THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. OSK PROPERTY HOLDINGS BERHAD (Company No. 201666-D) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED ACQUISITION BY WAWASAN RAJAWALI SDN BHD, A WHOLLY OWNED SUBSIDIARY COMPANY OF OSK PROPERTY HOLDINGS BERHAD, OF A PIECE OF FREEHOLD VACANT COMMERCIAL LAND MEASURING APPROXIMATELY 64,320 SQUARE METERS HELD UNDER H.S.(D) 28819, PT NO. 41831, MUKIM DENGKIL, DAERAH SEPANG, NEGERI SELANGOR DARUL EHSAN FROM CYBERVIEW SDN BHD AND SETIA HARUMAN SDN BHD FOR A TOTAL CASH CONSIDERATION OF RM86,542,830 AND NOTICE OF EXTRAORDINARY GENERAL MEETING Adviser The Notice of the Extraordinary General Meeting ("EGM") of OSK Property Holdings Berhad, to be held at the Auditorium, 11th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur on Wednesday, 15 June 2011 at 11.00 a.m. or immediately following the conclusion of the Twenty-First Annual General Meeting to be held on the same date at 10.00 a.m., whichever is earlier or at every adjournment thereof, together with the Form of Proxy are enclosed herein. A member entitled to attend and vote at the EGM is entitled to appoint a proxy or proxies to vote for and on his/ her behalf. In such event, the Form of Proxy should be lodged at the Registered Office of the Company at 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, on or before the date and time indicated below. The lodging of the Form of Proxy does not preclude you from attending and voting in person at the EGM, should you subsequently wish to do so. Last date and time for lodging the Form of Proxy : Monday, 13 June 2011 at 11.00 a.m. Date and time of the EGM : Wednesday, 15 June 2011 at 11.00 a.m. This Circular is dated 24 May 2011
DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- "Act" : The Companies Act, 1965 "Board" "Bursa Securities" : The Board of Directors of OSKPH : Bursa Malaysia Securities Berhad "Circular" : This circular to the shareholders of OSKPH dated 24 May 2011 "CSB" or the "Proprietor" "EGM" "EPS" "EPU" "FPE" "FYE" "Land" "LPD" "NA" "NBV" "OSK" "OSKPH" or the "Company" "OSKPH Group" or the "Group" "Proposed Project" "Proposed Acquisition" "Purchase Consideration "RM" and "sen" "SHSB" or the "Vendor" : Cyberview Sdn Bhd (Company No.405553-T) : Extraordinary General Meeting : Earnings per share : Economic Planning Unit : Financial period ended/ ending : Financial year ended/ ending : A piece of freehold vacant commercial land measuring approximately 64,320 square meters held under H.S.(D) 28819, PT No. 41831, Mukim Dengkil, Daerah Sepang, Negeri Selangor Darul Ehsan : 27 April 2011, being the latest practicable date prior to the printing of this Circular : Net assets : Net book value : OSK Investment Bank Berhad (Company No.14152-V) : OSK Property Holdings Berhad (Company No.201666-D) : OSKPH and its subsidiary companies : A mix development comprising approximately 1,800 units of studio to family sized service apartments, 80 units of shop offices, 200 units of office suites and one (1) unit of retail mall : Proposed acquisition of the Land by WRSB, a wholly owned subsidiary of OSKPH, for a total cash consideration of RM86,542,830 : A total cash consideration of RM86,542,830 for the Proposed Acquisition : Ringgit Malaysia and sen respectively : Setia Haruman Sdn Bhd (Company No.425145-U) i
DEFINITIONS (CONT"D) "SPA" : The conditional sale and purchase agreement dated 22 March 2011 entered into between WRSB, CSB and SHSB in relation to the Proposed Acquisition "WRSB" or the "Purchaser" "WTW" or the "Valuer" "Valuation Report" : Wawasan Rajawali Sdn Bhd (Company No.917808-A) : C H Williams Talhar & Wong Sdn Bhd (Company No.18149-U), a firm of professional independent registered valuer : The valuation report prepared by the Valuer dated 8 April 2011 to assess the market value of the Land Words incorporating the singular shall, where applicable, include the plural and vice versa and words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include a corporation, unless otherwise specified. Any reference in this Circular to any statute is a reference to that statute as for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise specified. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK ii
TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF OSKPH CONTAINING:- PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED ACQUISITION 2 3. RATIONALE FOR THE PROPOSED ACQUISITION 6 4. OUTLOOK AND PROSPECTS OF THE MALAYSIAN PROPERTY MARKET 7 5. RISK FACTORS 8 6. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION 9 7. APPROVALS REQUIRED/ OBTAINED 10 8. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED ACQUISITION 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED 10 10 10. CORPORATE PROPOSALS ANNOUNCED BUT NOT YET COMPLETED 10 11. DIRECTORS' RECOMMENDATION 11 12. EGM 11 13. FURTHER INFORMATION 11 APPENDICES I. VALUATION CERTIFICATE 12 II. FURTHER INFORMATION 16 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iii
