CREST BUILDER HOLDINGS BERHAD ( CREST BUILDER OR COMPANY ) PROPOSED DISPOSAL BY CREST BUILDER SDN BHD ( CBSB OR VENDOR ), A WHOLLY- OWNED SUBSIDIARY OF CREST BUILDER, OF A PARCEL OF LEASEHOLD LAND LOCATED IN MUKIM OF SUNGAI BULOH, DAERAH OF PETALING, NEGERI SELANGOR FOR A TOTAL CASH CONSIDERATION OF RM57,525,336 ( PROPOSED DISPOSAL ) 1. INTRODUCTION On behalf of the Board of Directors of Crest Builder, we wish to announce that on 4 March 2011, CBSB, a wholly-owned subsidiary of Crest Builder, had entered into a Sale and Purchase Agreement ( SPA ) with Foster Estate Sdn Bhd ( Foster Estate or Purchaser ) for the proposed disposal of a parcel of leasehold commercial development land held under H.S. (D) 222402, PT 44018, Mukim of Sungai Buloh, Daerah of Petaling, Negeri Selangor measuring approximately 6.33 acres with a net usable area of approximately 4.26 acres as agreed by both parties ( Net Usable Area ) ( Land ) for a total cash consideration of RM57,525,336 ( Disposal Consideration ). 2. DETAILS OF THE PROPOSED DISPOSAL 2.1 Basis of arriving at the Disposal Consideration The Disposal Consideration, based on the Net Usable Area, was arrived at on a willingbuyer willing-seller basis after negotiations between CBSB and Foster Estate. A valuation on the Land was undertaken by PA International Property Consultants (KL) Sdn Bhd on 23 February 2011. Using the nett/usable land area, the market value of the Land was assessed to be RM55,700,000. 2.2 Salient terms of the SPA The salient terms of the SPA are as follows: (i) The Disposal Consideration shall be paid by the Purchaser as follows: (a) (b) the sum of RM1,150,506.72, which was paid to the Vendor prior to the execution of the SPA as earnest deposit; upon the execution of the SPA, (1) the sum of RM1,150,506.72, to the Purchaser s solicitors as stakeholders for the purpose of compliance with the Real Property Gains Tax Act, 1976 and (2) the sum of RM3,451,520.16, to the Vendor s solicitors as stakeholders, making a total sum of RM5,752,533.60, representing a deposit of 10% of the Disposal Consideration ( Deposit ); and 1
(c) the balance sum of RM51,772,802.40 to be paid to the Vendor s solicitors as stakeholders within the period of three (3) months from the date of the Vendor s fulfillment of the Condition Precedent (as hereinafter defined in Section 2.2(ii) of this announcement) and the Purchaser s solicitors having received documentary evidence of the same ( Completion Period ), or within the extended period of two (2) months commencing immediately upon the expiry of the Completion Period, as the case may be, subject to the terms and conditions stated in the SPA; (ii) (iii) (iv) (v) (vi) (vii) The Proposed Disposal is conditional upon the Vendor having obtained the written consent from the Pejabat Tanah Dan Galian Selangor consenting to the transfer of the Land from the Vendor to the Purchaser ( Letter of Consent to Transfer ) and the Purchaser s solicitors having received a copy of the Letter of Consent to Transfer ( Condition Precedent ); In the event that the Condition Precedent is not fulfilled, complied with or obtained within the period of six (6) months from the date of the SPA ( Conditions Period ), the Vendor and the Purchaser ( the Parties ) agree that the Conditions Period shall be extended by a period of six (6) months commencing immediately upon the expiry of the Conditions Period or such extended period as may be mutually agreed by the Purchaser at its sole discretion ( Extended Conditions Period ); In the event that the Condition Precedent is not fulfilled, complied with or obtained within the Extended Conditions Period, the Parties agree that the Purchaser shall at its sole discretion have the right to further extend the Extended Conditions Period for a further period commencing immediately upon the expiry of the Extended Conditions Period ( Further Extended Conditions Period ); In the event that upon the expiry of the Extended Conditions Period, or the Further Extended Conditions Period, as the case may be, the Condition Precedent is still not fulfilled, complied with or obtained, the SPA shall lapse and be of no further effect and the Vendor shall within seven (7) business days from the expiry of the Extended Conditions Period, or the Further Extended Conditions Period, as the case may be, refund to the Purchaser the Deposit. In the event that the Vendor fails to refund the Deposit, the Vendor shall pay to the Purchaser interest on the Deposit, calculated at the rate of eight per centum (8%) per annum on the monies due and outstanding calculated on a daily basis from the due date of payment until full payment thereof; and The Vendor shall within a period of fourteen (14) business days from the date of the SPA, at the Vendor s sole cost and expense, submit and file the application to the relevant authorities for the Letter of Consent to Transfer in respect of the Land and all charges and cost and expense for the Letter of Consent to Transfer shall be wholly and absolutely borne by the Vendor. 2
2.3 Details of the Land The Land comprises a parcel of leasehold commercial development land held under H.S. (D) 222402, PT 44018, Mukim of Sungai Buloh, Daerah of Petaling, Negeri Selangor measuring approximately 6.33 acres, with a usable land area of approximately 4.26 acres and the balance thereof is required to be surrendered to the relevant authorities. The Land is located along Jalan PJU 8/8 parallel to the Lebuhraya Damansara Puchong ( LDP ) due west, within an ongoing self-contained residential and mixed commercial scheme commonly known as Damansara Perdana. The general locality is adjacent to Bandar Utama, Taman Tun Dr Ismail/Mutiara Damansara and is located on the north-western fringes of the Federal Territory skirting north Petaling Jaya. The Land is roughly rectangular in shape and is easily accessible from the city centre via Jalan Duta, Jalan Damansara onto the LDP just past Bandar Utama, Taman Tun Dr Ismail and Mutiara Damansara. Further information on the Land is as follows: Description of the Land H.S. (D) 222402, PT 44018, Mukim of Sungai Buloh, Daerah of Petaling, Negeri Selangor Land area 6.33 acres, with a net usable area of 4.26 acres Existing use of the Land Category of land use Express condition Vacant Bangunan Bangunan Perniagaan Tenure of Expiry date leasehold of the lease 99 years 8 June 2104 Based on the latest audited consolidated financial statements of Crest Builder for the financial year ended 31 December 2009, the net book value of the Land is RM38,206,376. As at the date of this announcement, the issue document of title to the Land is presently encumbered by a private caveat by EON Bank Berhad, which was registered on 1 December 2009. 