DUTALAND BERHAD PROPOSED DISPOSAL BY PERTAMA LAND & DEVELOPMENT SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF DUTA PLANTATIONS SDN BHD WHICH IN-TURN IS WHOLLY-OWNED BY DUTALAND BERHAD, OF THE PLANTATION ASSETS IN THE DISTRICT OF LABUK-SUGUT, BELURAN AND TONGOD, SABAH, MEASURING APPROXIMATELY 11,579.31 HECTARES TO BOUSTEAD RIMBA NILAI SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF BOUSTEAD PLANTATIONS BERHAD, FOR A TOTAL CASH CONSIDERATION OF RM750,000,000 ( PROPOSED DISPOSAL ) 1. INTRODUCTION Following the Company s announcements respectively dated 22 August 2017 and 6 October 2017, on behalf of the Board of Directors of DutaLand Berhad ( DutaLand or Company ) ( Board ), RHB Investment Bank Berhad ( RHB Investment Bank ) wishes to announce that Pertama Land & Development Sdn Bhd ( PLD or Vendor ) and 9 other registered owners (as detailed hereunder), all are wholly-owned subsidiaries of Duta Plantations Sdn Bhd ( DPSB ) which in-turn are wholly-owned by DutaLand have, on 30 October 2017 entered into a conditional sale and purchase agreement ( SPA ) with Boustead Rimba ai Sdn Bhd ( BRN or Purchaser ), a wholly-owned subsidiary of Boustead Plantations Berhad ( Boustead Plantations ), for the proposed disposal of 42 parcels of plantation lands beneficially owned by PLD in the locality of Labuk Road, Sg. Ruku-Ruku and Sg. Lokan, all within the district of Labuk- Sugut, Beluran and Tongod, Sabah, measuring an aggregate land area of approximately 11,579.31 hectares ( Lands ), together with all movable fixed assets, machineries and vehicles located on the Lands (collectively Plantation Assets ) for a total cash consideration of RM750,000,000 ( Disposal Consideration ). Further details of the Proposed Disposal are set out below. 2. DETAILS OF THE PROPOSED DISPOSAL 2.1 Proposed Disposal The Proposed Disposal involves the disposal by the Vendor to the Purchaser of the Plantation Assets, free from all encumbrances, caveat and other restraints and with vacant possession but subject to the existing category of land use and all express and implied conditions and restrictions of interest endorsed on the documents of titles in respect of the Plantation Assets, and upon the terms and conditions contained in the SPA. The Proposed Disposal is a major disposal transaction as it involves the disposal of all or substantially all of a listed corporation s assets which may result in the listed corporation being no longer suitable for continued listing on the Official List of Bursa Malaysia Securities Berhad ( Bursa Securities ) pursuant to paragraph 10.11A of the Main Market Listing Requirements of Bursa Securities ( Listing Requirements ). Accordingly, the Board has, on 30 October 2017, appointed MIDF Amanah Investment Bank Berhad to act as the Independent Adviser to provide an opinion to the directors and shareholders of DutaLand on the fairness and reasonableness of the Proposed Disposal, and on whether the shareholders should vote in favour of the Proposed Disposal. 1
2.2 Information on the Plantation Assets The Plantation Assets are situated on agricultural land locality at 3 separate sites cultivated with oil palm and form part of the estates identified as Ladang Pertama-Sapa Payau, Ladang Sg. Ruku Ruku, Ladang Sg. Lokan-Sg. Lokan Baru. The Lands comprise 42 parcels of land, together encompassing a combined area of 11,579.31 hectares. PLD and 9 other wholly-owned subsidiaries of DPSB which in-turn is wholly-owned by DutaLand are the registered owners of the Lands. Save for the parcels where PLD is the registered owner, all other parcels of the Lands ( Non-PLD Lands ) had been sold to PLD by the aforesaid 9 registered owners, vide the respective principal sale and purchase agreements ( Principal SPAs ), all dated 30 June 2003, and the Principal SPAs were deemed to have been completed on 30 June 2003. As at 27 October 2017, being the latest practicable date prior to the announcement ( LPD ), the Non-PLD Lands have not been transferred to PLD irrespective of the completion of the Principal SPAs. The development of the Plantation Assets is identified in the following table and plan: No. Estate Location Pieces of lands Total area (Hectares) (1) Ladang Pertama North of Sandakan-Kota Kinabalu-Highway 15 3,944.10 (2) Ladang Sapa Payau (3) Ladang Sg. Ruku Ruku South of Sandakan-Kota Kinabalu Highway 12 3,196.18 15 4,439.03 (4) (5) Ladang Sg. Lokan Ladang Sg. Lokan Baru South of Sandakan-Kota Kinabalu Highway and South of Ladang Sg. Ruku-Ruku 42 11,579.31 Ladang Pertama and Ladang Sapa Payau