ANNOUNCEMENT SUBJECT : TRANSACTION (CHAPTER 10 OF LISTING REQUIREMENTS) GABUNGAN AQRS BERHAD ( GBGAQRS OR THE COMPANY ) PROPOSED SALE OF LAND BY THE COMPANY S 52%-OWNED SUBSIDIARY, PRESTIGE FIELD DEVELOPMENT SDN BHD TO ARA INDAH DEVELOPMENT SDN BHD AT A CONSIDERATION OF RM34,727,683.00 1. INTRODUCTION Pursuant to Paragraph 10.06(1) of the Main Market Listing Requirements ( MMLR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ), the Board of Directors of the Company ( Board ) wishes to announce that Prestige Field Development Sdn Bhd (Company No. 927130-M) ( PFDSB or Vendor ), a 52%-owned subsidiary of the Company has on 17 March 2017 entered into a Sale and Purchase Agreement ( SPA ) with Ara Indah Development Sdn Bhd (Company No. 909033-M) ( Ara Indah or Purchaser ) for the sale of a piece of land more particularly described in subparagraph 2.3 hereinbelow ( Land ) free from all charges, encumbrances, liens, caveat or restraints on an as is where is basis and with vacant possession but subject to the existing category of land use and all conditions, whether express or implied, in the Issue Document of Title pertaining to the Land, and upon the terms and conditions of the SPA for a total consideration of RM34,727,683.00 ( Sale Consideration ) ( Proposed Sale of Land ). 2. INFORMATION ON THE PROPOSED SALE OF LAND 2.1 Information on the Vendor PFDSB was incorporated on 27 December 2010 in Malaysia and is a 52%-owned subsidiary of the Company. PFDSB s total number of issued shares is 500,000 ordinary shares. PFDSB is principally involved in property development activities. 2.2 Information on the Purchaser Ara Indah was incorporated on 22 July 2010 in Malaysia. Its total number of issued shares is 2 ordinary shares. Ara Indah is principally involved in property holding activities. 2.3 Information on the Land The Land measures in area approximately 20,861.02 square metres (equivalent to approximately 224,546 sq. ft.) and is held under H.S. (D) 316360, P.T. 82696, Mukim Petaling, Daerah Petaling, Negeri Selangor Darul Ehsan. More information on the Land are as shown below:- 1
Description Held under H.S. (D) 316360, P.T. 82696, Mukim of Petaling, District of Petaling, State of Selangor Darul Ehsan Proprietor PFDSB Category of Land Use Bangunan Express Condition Bangunan Perniagaan Restriction-in-interest Tanah ini boleh dipindahmilik, dipajak atau digadai setelah mendapat kebenaran Pihak Berkuasa Negeri Land Area Approximately 20,861.02 square metres Existing Usage None Buildings Erected None Approximate Age Not applicable of the Buildings Tenure 99-year leasehold land expiring on 4 September 2112 Date of Purchase 18 February 2013 Original Cost RM19,342,941 of Investment Net Book Value RM22,566,196.32 (as at 31 December 2016) Encumbrances Charged to Standard Chartered Bank Malaysia Berhad 2.4 Basis of the Sale Consideration The Sale Consideration was arrived at based on negotiations between the parties after taking into consideration amongst others, the following:- i) the original cost of investment of the Land; and the prevailing market value of the Land. 2.5 Salient Terms of the SPA The salient terms of the SPA include, amongst others, the following:- 2.5.1 Payment Mode of Sale Consideration The Sale Consideration shall be satisfied in cash and bank borrowings by Ara Indah and payable in the following manner:- i) Earnest Deposit Earnest deposit of RM694,553.66 (2% of Sale Consideration) had been paid to the Vendor s Solicitors prior to the execution of the SPA. Balance Deposit A further sum of RM2,778,214.64 (8% of Sale Consideration) shall be paid by Ara Indah upon execution of the SPA to the Vendor. (the Earnest Deposit and Balance Deposit are collectively referred to as Deposit Sum ). 2
i Balance Purchase Price Balance Purchase Price of RM31,254,914.70 together with the Purchaser s portion of Goods and Services Tax Sum to be paid to the Vendor s Solicitors as stakeholders within three (3) months from the date of the receipt by the Purchaser s Solicitors of all the documentary evidence of the fulfilment of condition precedent ( Condition Precedent, as defined in sub-paragraph 2.5.3 hereinbelow). 2.5.2 Kebenaran Merancang and Approved Building Plan The Proposed Sale of Land comes together with the KM and Approved Building Plan (as defined hereunder) and all rights and benefits incidental thereto:- i) by way of Kebenaran Merancang dated 2 August 2016 ( KM ), Majlis Perbandaran Subang Jaya ( MPSJ ) has granted approval to the Vendor for a commercial development on the Land ( Development ) upon the terms and conditions stated in the KM; and by way of a letter dated 12 January 2017 ( Approved Building Plan ), MPSJ has granted its approval for the building plan for the Development upon the terms and conditions contained therein. 