JKG LAND BERHAD ( JKG OR COMPANY ) PROPOSED AGREEMENT WITH ISY HOLDINGS SDN BHD TO DEVELOP A PIECE OF LEASEHOLD LAND MEASURING APPROXIMATELY 130 ACRES LOCATED AT KOMPARTMEN 32, BUKIT CHERAKAH, MUKIM BUKIT RAJA, SELANGOR BY BONAVA SDN BHD 1. INTRODUCTION The Board of Directors of JKG wishes to announce that its subsidiary, Bonava Sdn Bhd ( Bonava ) [Company No. 201263-D] had on 8 December 2017 entered into a conditional Agreement ( Agreement ) with ISY Holdings Sdn Bhd (Company No. 72531-T) [ ISY ], for the development of a piece of leasehold land measuring approximately 130 acres located at Kompartmen 32, Bukit Cherakah, Mukim Bukit Raja, Selangor ( said Land ) subject to the terms and conditions as stipulated in the Agreement ( Proposal ). 2. DETAILS OF THE PROPOSAL 2.1 Details of the said Land Descriptions of the said Land are set out below:- Location : Kompartmen 32, Bukit Cherakah, Mukim Bukit Raja, Selangor Size : Approximately 130 acres Tenure : Leasehold Category of the land use : Building Express Condition : Residential and Commercial Restriction in interest : The said Land cannot be transferred, leased, pledged or charged without state consent Encumbrances : Nil ISY was alienated the said Land from Pejabat Daerah / Tanah Petaling, Selangor in 2001. As at the date of Agreement, the issue document of title for the said Land has not been issued by the relevant authorities. 2.2 Information on Bonava Bonava is a private limited company incorporated in Malaysia on 20 July 1990 under the Companies Act, 1965. Bonava has in total 1,000,000 ordinary shares which had been issued and fully paid. The intended principal activity of Bonava is property development, but it is currently dormant. Page 1 of 6
2.3 Information on ISY ISY is a private limited company incorporated in Malaysia on 3 July 1981. The issued and paid-up share capital of ISY is RM1,200,000. The principal activity of ISY is investment holding. 2.4 Salient Terms of the Agreement The salient terms of the Agreement include, among others, include the followings:- 2.4.1 Consideration Payment Subject to the terms and conditions of the Agreement, the consideration of RM55,000,000 is to be paid to ISY and dealt with at the following times and in the following manner: (a) (b) (c) a sum of Ringgit Malaysia Three Million (RM3,000,000.00) ( Earnest Deposit ) has been paid by Bonava to ISY prior to the execution of the Agreement, the receipt whereof ISY hereby acknowledges; upon execution of the Agreement, a sum of Ringgit Malaysia Five Million and Five Hundred Thousand (RM5,500,000.00) ( Balance Deposit ) shall be paid by Bonava to ISY; the Balance Consideration shall be paid by Bonava in three (3) equal instalments over a period of eighteen (18) months commencing from the registration date of the title ( Registration Date ) or upon the execution of a Joint Venture Agreement between the parties as set out below: (i) (ii) within six (6) months from the Registration Date, Bonava shall pay to ISY the 1 st instalment; within twelve (12) months from the Registration Date, Bonava shall pay to ISY the 2 nd instalment; and 2.4.2 Conditions Precedent (iii) within eighteen (18) months from the Registration Date, Bonava shall pay to ISY the 3 rd and final instalment. Clause 4.1 of the Agreement Notwithstanding anything to the contrary contained in the Agreement, the Parties acknowledge that the respective rights and obligations of the Parties under the Agreement shall be subject to and conditional upon the fulfilment of the following conditions precedent within the time prescribed in Clause 4.2 and Clause 4.3 of the Agreement: - (a) Bonava having obtained the planning permission ( Kebenaran Merancang ) from Majlis Bandaraya Shah Page 2 of 6
Alam for the development of the said Land on terms acceptable to Bonava; (b) (c) (d) if required, Bonava having obtained the approval from the Department of Environment, Ministry of Natural Resources & Environment and other necessary approvals, consent, licenses and permits for the development of the said Land; Bonava making payment of the alienation premium ( Alienation Premium ) on behalf of ISY to the Relevant Authorities; and registration of the Title for the said Land or the execution of a Joint Venture Agreement between the parties. Clause 4.2 of the Agreement If the conditions precedent under Clauses 4.1(a) and (b) are not obtained within twelve (12) months from the date of the Agreement ( Approval Period ), the Parties agree to an automatic extension of six (6) months commencing immediately upon the expiry of the Approval Period (the Extended Approval Period ) or such other extension of time as may be mutually agreed upon between the Parties. Clause 4.3 of the Agreement The conditions precedent under Clauses 4.1(c) and (d) shall be fulfilled by the Parties within six (6) months from the Approval Period, Extended Approval Period or such other extension of time as may be mutually agreed upon, as the case may be. Clause 4.4 of the Agreement In the event the Conditions Precedent are not fulfilled within the prescribed period referred to in Clause 4.2, Clause 4.3 or such other extension of time as may be mutually agreed upon, the Parties are entitled to:- (a) terminate the Agreement whereupon ISY shall refund to Bonava within thirty (30) days of the notice of termination by Bonava, the Deposit and all monies paid by Bonava under the Agreement (together with the accrued interest) and SUBJECT ALWAYS to refund of the Deposit and all monies paid by Bonava under the Agreement, by ISY to Bonava, (i) (ii) neither Party shall have any claims against the other; and ISY shall be entitled to deal with the said Land as it deems fit; Page 3 of 6