are situated immediate north of kilometre ( KM ) 113, Sandakan-Kota Kinabalu Highway ( Highway ) while Ladang Sg. Ruku Ruku, Ladang Sg. Lokan and Ladang Sg. Lokan Baru are situated south of KM 109 of the same Highway, the northern boundaries of which being approximately 1 km and 12 km due south of the Highway respectively. Ladang Pertama and Ladang Sapa Payau are about 97 km south-west of Sandakan Municipal Centre while Ladang Sg. Ruku Ruku, Ladang Sg. Lokan and Ladang Sg. Lokan Baru are about 95 km and 91 km respectively south-west of Sandakan Municipal Centre. Approach to the Plantation Assets from Sandakan Municipal Centre is via Jalan Utara-Labuk (of the Highway) to KM 113, then turning north onto a gravelled (former logging) road, known as Golden Apex Borad which runs through the western part of Ladang Pertama. The southern tip of Ladang Pertama fronts onto the Highway. Ladang Sapa Payau which adjoins Ladang Pertama at the latter s mid eastern section is accessible from the internal roads of Ladang Pertama and from Jalan Tung Hup (Maxland Road) which runs through the eastern part of the estate. Approach to Ladang Sg. Ruku Ruku, Ladang Sg. Lokan and Ladang Sg. Lokan Baru is up to KM 109 of the Highway, thereafter turning southwards onto Tung Hup Road (Maxland Road) for some 2 km to reach the north-western corner of Ladang Sg. Ruku Ruku. From here the main access road leads off eastwards and then southwards through Ladang Sg. Ruku Ruku. From the southernmost part of Ladang Sg. Ruku Ruku it is another 9 km by road to Ladang Sg. Lokan through the adjoining Golden Land Berhad plantation. Ladang Sg. Lokan Baru is situated next to Ladang Sg. Lokan and accessible from the internal roads of Ladang Sg. Lokan. The gravelled roads are in fair motorable conditions while the earth surfaced roads could be difficult to drive on in wet weather. Golden Apex road and Tung Hup Road (Maxland Road) are gravel surfaced and maintained in fair motorable condition. The Highway is a tar sealed all weather road in good motorable condition. 2
Telupid Township, located at KM 130 of the Highway, is a small interior town situated midway between Sandakan and Ranau. The commercial centre at the Telupid Town consists of 2 blocks 14 units single storey concrete shophouses and 1 block 8 units double concrete shophouses. Next to it is a newer commercial development comprising 10 blocks 57 units new double storey concrete shophouses. Across, on the opposite side of the Highway, at the junction with Jalan Telupid-Tongod is also 1 block 10 units single concrete shophouses. The town s police station, a secondary school, the large Forest Department office complex, the government hospital and the Jabatan Air s water treatment plant are also situated here, along the southern side of the Highway. Straddling the said highway here are a scattering of mainly wooden structures, utilised as retail shops, eateries, workshops, etc. Sandakan, 109 133 km away is the second largest town in Sabah and former state capital. The map below illustrates the location of the 42 parcels of plantation lands. (Source: C H William Talhar & Wong (Sabah) Sdn Bhd s valuation report for the Plantation Assets) Further details of the Plantation Assets are summarised in Appendix I. 3
2.3 Salient terms of the SPA The salient terms of the SPA for the Proposed Disposal are as follows: 2.3.1 Agreement of sale In consideration each party s covenants and promises hereunder to the other, the Vendor hereby agrees to sell and the Purchaser hereby agrees to purchase the Plantation Assets strictly free from all encumbrances, caveats, liens and other restraints, and subject to the restrictions in interest and conditions whether express or implied on the issue documents of title to Plantation Assets and the conditions as set out in the SPA, at the Disposal Consideration. 2.3.2 Vacant possession Vacant possession of the Plantation Assets shall be delivered on by the Vendor to the Purchaser in condition satisfactory to the Purchaser and in compliance with the conditions as set out in the SPA simultaneously upon the release or payment of the Balance Disposal Consideration (as defined below) together with the late payment interest (if any) by the Vendor s solicitors to the Vendor and the payment of the apportionment of all outgoings including quit rent, rates, taxes, assessments and other charges payable in respect of the Lands by the Purchaser to the Vendor ( Delivery Date ). The Purchaser may require a joint-inspection to be held on the Delivery Date to ensure the conditions as set out in the SPA shall have been fulfilled. 