OSK PROPERTY HOLDINGS BERHAD (Company No. 201666-D) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office 20th Floor, Plaza OSK Jalan Ampang 50450 Kuala Lumpur 24 May 2011 Board of Directors Dato' Nik Mohamed Din bin Datuk Nik Yusoff (Executive Chairman) Ong Leong Huat @ Wong Joo Hwa (Executive Director) Wong Chong Kim (Non-Independent Non-Executive Director) Ong Yee Ching (Non-Independent Non-Executive Director) Haron bin Datuk Tamby Chik (Senior Independent Non-Executive Director) Dato' Ikmal Hisham bin Abdul Aziz (Independent Non-Executive Director) To: The shareholders of OSK Property Holdings Berhad Dear Sir/ Madam, PROPOSED ACQUISITION BY WAWASAN RAJAWALI SDN BHD, A WHOLLY OWNED SUBSIDIARY COMPANY OF OSK PROPERTY HOLDINGS BERHAD, OF A PIECE OF FREEHOLD VACANT COMMERCIAL LAND MEASURING APPROXIMATELY 64,320 SQUARE METERS HELD UNDER H.S.(D) 28819, PT NO. 41831, MUKIM DENGKIL, DAERAH SEPANG, NEGERI SELANGOR DARUL EHSAN FROM CYBERVIEW SDN BHD AND SETIA HARUMAN SDN BHD FOR A TOTAL CASH CONSIDERATION OF RM86,542,830 1. INTRODUCTION On 22 March 2011, OSK had, on behalf of the Board, announced that WRSB, a wholly owned subsidiary of OSKPH, had, on even date entered into a conditional SPA with CSB and SHSB for the proposed acquisition of a piece of freehold vacant commercial land measuring approximately 64,320 square meters held under H.S.(D) 28819, PT No. 41831, Mukim Dengkil, Daerah Sepang, Negeri Selangor Darul Ehsan for a total cash consideration of RM86,542,830. On 25 March 2011, OSK had, on behalf of the Board, announced the additional details pertaining to the Proposed Project on the Land. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE THE SHAREHOLDERS OF OSKPH WITH THE RELEVANT INFORMATION ON THE PROPOSED ACQUISITION AS WELL AS TO SEEK THE APPROVAL FROM THE SHAREHOLDERS OF OSKPH FOR THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED ACQUISITION TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF THE FORTHCOMING EGM AND THE FORM OF PROXY ARE ENCLOSED TOGETHER WITH THIS CIRCULAR. 1
SHAREHOLDERS OF OSKPH ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED ACQUISITION TO BE TABLED AT THE FORTHCOMING EGM. 2. DETAILS OF THE PROPOSED ACQUISITION 2.1 Information on WRSB WRSB was incorporated in Malaysia on 10 October 2010 under the Act as a private limited company under its present name. WRSB is presently dormant with its intended principal activities of property development and property management activities. WRSB is a wholly owned subsidiary company of OSKPH. As at the LPD, the authorised share capital of WRSB is RM100,000 comprising 100,000 ordinary shares of RM1.00 each ("WRSB Shares"), of which RM2.00 comprising two (2) WRSB Shares have been issued and fully paid-up. Pursuant to the approval letter from EPU, Prime Minister's Department dated 12 April 2011 for the purchase of the Land, the Company had, on 10 May 2011, increased the authorised share capital of WRSB from RM100,000 comprising 100,000 WRSB Shares to RM500,000 comprising 500,000 WRSB Shares and increased the issued and paid-up capital of WRSB from RM2.00 comprising two (2) WRSB Shares to RM250,000 comprising 250,000 WRSB Shares. As at the LPD, the directors of WRSB are Dato Nik Mohamed Din bin Datuk Nik Yusoff and Ong Ju Xing. 2.2 Information on the Proprietor The Proprietor is a private limited company incorporated in Malaysia on 10 October 1996 under the Act. As at the LPD, the authorised share capital of the Proprietor is RM2,000,000,001 comprising 2,000,000,000 ordinary shares of RM1.00 each and 1 special share of RM1.00, of which 332,500,000 ordinary shares of RM1.00 each and 1 special share of RM1.00 have been issued and fully paid-up. The Proprietor is a Government owned company, Minister of Finance (Incorporated) and is the registered and beneficial owner of the Land in the area known as the Flagship Zone of the city of Cyberjaya ("CFZ Area"). The principal activities of the Proprietor are that of monitoring and ensuring the proper implementation of CFZ Area development undertaken by the master developer, SHSB, as well as implementing projects on behalf of the Government of Malaysia in the CFZ Area. As at the LPD, the directors of the Proprietor are set out below:- Hafidz bin Hashim; Dato' Redza Rafiq bin Abdul Razak; Tan Sri Dr Wan Abdul Aziz bin Wan Abdullah; Tan Sri Abdul Halim bin Ali; Tan Sri Dato' Ir. Omar bin Ibrahim; Dato' Haji Abd Karim bin Munisar; Datuk Mohd Badlisham bin Ghazali; Mohd Raidzoh bin Bukhari; Ng Wan Peng (Alternate director to Datuk Mohd Badlisham bin Ghazali); Wong Yien Kim (Alternate director to Dato' Haji Abd Karim bin Munisar); and Wee Huay Neo (Alternate director to Tan Sri Abdul Halim bin Ali) 2
2.3 Information on the Vendor The Vendor is a private limited company incorporated in Malaysia on 28 March 1997 under the Act. As at the LPD, the authorised share capital of the Vendor is RM1,005,000,000 comprising 1,000,000,000 ordinary shares of RM1.00 each and 5,000,000 redeemable non-cumulative convertible preference shares of RM1.00 each, of which 6,000,000 ordinary shares of RM1.00 each have been issued and fully paidup. The Vendor is the master developer of CFZ Area and its principal activities are property development, project development and sale of land and provision of basic infrastructure in CFZ Area. Its role includes planning, designing and preparing the primary infrastructure for CFZ Area and subsequently selling parcels of land to subdevelopers and individual purchasers, who will then have the flexibility to design their own premises, township layout and development unit design subject to permitted guidelines. As at the LPD, the directors of the Vendor are set out below:- Datuk Kasi A/L K L Palaniappan; Lao Chok Keang; Balasingam A/L Govindan; Teh Heng Poh; Tan Sri Datuk Hj Mustapha Kamal bin Hj Abu Bakar; Fazwinna binti Tan Sri Datuk Hj Mustapha Kamal; Mohd Zakir bin Omar; Annuar Marzuki bin Abdul Aziz; Felina binti Tan Sri Datuk Hj Mustapha Kamal (Alternate director to