder of CASB. Teoh Seng Aun ( TSA ), a major shareholder of Meda, is a Director and substantial shareholder of CASB. Dato (Dr.) Teoh Seng Foo ( DTSF ), a Director and substantial shareholder of Meda and a Director of ZKP, is the brother of DTSK and TSA. Cheam Shaw Fin ( CSF ), the spouse of DTSF, is a substantial shareholder of Meda by virtue of her direct interest and indirect interest held through DTSF. Accordingly, DTSF, DTSK, TSA and CSF are deemed interested in the Proposed Disposal. The interested Directors of the Company, namely DTSF and DTSK ( Interested Directors ), have abstained and will continue to abstain from deliberating and voting at the relevant Board meetings or on the relevant resolutions of the Board of Meda in relation to the Proposed Disposal. DTSF, DTSK, TSA and CSF shall also abstain from voting, in respect of their direct and/or indirect interests in Meda, on the proposed ordinary resolution pertaining to the Proposed Disposal at an EGM to be convened. They have also undertaken to ensure that persons connected with them will also abstain from voting in respect of their direct and/or indirect interests in Meda, if any, on the proposed ordinary resolution pertaining to the Proposed Disposal at an EGM to be convened. 9. RELATED PARTY TRANSACTIONS In view of the interests disclosed in Section 8 of this Announcement, the Proposed Disposal is deemed a related party transaction pursuant to Chapter of the Listing Requirements. As at the date of this Announcement, there are no other related party transactions transacted by the Meda Group during the 12 months preceding the date of this Announcement. 12

13 10. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Listing Requirements is 35.24% computed based on the audited financial statements of the Company for the financial year ended 31 December In this regard, Meda is required to issue a circular to shareholders, convene an EGM to seek shareholders approval for the Proposed Disposal and appoint a Principal Adviser and an Independent Adviser. 11. ADVISERS The Board has appointed HLIB to act as the Principal Adviser to the Company for the Proposed Disposal. MainStreet Advisers Sdn Bhd has been appointed by Meda to act as the Independent Adviser to advise the non-interested directors and non-interested shareholders as to whether the Proposed Disposal is fair and reasonable so far as the non-interested shareholders are concerned and whether the Proposed Disposal is to the detriment of the non-interested shareholders of the Company. 12. AUDIT COMMITTEE S STATEMENT The Audit Committee of Meda, having considered all aspects of the Proposed Disposal (including, but not limited to the terms and rationale for the Proposed Disposal), is of the opinion that the Proposed Disposal is: (iii) in the best interest of Meda; fair, reasonable and on normal commercial terms; and not detrimental to the interest of the non-interested shareholders of Meda. In arriving at the above view, the Audit Committee had taken into consideration, among others, the following: (iii) the preliminary view of the Independent Adviser; the basis of arriving at the Disposal Consideration and the settlement of the Net Amount Owing by the Purchaser; and the rationale for the Proposed Disposal. 13. DIRECTOR S RECOMMENDATION Having considered and deliberated all the relevant aspects of the Proposed Disposal, including but not limited to the rationale for the Proposed Disposal, the proposed utilisation of proceeds arising from the Proposed Disposal, the proforma financial effects of the Proposed Disposal and the recommendations of the Audit Committee, the Board (save for the Interested Directors) is of the opinion that the Proposed Disposal is: (iii) in the best interests of the Meda Group; fair, reasonable and on normal commercial terms; and not detrimental to the interest of the non-interested shareholders of Meda. 13

14 14. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to the relevant approvals as described in Section 7 of this Announcement having been obtained, the Proposed Disposal is expected to be completed by 1 st quarter of 2017]. 15. DOCUMENTS FOR INSPECTION A copy of the SSA is available for inspection at the registered office of Meda at No. C-07-01, Capital 3, Oasis Square, No. 2, Jalan PJU 1A/7A, Petaling Jaya, Selangor Darul Ehsan, Malaysia during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this Announcement. This Announcement is dated 24 July

15 APPENDIX I SUMMARY OF FINANCIAL INFORMATION OF ZKP A brief summary of ZKP s historical financial information for the past 3 FYE up to 31 December 2014 are disclosed below: < Audited FYE 31 December > RM 000 RM 000 RM 000 Revenue 7,346 8,582 8,376 PAT / (LAT) 367 (2,407) 171 NA 12,531 10,124 10,295 Share capital 8,750 8,750 8,750 Total borrowings 12, NA per share (RM) Net EPS / (loss) per share ( LPS ) (RM) Gearing ratio (times) * Note: * Negligible. Financial commentary: FYE 31 December 2012 vs FYE 31 December 2013 For the FYE 31 December 2013, ZKP has managed to record revenue of RM8.58 million, representing an increase of RM1.23 million or 16.73% from RM7.35 million for the FYE 31 December This was mainly due to the increase in rental of retail space received of RM0.83 million from an anchor tenant and RM0.57 million from the increase in revenue generated from hotel operations. However, this was slightly dampened by the decrease in revenue generated from car park operations of RM1.6 million as the management had resolved to stop charging for its usage. Notwithstanding the increase in revenue, ZKP had recorded a LAT of RM2.41 million for the FYE 31 December 2013 from a PAT of RM0.37 million for the FYE 31 December This was mainly due to the increase in administrative expenses resulting from an impairment loss on trade receivables and deposits totalling RM0.73 million and a decrease of net realisable value for ZKP s completed development properties which are held as inventory of RM1.62 million. FYE 31 December 2013 vs FYE 31 December 2014 For the FYE 31 December 2014, ZKP has managed to record revenues of RM8.38 million, representing a slight decrease of RM0.20 million or 2.33% from RM8.58 million for the FYE 31 December This was mainly due to the slight decrease in occupancy rates of the Hotel. However, ZKP had recorded a PAT of RM0.17 million for the FYE 31 December 2014 compared to a LAT of RM2.41 million for the FYE 31 December This was mainly due to administrative expenses incurred during the FYE 31 December 2013 as detailed above. In addition, ZKP had also experienced a decrease in finance costs of RM0.65 million as a result of the settlement of its term loans.