2.3.3 Conditions precedent The obligation of the parties to sell and purchase the Plantation Assets shall be conditional upon the fulfilment of the following conditions precedent ( Conditions Precedent ) within a period of 6 months from the date of SPA with a further extension to be mutually agreed between the parties in writing: (a) (b) (c) the approval of shareholders of Boustead Plantations, the holding company of the Purchaser, for the purchase of the Plantation Assets from the Vendor being obtained by Boustead Plantations; the approval of shareholders of DutaLand, the ultimate holding company of the Vendor for the sale of the Plantation Assets to the Purchaser being obtained by DutaLand; and the approval of any regulatory authority as may be required to effect the sale and transfer of the Lands. 2.3.4 Disposal Consideration The Disposal Consideration shall be paid by the Purchaser in the following manner: (a) (b) a sum of RM15,000,000 amounting to 2% of the Disposal Consideration ( Earnest Deposit ) has been paid to the Vendor, prior to the execution of the SPA as earnest deposit and part payment towards the account of the Disposal Consideration; a sum of RM37,500,000 amounting to 5% of the Disposal Consideration ( Balance Deposit ) shall be paid to the Vendor in the form of a cheque made in favour of the Vendor upon the execution of the SPA; 4
(c) a sum of RM22,500,000 only amounting to 3% of the Disposal Consideration ( Retention Sum ) shall be paid to the Purchaser s solicitors pursuant to the provisions of Section 21B of the Real Property Gains Tax Act 1976 or any modification(s) made thereunder upon the execution of the SPA and the Purchaser s solicitors are hereby authorised to deal with the Retention Sum in accordance with the SPA. The total amount of the deposit, comprising the Earnest Deposit, Balance Deposit and the Retention Sum, shall be sum of RM75,000,000 (collectively, Deposit ); and (iv) provided always that the notices of assessment of stamp duty on the Transfers in respect of the Lands executed by the registered owners and the Vendor respectively in favour of the Purchaser ( Transfer ) shall have been issued more than 21 business days before the expiry of the Completion Period (as defined below), a sum of RM675,000,000 amounting to 90% of the Disposal Considertion ("Balance Disposal Consideration") shall be paid by the Purchaser to the Vendor s solicitors as stakeholders in the form of a bankers cheque made in favour of the Vendor within 1 month from the date on which the last of the Conditions Precedent has been fulfilled ( Completion Period ) provided that the registered owners and the Vendor shall have complied with all obligations under the SPA, with an automatic extension of 1 month from the expiry of the Completion Period subject to payment by the Purchaser of a late payment interest at the rate of 8% per annum to be calculated on a daily basis from the day next after the last day of the Completion Period to the date of payment of the outstanding Balance Disposal Consideration by the Purchaser. 2.3.5 Purchaser s default The Vendor s solicitors shall be authorised to release the Balance Disposal Consideration received from the Purchaser to the Vendor upon the expiry of 8 business days from the date of presentation of the Transfer in favour of the Purchaser and, if applicable, the concurrent presentation of the memorandum of charge in favour of the Purchaser s financier for registration with the relevant land authority or upon the Purchaser s receipt of the issue documents of title to the Lands, registered in the Purchaser s name, whichever is earlier, provided that the Vendor shall simultaneously with the release of the Balance Disposal Consideration deliver possession of the Lands to the Purchaser in accordance with the provisions of the SPA and provided always that the presentation of the Transfer in favour of the Purchaser and memorandum of charge in favour of the Purchaser s financier (if applicable) shall be within 5 business days of the Purchaser s solicitors or the Purchaser s financier s solicitors receipt of the issue documents of title to the Lands together with all relevant documents required for presentation of the Transfer, failing which the Vendor s solicitors shall be authorised to release the Balance Disposal Consideration to the Vendor upon the expiry of 13 business days of the Purchaser s solicitors or the Purchaser s financier s solicitors receipt of the issue documents of title to the