Fazwinna binti Tan Sri Datuk Hj Mustapha Kamal); Ahmad Khalif bin Tan Sri Datuk Hj Mustapha Kamal (Alternate director to Tan Sri Datuk Hj Mustapha Kamal bin Hj Abu Bakar); and Farah Mahami binti Tan Sri Datuk Hj Mustapha Kamal (Alternate director to Lao Chok Keang) As at the LPD, the substantial shareholders of SHSB are set out below:- < ----------Direct---------- > < ---------Indirect-------- > Name No. of Shares % No. of Shares % Virtual Path Sdn Bhd 1,500,000 25.0 - - Menara Embun Sdn Bhd 1,500,000 25.0 - - UEM Land Bhd 1,500,000 25.0 - - Modern Eden Sdn Bhd 750,000 12.5 - - Impresive Circuit Sdn Bhd 750,000 12.5 - - Tan Sri Datuk Hj Mustapha Kamal bin Hj Abu Bakar - - 3,750,000 *1 62.5 Datuk Kasi A/L K L Palaniappan - - 3,000,000 *2 50.0 Notes:- *1 *2 Deemed interest by virtue of his substantial shareholdings held through Virtual Path Sdn Bhd, Menara Embun Sdn Bhd and Modern Eden Sdn Bhd Deemed interest by virtue of his substantial shareholdings held through Menara Embun Sdn Bhd, Modern Eden Sdn Bhd and Impresive Circuit Sdn Bhd 3
2.4 Information on the Land and proposed development OSKPH has agreed to buy and the Vendor has agreed to sell the Land free from all claims, charges, liens or other encumbrances whatsoever and with all rights, benefits, title and interest attached thereto together with vacant possession for the Purchase Consideration based upon the terms and conditions contained in the SPA. The Land is a freehold interest property and is a vacant commercial lot measuring approximately 64,320 square meters held under H.S.(D) 28819, PT No. 41831, Mukim Dengkil, Daerah Sepang, Negeri Selangor Darul Ehsan. The Land is strategically located within the Cyberjaya Flagship Zone Area and easily accessible via a comprehensive network of expressways such as The North South Central Link (Elite Highway), MAJU Expressway (MEX Highway), South Klang Valley Expressway, The Damansara-Puchong Highway, the State Road B15 Toll Free Highway and the KL-Putrajaya/Cyberjaya dedicated highway. The Land is also within easy reach from Multimedia University, Lim Kok Wing University College of Creative Technology, Cyberjaya University College of Medical Science, Street Mall, Alamanda Shopping Mall, Multimedia Development Corporation Headquarters, Putrajaya Marriot Hotel, Cyberview Lodge Resort and Spa, Cyberpark and as well as hospitals such as Hospital Putrajaya and Hospital Serdang. The Board is unable to procure the net book value of the Land as the Company is not privy to such information. Based on preliminary plans, WRSB proposes to undertake the Proposed Project on the Land, subject to approval of the relevant authorities, which is expected to have an estimated gross development value of approximately RM1.2 billion. The total development cost and the expected profits to be derived from the Proposed Project cannot be determined at this juncture as the Proposed Project is still at its early planning stage. Furthermore, as set out below, as at the LPD, WSRB has yet to submit the application to Majlis Perbandaran Sepang for the development and planning consent for the Proposed Project. The Proposed Project is expected to commence in early of 2012 and to be developed over a span of five (5) years. Further details on the outlook and prospects of the Malaysian property market are set out in Section 4 of this Circular. The development cost for the Proposed Project will be funded by both internally generated funds and bank borrowings. The exact mix of internally generated funds and bank borrowings will be decided by the management of OSKPH Group at a later stage upon procuring the relevant approvals. The name of the Proposed Project will be decided by the management of OSKPH Group at a later stage after the relevant approvals for the Proposed Acquisition has been procured. As at the LPD, the application to Majlis Perbandaran Sepang for the development and planning consent for the Proposed Project has not been submitted by WSRB. Further details of the Land are summarised in the table below:- Lot No./ Title No./ Description : H.S.(D) 28819, PT No. 41831, Mukim Dengkil, Daerah Sepang, Negeri Selangor Darul Ehsan Aggregate land area : Approximately 64,320 square meters Category of land use : Building Existing/ Future use : Vacant commercial land/ Future development 4
Express condition : Commercial Building Restriction-in-interest : The Land may be transferred, leased or charged subject to the State Authority's consent Tenure : Term In Perpetuity (Freehold) Registered owner : CSB Encumbrances : Nil Other endorsements : Nil Valuation method : Comparison Method Market value *1 : RM87,900,000 Note:- *1 Based on the valuation report dated 8 April 2011 prepared by WTW 2.5 Basis and justification of arriving at the Purchase Consideration The purchase consideration of RM86,542,830 was arrived at on a willing-buyer willing-seller basis, after taking into consideration the valuation of the Land of RM87,900,000, which was carried out by WTW based on the valuation letter dated 21 March 2011. The Purchase Consideration represents a discount of RM1,357,170 or 1.5% over the market value of the Land as appraised by WTW. The Purchase Consideration will be fully satisfied by way of cash payment in accordance to the following timeframe and manner:- Timeframe Amount Payable RM Deposit Upon execution of the SPA 8,654,283 *1 Balance Purchase Price Within a period of 90 days from the Unconditional Date (defined herein) 77,888,547 Total 86,542,830 Note:- *1 The deposit amounting to RM8,654,283 has been paid by the Purchaser to the Vendor on 22 March 2011. In the event that the Conditions Precedent as set out in Section 2.8 of this Circular are not fulfilled within the Conditions Precedent Fulfillment Period, any affected party to the SPA shall be entitled by notice in writing to terminate the SPA whereupon the Vendor shall refund the Deposit, free of interest, to the Purchaser within 14 days from the expiry of the Conditions Precedent Fulfillment Period. 