OR (b) waive or convert any of the unfulfilled Conditions Precedent into an obligation to be performed by the respective Parties. 2.5 Basis of Consideration The consideration payable to ISY for the said Land of RM55,000,000 which include the Alienation Premium (which will be borne by ISY subject to a maximum amount of RM25,000,000) was arrived at on a mutually agreeable basis after taking into consideration the suitability and strategic location as well as the development potential of the said Land. No valuation was carried out on the said Land. 2.6 Liabilities to be assumed by Bonava Save for the obligations and liabilities in and arising from, pursuant to or in connection with the Agreement, there are no other liabilities, including contingent liabilities and guarantees, to be assumed by Bonava pursuant to the Agreement. 3. SOURCE OF FUNDING The consideration to be paid to ISY will be satisfied by way of cash payment through internally generated funds. 4. RATIONALE FOR THE PROPOSAL The Proposal is part of JKG Group s objective and long term plan to invest in strategic land bank which are located in strategic areas and have development potential in future. The Proposal is in line with JKG s strategy of expanding its land bank within Klang Valley to further strengthen its position, market presence in Klang Valley and gain a meaningful exposure to future upside potential of these land bank. The said Land is strategically located nearby the major highways ie. incoming DASH Elevated Expressway, Guthrie Corridor Expressway and LATAR Expressway. JKG Group intends to develop the said Land into predominantly residential and commercial properties together with all the necessary infrastructure and public utilities in accordance with the necessary approvals and to sell, lease or rent to end purchasers or deal with in any manner the properties erected on the said Land. The Proposal is expected to contribute positively to the Group s future revenue and earnings and to enhance shareholders value in the long term. 5. RISK FACTORS IN RELATION TO THE PROPOSAL JKG Group is principally engaged in property development activities. As such, the Proposal will not materially change the risks of the Company s business as the Group would still be exposed to the same business, operational, financial and investment risk inherent in the property sector. These risks are inherent risks due to timely commencement or completion of projects, obtaining required approvals, satisfactory performance of contractors and adverse economic events or recession. Nevertheless, the Company has exercised due care in evaluating the potential risks and benefits associated with the Proposed Acquisition. Page 4 of 6
6. EFFECTS OF THE PROPOSAL 6.1 Share capital The Proposal will not have any effect on the share capital of JKG as the consideration for the said Land is to be fully satisfied in cash and does not involve any issuance of new ordinary shares in JKG. 6.2 Substantial shareholders shareholdings The Proposal will not have any effect on the substantial shareholders shareholdings of JKG as the Proposal does not involve any issuance of new ordinary shares in JKG. 6.3 Net assets per share and Earnings per share The Proposal will not have any material effect on the net assets per share and earnings per share of JKG Group for the financial year ending 31 January 2018. 6.4 Gearing The Proposal will not have any material effect on the gearing of JKG Group. 7. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE PROPOSAL Pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the highest percentage ratio applicable to the Proposal is 12.83% based on the latest audited consolidated financial statements of JKG for the financial year ended 31 January 2017. 8. ESTIMATED TIME FRAME FOR COMPLETION OF THE PROPOSAL Barring any unforeseen circumstances, the Proposal is expected to be completed within twenty four (24) months from the date of the Agreement. 9. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors and/or major shareholders of JKG and/or persons connected with them have any interests, direct or indirect, in the Proposal. 10. STATEMENT BY THE BOARD The Board of Directors of JKG, having considered all aspects of the Proposal, is of the opinion that the Proposal is in the best interest of JKG Group. 11. APPROVALS REQUIRED The Proposal is subject to the approvals being obtained from Majlis Bandaraya Shah Alam for the development of the said Land on terms acceptable to Bonava and if required, Department of Environment, Ministry of Natural Resources & Environment and other necessary approvals, consent, licenses and permits for the development of the said Land. Page 5 of 6
The Proposal is not subject to the approval of the shareholders of JKG. 12. DOCUMENTS FOR INSPECTION The Agreement dated 8 December 2017 is available for inspection at the Registered Office of the Company at No. 8, 3 rd Floor, Jalan Segambut, 51200 Kuala Lumpur, during normal business hours from Monday to Friday (except public holidays) within three (3) months from the date of this announcement. This announcement is dated 8 December 2017. Page 6 of 6