Lands together with the relevant documents required for presentation of the Transfer. If the Purchaser shall fail to pay the Balance Disposal Consideration or any part thereof in the manner and within the times stipulated in the SPA, provided always that the Vendor shall have complied with all its obligations hereunder, the Vendor shall be entitled to terminate the SPA whereupon the Deposit shall be forfeited absolutely to the Vendor as agreed liquidated damages. Upon the termination of the SPA, subject to the withdrawal of the private caveats lodged by the Purchaser on the Plantation Assets and re-delivery of the possession of the Plantation Assets in the same state and condition as at the date of its delivery (if possession of the Plantation Assets have been delivered to the Purchaser), the Vendor shall refund free of interest to the Purchaser the sum, if any, equivalent to all payments of the Disposal Consideration already paid by the Purchaser to the Vendor pursuant to the SPA to the date of such default less the Deposit and thereafter the SPA 5
shall be null and void and be of no further force or effect and neither party shall have any claims whatsoever against the other save for any antecedent breach under the SPA and the Vendor shall be entitled at its absolute discretion to sell or otherwise deal with the Plantation Assets as a whole or in its subdivided parcels. Each party shall bear and pay its own solicitors fees and the respective costs agreed to be borne and discharged by the party as set out in the SPA without any contribution by the other. 2.3.6 Vendor s default If for any reason the Vendor shall fail to complete the sale of the Plantation Assets or be in breach of any of the Vendor s terms, conditions, stipulations, provisions, covenants, undertakings or obligations under the SPA, the Purchaser may give a notice to the Vendor specifying such failure or breach and if the Vendor shall fail to remedy such failure or breach within 14 business days from the date of receipt by the Vendor of such notice provided always that the Purchaser shall have complied with all its obligations hereunder the Purchaser shall be entitled to either seek specific performance and all other remedies available under the law or to terminate the SPA whereupon the Vendor shall refund all payment of the Disposal Consideration already paid by the Purchaser to the Vendor pursuant to the SPA and a further sum equivalent to the Deposit as agreed liquidated damages and thereafter the SPA shall be null and void and shall have no further effect and neither party shall have any claims against the other save and except for any antecedent breach, without prejudice to other rights and remedies available to the Purchaser in law or equity or under the SPA. In the event the Vendor shall be unable or fail to deliver any of the movable fixed assets, machineries and vehicles comprised in the Plantation Assets upon the date of the payment of the Balance Disposal Consideration on or before the Completion Period or 1 month from the expiry of Completion Period, as the case may be ( Completion Date ), the parties hereto agree that the Vendor shall pay for such movable fixed asset, machinery or vehicle, as the case may be, based on the amount as set out in the SPA, no later than 7 business days from the Completion Date. 2.3.7 Non-completion of SPA or non-registration of the Transfer In the event the SPA cannot be completed or the Transfer of all or any Lands in favour of the Purchaser free from all charges and encumbrances cannot be registered by the relevant land authority for any reason or defect whatsoever not due to any act, omission, default, neglect and/or blameworthy conduct on the part of any of the parties and which cannot be rectified within 30 days from the parties knowledge of the reason or defect, the Purchaser shall be entitled to terminate the SPA by written notice to the Vendor, in which event: (a) (b) the Vendor shall refund to the Purchaser all moneys paid by the Purchaser to the Vendor towards the Disposal Consideration, including the Retention Sum (notwithstanding that the Retention Sum may already have been released by the Purchaser s solicitors to the director general) pursuant to the terms of the SPA free of interest ( Refund ) within 14 days from the date of the Purchaser s termination notice to the Vendor; and the Purchaser shall in simultaneous exchange of the Refund, withdraw of the private caveats lodged by the Purchaser on the Lands, return to the Vendor the Transfer (if the same is returned to the Purchaser s solicitors by the relevant land office/registry and is not required for cancellation of stamp duty paid), the original issue documents of title to the Lands (if delivered to the Purchaser) and all other related Vendor s documents with the Vendor s interest intact and re-deliver possession of the Lands in the same state and condition as at the date of its delivery and free from any structures which the Purchaser may have erected or constructed and occupiers (if possession of the Lands have already been delivered to the Purchaser); 6