2.6 Source of funding OSKPH Group intends to fund the Proposed Acquisition through internally generated funds and/or bank borrowings, the exact quantum/ mix of which has not been finalised as at the LPD. Based on internal preliminary discussion, the indicative funding from internally generated funds is 20% while the indicative funding from bank borrowings is 80%. The management of OSKPH Group will choose the most optimum mix taking into consideration, its gearing level, interest expenses as well as internal cash requirements for its business. 5
2.7 Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by the Purchaser pursuant to the Proposed Acquisition. 2.8 Salient terms and conditions of the SPA The salient terms and conditions of the SPA include, amongst others, the following:- Conditions Precedent The completion of the sale and purchase of the Land shall be subject to and conditional upon the following being obtained within four (4) months from the date of the SPA (the "Conditions Precedent Fulfillment Period"):- (a) (b) (c) procurement by the Purchaser of the approval in writing from the EPU, Prime Minister's Department for the purchase of the Land. The approval letter from EPU, Prime Minister's Department dated 12 April 2011 for the purchase of the Land was received by the Company on 14 April 2011. Please refer to Section 7 of this Circular for further details on the approval letter; the Vendor being granted the written consent and approval by the Appropriate Authority for the sale and transfer to the Purchaser of the Land pursuant to the SPA. SHSB had, on 25 April 2011, submitted an application to Pejabat Daerah/ Tanah Sepang for the transfer of the Land to WRSB. As at the LPD, the decision of the aforementioned application from Pejabat Daerah/ Tanah Sepang is still pending; and procurement by the Purchaser, as required by the Main Market Listing Requirement of Bursa Securities, of the approval of shareholders in a general meeting of OSKPH. The SPA shall become unconditional on the date when all the abovementioned Conditions Precedent are obtained or fulfilled ("Unconditional Date"). 2.9 Salient features of the Valuation Report WTW had appraised the Land in its report dated 8 April 2011 using the Comparison Method, by comparing the Land with other comparable properties which have been sold and making adjustments for factors which affect the Land's value such as location and accessibility, market conditions, time, size, shape, orientation, terrain of the Land, tenure and restriction, if any, and other relevant characteristics. WTW is of the opinion that the market value of the Land, with permission to sell, transfer, lease or charge and free from all encumbrances is RM87,900,000. A summary of the details of the Land were set out in Section 2.4 of this Circular. The valuation certificate prepared by WTW dated 8 April 2011 is set out in Appendix I of this Circular. 3. RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition will enable OSKPH Group to increase its existing property development land bank and to strengthen OSKPH Group's presence in Cyberjaya by offering a wider choice of products from its existing high end condominium and lake villas development in Perdana Lakeview known as Mirage by the Lake. The Board believes that the Land in Cyberjaya offers good potential due to its unique demographics. 6
With a total land area of 7,000 acres, the CFZ is a self-contained intelligent city with complete IT infrastructure, low-density urban enterprise as well as commercial, residential, enterprise and institutional developments. As an emerging township, Cyberjaya also provides convenient amenities such as police station complex, fire station, hotels, boutique mall, recreation centres and community clubhouse. Cyberjaya is easily accessible via a comprehensive network of expressways such as The North South Central Link (Elite Highway), MAJU Expressway (MEX Highway), South Klang Valley Expressway, The Damansara-Puchong Highway, the State Road B15 Toll Free Highway and the KL-Putrajaya/Cyberjaya dedicated highway, which has considerably shortened the travel time between Kuala Lumpur and Cyberjaya to approximately 20 minutes. Currently over 500 companies who qualify for Multimedia Super Corridor ("MSC") status have relocated their operations to Cyberjaya, making the township a rapidly growing area. Among them are Shell, Hewlett Packard, Electronic Data System, Ericsson, BMW, HSBC, DHL, Dell Global Business Centre, OCBC, Motorola and others. According to The Star newspaper dated 2 March 2011, Advanced Micro Devices ("AMD") has recently opened its global services centre in Cyberjaya. The centre, which currently employs about 400 personnel, will support the business process as well as finance, accounting and IT services for AMD worldwide. It is also the chosen location for some education institutes such as Lim Kok Wing University College of Creative Technology, Multimedia University and Cyberjaya University College of Medical Sciences and Nexus International School, Putrajaya. To cater for schoolgoing children of the general population of Cyberjaya, there are also primary Sekolah Kebangsaan Cyberjaya, secondary Sekolah Menengah Cyberjaya public schools and Sekolah Seri Puteri, a secondary full boarding school for girls. 