2.5.3 Condition Precedent The Vendor and the Purchaser acknowledge that the SPA shall be conditional upon the Condition Precedent to be fulfilled by the Vendor within seven (7) months from the date of the SPA ( Expiry Date ) namely, the State Authority giving its consent for the transfer of the Land from the Vendor in favour of the Purchaser ( State Authority s Consent ). If the Condition Precedent is not fulfilled or satisfied within the Expiry Date without any fault attributable to the Vendor, the Vendor and Purchaser may mutually agree to a further extension of time or alternatively, either party shall have the option to terminate the SPA by way of written notice and in which event the Vendor shall, within seven (7) days from the date of the notice of termination, refund to the Purchaser the Deposit Sum and any other sums paid by the Purchaser towards the account of the Sale Consideration free of interest and the Purchaser shall return all the documents deposited by the Vendor pursuant to the SPA and thereafter the SPA shall be deemed null and void and have no effect whatsoever. 2.6 Expected Gain and Utilisation of Proceeds i) The expected gain from the Proposed Sale of Land is approximately RM6,800,000 (net of tax); and The net proceeds arising from the Proposed Sale of Land are expected to be primarily utilised for the full settlement of the redemption sum due and payable to PFDSB s financier in order to obtain a valid and registrable discharge of the existing charge on the Land from PFDSB s financier. 3
2.7 Liabilities to be assumed by the Purchaser Save for the obligations owing to the end-financiers (if any), there are no other liabilities to be assumed by the Purchaser from the Proposed Sale of Land. 3. RATIONALE OF THE PROPOSED SALE OF LAND The Proposed Sale of Land is part of the GBGAQRS group s ongoing monetization programme where the GBGAQRS group disposes of selected pieces of land to (i) raise funds as working capital for the GBGAQRS group s construction order books of approximately RM1.7 billion, and/or ( repay bank borrowings which is in line with the GBGAQRS group s de-gearing exercise to strengthen its financial footing. Also as part of the GBGAQRS group s ongoing monetization programme, the GBGAQRS group plans to dispose of all that parcel of leasehold land measuring in area approximately 19.13 acres which forms part of the land held under Master Title PN 39250 Lot 14000 [previously held under H.S. (D) 2487 P.T. 6250] in Mukim of Dengkil, District of Sepang, State of Selangor Darul Ehsan when the Master En-Bloc Purchase Agreement is executed with PR1MA Corporation Malaysia ( PR1MA ), which is expected by the end of first financial quarter ending 31 March 2017. 4. FINANCIAL EFFECTS OF THE PROPOSED SALE OF LAND 4.1 Share capital and shareholdings of the substantial shareholders The Proposed Sale of Land will not have any effect on the issued share capital of the Company and substantial shareholders shareholdings, as the Proposed Sale of Land does not involve any issuance of shares in the Company. 4.2 Net assets ( NA ) and NA per share The Proposed Sale of Land is expected to have a positive impact on the NA and NA per share of the Company for the financial year ending 31 December 2017 ( FYE 2017 ). 4.3 Earnings and earnings per share The Proposed Sale of Land is expected to have a positive impact on the earnings and earnings per share of the Company for FYE 2017. 4.4 Gearing The receipt of proceeds from the Proposed Sale of Land, together with the proceeds from the previous sale of land measuring in area approximately 7.977 acres and forms part of a larger piece of land held under Master Title H.S. (D) 293098 P.T. 81445 in Mukim and District of Petaling, State of Selangor Darul Ehsan (as announced to Bursa Securities on 6 April 2016) for a total consideration of RM50,384,327.40, the conditions precedent of which have been fulfilled, will reduce the gearing of the Company. 4
5. RISK RELATING TO THE PROPOSED SALE OF LAND The Proposed Sale of Land is not expected to have any associated material risk factor except for the State Authority s Consent being obtained from the State Government of Selangor. 6. APPROVALS REQUIRED The Proposed Sale of Land is not subject to the approval of shareholders of the Company but the State Authority s Consent being obtained from the State Government of Selangor. 7. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Sale of Land pursuant to Paragraph 10.02(g) of the MMLR is 5.62% based on the Audited Financial Statements of GBGAQRS as at 31 December 2015. 8. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the directors and major shareholders of the Company and persons connected with them has any interest, direct or indirect, in the Proposed Sale of Land. 9. BOARD OF DIRECTORS STATEMENT The Board, having considered all aspects of the Proposed Sale of Land, is of the opinion that the Proposed Sale of Land is in the best interest of PFDSB and the Company. 10. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Sale of Land is expected to be completed within twelve (12) months from the date of the SPA. 11. DOCUMENT FOR INSPECTION The SPA dated 17 March 2017 is available for inspection at the Registered Office of the Company, H-73-1, Blok H, Jalan Teknologi 3/9, Bistari De Kota, Kota Damansara, PJU 5, 47810 Petaling Jaya, Selangor Darul Ehsan on Mondays to Fridays (except public holidays) during normal business hours for a period of three (3) months from the date of this announcement. This announcement is dated 17 March 2017. 5