and thereafter the SPA shall be null and void and be of no further force or effect and neither party shall have any claims whatsoever against the other save for any antecedent breach under the SPA and the Vendor shall be at liberty to sell or otherwise deal with the Plantation Assets in such manner and to such persons as the Vendor shall deem fit. 2.4 Basis of arriving at and justification for the Disposal Consideration for the Plantation Assets The Disposal Consideration for the Plantation Assets was arrived at on a willing buyer-willing seller basis after taking into consideration the market valuation on the Plantation Assets carried out by C H Williams Talhar & Wong (Sabah) Sdn Bhd ( C H Williams or Valuers ), an independent firm of registered valuers, appointed by the Vendor. The Valuers had vide its valuation certificate dated 2 October 2017 ( Land Valuation Certificate ) assessed the market value on the Plantation Assets at approximately RM771,000,000 using the Investment Method and Comparison Method of valuations. 2.5 Method of valuations In arriving at the opinion of the market value of the Plantation Assets, the Valuers had appraised the Plantation Assets in its Valuation Certificate using Investment Method and Comparison Method of valuations. With the Investment Method (Net Present Value, Discounted Cash Flow), the annual income accruing to the oil palm is estimated based on yield and long term average price of the crop. From this is deducted the costs of production and the net income is then capitalised at the appropriate rate of return for the remaining cropping life of the oil palm to obtain the value of the present crops. To this is added the scrap value or basic land value to which the land reverts at the end of the economic life of the cultivations, the basic land value being deferred (discounted) for the period. Where additional buildings are considered to be required, or additional roads or gravelling of roads, this is deducted as capital expenditure from the capitalised income. Comparison Method entails the Plantation Assets with oil palm estates sold and making due adjustments for location, accessibility, topography, soil, cultivations, title restrictions, if any, and other relevant characteristics to arrive at the market value of the Plantation Assets. Comparison Method is used to cross check the valuation obtained by the Investment Discounted Cash Flow Method, providing the range of values being realised for comparable properties and with which the values arrived at by the Investment Method should be reconciled making due adjustments for age, yields, locations and terrains/soils of the respective palms. As the differences, might be very significant and adjustments difficult, the Valuers have not relied on the Comparison Method but only made reference to the sales evidence as rough guide and range of realisable/realistic values. In the Valuers valuation, they have taken note particularly into consideration: (a) (b) (c) (d) (e) past yields of the oil palms of the 5 estates had been below average but with the rehabilitation work now largely completed and the estates brought back to normal condition and more harvesters and general workers employed, yields and production were improving; the favourable combination of high rainfall conditions, moderate to fairly good soil and terrain here for oil palm cultivation; the keen demand for oil palm estates in Sabah and the generally bright outlook for oil palm cultivation; the location and accessibility of the properties with frontage or are near to the Sandakan- Kota Kinabalu Highway; and there are various palm oil mills in the locality such as Tanahmas palm oil mill, Monsok mill, Everyied mill, Sapi mill, etc. 7