4. OUTLOOK AND PROSPECTS OF THE MALAYSIAN PROPERTY MARKET The Malaysian economy is projected to expand between 5.0% to 6.0% in 2011, mainly driven by domestic demand and supported by a favourable external sector. The strong economic fundamentals will continue to propel the growth momentum of domestic demand. Private investment activity, which turned positive in 2010, is envisaged to contribute significantly to economic growth. This is in line with the expected commencement of 52 Private Finance Initiatives over the 10th Malaysia Plan period as well as the implementation of private sector projects under the National Key Economic Areas. Private consumption is expected to strengthen in view of low unemployment and increasing disposable household income. Growth prospects are also premised on firm prices of major commodities which will spur rural household spending in 2011. With the private sector spearheading growth, public expenditure is expected to moderate, reflecting the Government's commitment towards prudent fiscal management. Construction activity in the residential sub-sector moderated following the completion of several high-end properties, particularly condominiums and apartments. In addition, the performance of the sub-sector in the first half of 2010 was affected by the delay in launching new projects during the economic downturn in 2009 when developers were more cautious. However, following the economic recovery, coupled with attractive financing packages and affordable interest rates, housing started to record an increase of 3.2% in the second quarter of 2010 compared with the preceding quarter. In addition, the take-up rate of newly launched residential units improved to 19.5% as compared to 12.3% recorded during the first half of 2009. Despite slower housing construction activity, high-end landed properties located in preferred areas were well-received with 100% take-up rate during launches. The aggressive promotion of Malaysia My Second Home programme also contributed to the strong take-up of high-end properties. With the strong domestic economic performance coupled with the buoyant secondary housing market, potential house buyers, particularly in the Klang Valley, Penang and Selangor are shifting from a wait-and-see attitude in 2009 to ready-to-commit in the second half of 2010. Source: Economic Report 2010/2011, Ministry of Finance Malaysia 7
As set out in Section 2.4 of this Circular, the Land is strategically located within the Cyberjaya Flagship Zone Area and easily accessible via a comprehensive network of expressways such as The North South Central Link (Elite Highway), MAJU Expressway (MEX Highway), South Klang Valley Expressway, The Damansara-Puchong Highway, the State Road B15 Toll Free Highway and the KL-Putrajaya/Cyberjaya dedicated highway. The Land is also within easy reach from Multimedia University, Lim Kok Wing University College of Creative Technology, Cyberjaya University College of Medical Science, Street Mall, Alamanda Shopping Mall, Multimedia Development Corporation Headquarters, Putrajaya Marriot Hotel, Cyberview Lodge Resort and Spa, Cyberpark and as well as hospitals such as Hospital Putrajaya and Hospital Serdang. Based on preliminary plans, WRSB proposes to undertake the Proposed Project on the Land, subject to approval of the relevant authorities, which is expected to have an estimated gross development value of approximately RM1.2 billion. Barring any unforeseen circumstances, the Board after having considered all the relevant aspects, including the aforementioned outlook and prospects of the Malaysian property market as well as the proposed development plan on the Land as set out in Section 2.4 of this Circular, is of the opinion that the Proposed Project is expected to contribute positively to the future earnings of the Group and to enhance OSKPH's shareholders' value in the long run. 5. RISK FACTORS The following are risk factors that may arise from the Proposed Acquisition (which may not be exhaustive):- 5.1 Sensitivity to economic downturn and business risk in the property market The demand for properties is dependent on the general economic, business and credit conditions as well as the availability of supply in the market. The Board reckons that the effects of weaker demand could be mitigated in a slow economic environment by good planning in terms of design, timing of launch and pricing points as compared to competitors. The future development on the Land is also subject to inherent risks in the property development industry, which includes labour supply, volatility in construction material prices and changes in regulatory framework of the construction and/or property development industries. OSKPH Group will leverage on its strength and experience as a property development manager to manage these risks closely. 5.2 Competitive risks OSKPH Group faces competition from various property developers. Competitiveness of a property development company is dependent on its ability to acquire reasonably priced land banks at strategic locations, availability of labour supply and the market price of properties. OSKPH Group will continue to take measures to mitigate these risks such as conducting market intelligence surveys, monitoring and adjusting development and marketing strategies in response to changing economic conditions and market demand. 8