2.4 Original cost of investment The Land was originally acquired by CBSB on 20 February 2009 for a purchase price of RM37,113,120, which was satisfied by setting off the same amount against part of the total contract sum payable by Saujana Triangle Sdn Bhd, a wholly-owned subsidiary of MK Land Holdings Berhad, to CBSB in the ordinary course of business as at 20 February 2009. 2.5 Gain or loss on the Proposed Disposal Crest Builder and its subsidiaries ( Crest Builder Group ) expect to realise a gain of approximately RM19.72 million from the Proposed Disposal. 3
2.6 Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by the Purchaser pursuant to the Proposed Disposal. 3. BACKGROUND INFORMATION ON CBSB AND FOSTER ESTATE 3.1 CBSB CBSB was incorporated in Malaysia under the Companies Act, 1965 ( Act ) on 21 November 1983. CBSB is principally a construction company. CBSB is registered as a Class A Contractor (PKK) with the Ministry of Entrepreneurial Development as well as in the G7 category with the Construction Industry Development Board of Malaysia (CIDB). CBSB is a wholly-owned subsidiary of Crest Builder. 3.2 Foster Estate Foster Estate was incorporated in Malaysia under the Act on 4 November 2010 with its registered address at 68-3A, Jalan Pasar, 41400 Klang, Selangor Darul Ehsan. Foster Estate is principally a property investment holding company. 4. PROPOSED UTILISATION OF PROCEEEDS The expected gross proceeds of RM57,525,336 arising from the Proposed Disposal are expected to be utilised within one (1) year from date of completion of the Proposed Disposal in the following manner: Note RM Repayment of borrowings 1 40,000,000 Working capital 17,525,336 TOTAL 57,525,336 Note: (1) Crest Builder proposes to use part of the proceeds from the Proposed Disposal for early settlement of its entire Collaterised Loan Obligations ( CLO Loan ). The utilisation of the proceeds from the Proposed Disposal will result in an estimated interest savings of approximately RM1.476 million. Based on Crest Builder s audited financial statement for the financial year ended 31 December 2009, the principal amount outstanding of the CLO Loan amounts to approximately RM40 million. 5. RATIONALE FOR THE PROPOSED DISPOSAL Based on the Disposal Consideration, Crest Builder Group would be able to realise an immediate gain on disposal of approximately RM19.72 million. In addition, the cash proceeds from the Proposed Disposal may be utilised for the purposes stated under Section 4 of this announcement. 4
6. EFFECTS OF THE PROPOSED DISPOSAL 6.1 Issued and paid-up share capital The Proposed Disposal will not have any effect on the issued and paid-up share capital of the Company. 6.2 Shareholdings of substantial shareholders The Proposed Disposal will not have any effect on the shareholdings of the substantial shareholders of the Company. 6.3 Earnings per share Crest Builder Group expects to realise a gain on disposal of approximately RM19.72 million for the financial year ending 31 December 2011. As such, the Proposed Disposal will improve the Company s consolidated earnings per share for the financial year ending 31 December 2011. 6.4 Net assets per share and gearing The proforma effects of the Proposed Disposal on the net assets per share and gearing of Crest Builder Group based on the audited consolidated financial statements of Crest Builder for the financial year ended 31 December 2009 are as follows: Group Audited 31 December 2009 RM After the Proposed Disposal RM Share capital 124,089,450 124,089,450 Reserves 106,691,593 (1) 126,414,853 Shareholders equity/ Net assets 230,781,043 250,504,303 Interest bearing borrowings 155,147,173 (2) 115,147,173 No. of ordinary shares of RM1.00 in issue 124,089,450 124,089,450 Net assets per share 1.86 2.02 Gearing (times) 0.67 0.46 Notes: (1) Assuming a gain on disposal of approximately RM19.72 million arising from the Proposed Disposal. (2) RM40 million of the proceeds from the Proposed Disposal shall be utilised to repay the CLO Loans. 7. APPROVALS REQUIRED Save as disclosed in Section 2.2(ii) of this announcement, the Proposed Disposal is not subject to the approval of any other authorities and/or parties. Application to the relevant authority for the Proposed Disposal is expected to be made within one (1) month from the date of this announcement. 5
8. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors, major shareholders and/or persons connected to them has any interest, direct or indirect, in the Proposed Disposal. 9. DIRECTORS STATEMENT The Board of Directors of Crest Builder, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of the Company. 10. PERCENTAGE RATIOS Based on the audited consolidated financial statements of Crest Builder for the financial year ended 31 December 2009, the highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is the aggregate value of the Disposal Consideration over the net assets of the Company, which amounts to approximately 24.9%. 11. EXPECTED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by the second half of 2011. 12. DOCUMENTS AVAILABLE FOR INSPECTION The SPA and independent valuation certificate with respect to the Land are available for inspection at Crest Builder s registered office at No. 14-2, Jalan 4A/27A, Section 2, Wangsa Maju, 53300 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 4 March 2011. 6