5.3 Delay in commencement and completion of development Commencement and completion of development are dependent on many external factors, which may be beyond the control of OSKPH Group, such as getting the necessary approvals from land offices, planning authorities and local councils as scheduled, sourcing and securing quality construction materials in adequate amounts, getting favourable credit terms, environmental factors such as weather conditions as well as satisfactory performance of contractors who are appointed to complete the development project. The Board and management of OSKPH Group will seek to mitigate such risks by closely monitoring the progress of the development to ensure the timely completion of the Proposed Project on the Land. 5.4 Non-completion of the Proposed Acquisition If the Conditions Precedent are not met by the Conditions Precedent Fulfillment Period, the Proposed Acquisition will not be completed, OSKPH Group will not be able to meet its objective as stated in Section 3 of this Circular. The Board will take reasonable steps to ensure that the Conditions Precedent are met in order to complete the Proposed Acquisition. 6. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The financial effects of the Proposed Acquisition are set out below:- 6.1 Issued and paid-up share capital and substantial shareholders' shareholding The Proposed Acquisition will not have any effect on the issued and paid-up share capital and the substantial shareholders' shareholding structure of OSKPH as the Purchase Consideration is to be fully satisfied via cash and does not involve any issuance of new ordinary shares in OSKPH. 6.2 NA, NA per share and gearing The Proposed Acquisition will not have any material effect on the NA and NA per share of OSKPH for the financial year ending 31 December 2011. Based on the audited consolidated financial statements of OSKPH Group as at 31 December 2010, the Group's gearing is 0.34 times. Purely for illustrative purposes only, assuming RM69.2 million representing 80% of the Purchase Price is financed through external borrowings to be procured, the proforma gearing position of the Group is expected to increase to 0.56 times after the Proposed Acquisition. As disclosed in Section 2.6 of this Circular, the exact mix of internally generated funds and bank borrowings will be decided by the management of OSKPH Group at a later date. The management of OSKPH Group will choose the most optimum mix taking into consideration, its gearing level, interest expenses as well as internal cash requirements for its business. 6.3 Earnings and earnings per share ("EPS") The Proposed Acquisition is not expected to have any material impact on the earnings and EPS of OSKPH for the financial year ending 31 December 2011. However, the potential future profit contribution arising from the development of the Land may enhance the earnings and EPS in the long run. 9
7. APPROVALS REQUIRED/ OBTAINED The Proposed Acquisition is subject to the following approvals being obtained:- i. the shareholders of OSKPH at an extraordinary general meeting to be convened; and ii. any other relevant authorities and/or approvals, if necessary. The approval letter from EPU, Prime Minister's Department dated 12 April 2011 for the purchase of the Land was received by the Company on 14 April 2011. The EPU's approval is subject to WRSB increasing its issued and paid-up capital to at least RM100,000 prior to the completion of the Proposed Acquisition. The Company had, on 10 May 2011, increased the authorised share capital of WRSB from RM100,000 comprising 100,000 WRSB Shares to RM500,000 comprising 500,000 WRSB Shares and increased the issued and paid-up capital of WRSB from RM2.00 comprising two (2) WRSB Shares to RM250,000 comprising 250,000 WRSB Shares. The Proposed Acquisition is not conditional upon any other corporate exercises undertaken or to be undertaken by the Company. 8. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED ACQUISITION Barring any unforeseen circumstances and subject to fulfillment of all the Conditions Precedents as set out in the SPA, the Proposed Acquisition is expected to be completed by the third quarter of 2011. The tentative timetable for the implementation of the Proposed Acquisition is as follows:- Month May 2011 June 2011 September 2011 Event Despatch of Circular to the shareholders of OKSPH Convening of EGM and approval from the shareholders of OSKPH for the Proposed Acquisition Completion of the Proposed Acquisition Note:- * The timetable is indicative at this juncture and is subject to changes which may be necessary to facilitate implementation procedures. 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors or major shareholders of OSKPH and/or persons connected to them have any interest, whether direct or indirect, in the Proposed Acquisition. 10. CORPORATE PROPOSALS ANNOUNCED BUT NOT YET COMPLETED Save for the Proposed Acquisition, the Board is not aware of any other outstanding corporate proposals which have been announced, but not yet completed as at the date of this Circular. The Proposed Acquisition is not conditional upon any other corporate exercises undertaken or to be undertaken by the Company. 10
11. DIRECTORS' RECOMMENDATION The Board after having considered all the relevant aspects, including the market value of the Land as appraised by WTW, terms of the SPA and the rationale of the Proposed Acquisition, is of the opinion that the terms and conditions of the Proposed Acquisition are fair and reasonable and are in the best interest of the Company and none of the Directors have disagreed with this statement. Accordingly, the Board recommends that you vote in favour of the ordinary resolution pertaining to the Proposed Acquisition to be tabled at the forthcoming EGM of the Company. 12. EGM The EGM, the notice of which is set out in this Circular, will be held at the Auditorium, 11th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur on Wednesday, 15 June 2011 at 11.00 a.m. or immediately following the conclusion of the Twenty-First Annual General Meeting to be held on the same date at 10.00 a.m., whichever is earlier or at every adjournment thereof, for the purpose of considering and, if thought fit, passing the ordinary resolution to give effect to the Proposed Acquisition. If you are unable to attend and vote in person at the EGM, you are requested to complete and return the enclosed Form of Proxy in accordance with the instruction provided thereon so as to arrive at the Registered Office of the Company at 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, not less than 48 hours before the time fixed for holding the EGM. The lodging of the Form of Proxy does not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 13. FURTHER INFORMATION Shareholders are advised to refer to the appendices set out in this Circular for further information. Yours faithfully, For and on behalf of the Board of Directors of OSK PROPERTY HOLDINGS BERHAD DATO' NIK MOHAMED DIN BIN DATUK NIK YUSOFF Executive Chairman 11
VALUATION CERTIFICATE APPENDIX I 12
APPENDIX II FURTHER INFORMATION 1. DIRECTORS' RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board and they individually and collectively accept full responsibility for the accuracy of the information contained in this Circular and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there is no other fact the omission of which would make any statement herein false or misleading. 2. CONSENTS 1.1 Adviser The written consent of OSK to the inclusion of its name in this Circular, in the form and context in which they appear have been given and have not subsequently been withdrawn before the issuance of this Circular. 1.2 Independent Valuer The written consent of WTW, being the independent valuer, to the inclusion of its name in this Circular and the valuation certificate, in the form and context in which they appear have been given and have not subsequently been withdrawn before the issuance of this Circular. 3. DECLARATIONS OF CONFLICT OF INTEREST 3.1 Adviser OSK confirms that as at the date of this Circular, there is no situation of conflict of interest that exists or is likely to exist in relation to its role as the adviser to the Company for the Proposed Acquisition. 3.2 Independent Valuer WTW confirms that as at the date of this Circular, there is no situation of conflict of interest that exists or is likely to exist in relation to its role as the independent valuer to the Company for the Proposed Acquisition. 4. MATERIAL CONTRACTS Save as disclosed below and the SPA, neither OSKPH nor any of its subsidiaries have entered into any material contracts (not being contracts entered into in the ordinary course of business) within the two (2) years preceding the date of this Circular. On 31 March 2010, Jelang Vista Sdn Bhd (Company No. 889503-W), a wholly owned subsidiary of OSKPH, entered into a sale and purchase agreement with CSB and SHSB for the acquisition of two (2) plots of residential land held under Geran 232650 Lot 44542 (formerly known as HS(D) 22669 PT No. 38039) measuring approximately 23,942 square metres (257,711.69 square feet) and Geran 232651 Lot 44543 (formerly known as HS(D) 22670 PT No. 38040) measuring approximately 25,221 square metres (271,478.84 square feet) both in Mukim of Dengkil, Daerah Sepang, Negeri Selangor for a total cash consideration of RM32,677,515.00. The sale and purchase agreement was completed on 15th October 2010. 16
5. MATERIAL LITIGATION As at the LPD, the Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware of any proceedings pending or threatened against the Group or of any facts likely to give rise to any proceedings which may materially and adversely affect the financial position or business operations of the Group. 6. MATERIAL COMMITMENTS As at the LPD, the Board is not aware of any material commitments incurred or known to be incurred by OSKPH Group that has not been provided for, which upon becoming enforceable, may have a material impact on the financial results/ position of the Group. 7. CONTINGENT LIABILITIES Save as disclosed below, as at the LPD, the Board is not aware of any contingent liabilities incurred or known to be incurred which, upon becoming enforceable, may have a material impact on the financial results/ position of the Group. RM'000 Corporate guarantees given to licensed banks for credit facilities of subsidiary companies 114,979 Total 114,979 8. DOCUMENTS AVAILABLE FOR INSPECTION The following documents are available for inspection at the registered office of OSKPH at 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, during normal business hours from Monday to Friday (except public holidays) from the date of this Circular up to and including the date of the forthcoming EGM, or at any adjournment thereof:- i. Memorandum of Articles of Association of OSKPH; ii. Audited consolidated financial statements of OSKPH for the past two (2) FYE 31 December 2009 and 31 December 2010 as well as the quarterly report of OSKPH for the FYE 31 March 2011; iii. iv. The letters of consent referred to in Section 2 above; The SPA and the material contract referred to in Section 4 above; and v. The valuation report by WTW dated 8 April 2011 together with the valuation certificate in relation to the Land. 17
OSK PROPERTY HOLDINGS BERHAD (Company No. 201666-D) (Incorporated in Malaysia under the Companies Act, 1965) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting of OSK Property Holdings Berhad ("OSKPH" or "the Company") will be held at the Auditorium, 11th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur on Wednesday, 15 June 2011 at 11.00 a.m. or immediately following the conclusion of the Twenty-First Annual General Meeting to be held on the same date at 10.00 a.m., whichever is earlier or at every adjournment thereof, for the purpose of considering and if thought fit, passing the following ordinary resolution, with or without modification:- ORDINARY RESOLUTION PROPOSED ACQUISITION BY WAWASAN RAJAWALI SDN BHD ("WRSB"), A WHOLLY OWNED SUBSIDIARY COMPANY OF OSK PROPERTY HOLDINGS BERHAD, OF A PIECE OF FREEHOLD VACANT COMMERCIAL LAND MEASURING APPROXIMATELY 64,320 SQUARE METERS HELD UNDER H.S.(D) 28819, PT NO. 41831, MUKIM DENGKIL, DAERAH SEPANG, NEGERI SELANGOR DARUL EHSAN FROM CYBERVIEW SDN BHD ("CSB") AND SETIA HARUMAN SDN BHD ("SHSB") FOR A TOTAL CASH CONSIDERATION OF RM86,542,830 ("PROPOSED ACQUISITION") "THAT, subject to and conditional upon the approvals of all relevant regulatory authorities being obtained, where required, approval be and is hereby given for WRSB, a wholly owned subsidiary of OSKPH, to acquire a piece of freehold vacant commercial land measuring approximately 64,320 square meters held under H.S.(D) 28819, PT No. 41831, Mukim Dengkil, Daerah Sepang, Negeri Selangor Darul Ehsan from CSB and SHSB for a total cash consideration of RM86,542,830, in accordance with terms and conditions of the conditional Sale and Purchase Agreement dated 22 March 2011 entered into between WRSB, CSB and SHSB. AND THAT the Directors of the Company, in order to implement, give full effect and complete the Proposed Acquisition, be hereby empowered and authorised to do or procure to be done all acts, deeds and things and to execute, sign and deliver on behalf of the Company, all such documents as the Company may deem necessary, expedient, and/ or appropriate to implement, give effect to and complete the Proposed Acquisition with full power to assent to any condition, variation, modification and/ or amendment as may be required by any relevant authority and/ or party to give full effect to the Proposed Acquisition." By Order of the Board Chua Siew Chuan (MAICSA 0777689) Chin Mun Yee (MAICSA 7019243) Company Secretaries Kuala Lumpur 24 May 2011 Notes:- 1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/ proxies to attend and vote instead of him. A proxy may but need not be a member of the Company. 2. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportion of his holding(s) to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under seal or in some other manner approved by its Board of Directors. 4. The instrument appointing a proxy must be deposited at the registered office of the Company, 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.
OSK PROPERTY HOLDINGS BERHAD (201666-D) (Incorporated in Malaysia) FORM OF PROXY CDS Accounts No. Number of ordinary shares I/We NRIC No./Passport No./Company No. Of Being a member/members of OSK Property Holdings Berhad hereby appoint:- Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address *and/or (*delete if not applicable) Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address or failing him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the Extraordinary General Meeting of the Company to be held at the Auditorium, 11th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur on Wednesday, 15 June 2011 at 11.00 a.m. or immediately following the conclusion of the Twenty-First Annual General Meeting to be held on the same date at 10.00 a.m., whichever is earlier or at every adjournment thereof. My/our proxy is to vote as indicated below:- RESOLUTION FOR AGAINST Ordinary Resolution Proposed Acquisition Please indicate with an "X" in the appropriate space how you wish your proxy to vote. If you do not indicate how you wish your proxy to vote on the resolution, the proxy shall vote as he thinks fit or, at his discretion, abstain from voting. Dated this day of 2011 Notes:- * Signature/Common Seal of Shareholder * Delete if not applicable 1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/ proxies to attend and vote instead of him. A proxy may but need not be a member of the Company. 2. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportion of his holding(s) to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under seal or in some other manner approved by its Board of Directors. 4. The instrument appointing a proxy must be deposited at the registered office of the Company, 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.
Please fold here Stamp The Company Secretaries OSK Property Holdings Berhad (201666-D) 20th Floor, Plaza OSK, Jalan Ampang 50450 Kuala Lumpur Please fold here