2.6 Information on the Vendor PLD was incorporated in Malaysia as a private company limited by shares pursuant to the then Companies Act, 1965 on 9 June 1981 under its present name. PLD is a wholly-owned subsidiary of DPSB which in-turn is wholly-owned by DutaLand. The principal activity of PLD is cultivation of oil palm and sales of oil palm fresh fruit bunches. As at the LPD, the total issued shares of PLD comprising 10,000,000 ordinary shares. The existing Directors of PLD are Tan Sri Dato Yap Yong Seong, Dato Sri Yap Wee Keat, Yap Wee Chun and Ng Ju Siong. 2.7 Information on the Purchaser BRN was incorporated in Malaysia as a private company limited by shares pursuant to the then Companies Act, 1965 on 13 June 1995 under its present name. BRN is a wholly-owned subsidiary of Boustead Plantations. The principal activity of BRN is cultivation of oil palm and processing of fresh fruit bunches. As at the LPD, the total issued shares of BRN comprising 100,000,000 ordinary shares. The existing Directors of BRN are Dato Shoib Abdullah, Tuan Haji Sharudin Jaffar and Chow Kok Choy. 2.8 Information on 9 other registered owners (a) Majusa Sdn Bhd ( Majusa ) Majusa is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 26 March 1980. Majusa is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Majusa comprising 3,000 ordinary shares. The existing Directors of Majusa are Yap Wee Chun and Ng Ju Siong. (b) Labuk Estate Sdn Bhd ( Labuk Estate ) Labuk Estate is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 20 August 1981. Labuk Estate is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Labuk Estate comprising 3 ordinary shares. The existing Directors of Labuk Estate are Yap Wee Chun and Ng Ju Siong. (c) Telupid Plantation Sdn Bhd ( Telupid Plantation ) Telupid Plantation is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 5 September 1981. Telupid Plantation is a whollyowned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Telupid Plantation comprising 3 ordinary shares. The existing Directors of Telupid Plantation are Yap Wee Chun and Ng Ju Siong. 8
(d) Labukpalm Sdn Bhd ( Labukpalm ) Labukpalm is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 20 August 1981. Labukpalm is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Labukpalm comprising 3 ordinary shares. The existing Directors of Labukpalm are Yap Wee Chun and Ng Ju Siong. (e) Ladang Anak Jati Sdn Bhd ( Ladang Anak Jati ) Ladang Anak Jati is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 20 August 1981. Ladang Anak Jati is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Ladang Anak Jati comprising 3 ordinary shares. The existing Directors of Ladang Anak Jati are Yap Wee Chun and Ng Ju Siong. (f) Moyog Properties Sdn Bhd ( Moyog ) Moyog is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 7 May 1980. Moyog is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Moyog comprising 3 ordinary shares. The existing Directors of Moyog are Yap Wee Chun and Ng Ju Siong. (g) Tawai Estate Sdn Bhd ( Tawai ) Tawai is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 6 August 1981. Tawai is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Tawai comprising 3 ordinary shares. The existing Directors of Tawai are Yap Wee Chun and Ng Ju Siong. (h) Telupid Estate Sdn Bhd ( Telupid Estate ) Telupid Estate is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 20 August 1981. Telupid Estate is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Telupid Estate comprising 3 ordinary shares. The existing Directors of Telupid Estate are Yap Wee Chun and Ng Ju Siong. (i) Labuk Plantation Sdn Bhd ( Labuk Plantation ) Labuk Plantation is a private company limited by shares incorporated in Malaysia under the then Companies Act, 1965 on 23 July 1981. Labuk Plantation is a wholly-owned subsidiary of DPSB, which in-turn is wholly-owned by DutaLand. It is a dormant company presently. As at the LPD, the total issued shares of Labuk Plantation comprising 3 ordinary shares. The existing Directors of Labuk Plantation are Yap Wee Chun and Ng Ju Siong. 9
2.9 Original cost and dates of investment DutaLand and its subsidiaries ( DutaLand Group or Group ) have invested approximately RM173,000,000 for the Plantation Assets since the year of 1995. 2.10 Liabilities to be assumed by the Purchaser The Purchaser shall not be liable for any and all liabilities in connection with the Proposed Disposal. 3. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal will enable the Group to unlock the value of its assets. Given the size, location and market value of the Lands, it is not easy for DutaLand to dispose the Plantation Assets at the market value to a single buyer. As such, the Proposed Disposal appears to be an attractive offer that is in line with the Group s objective to enhance shareholders value. The proceeds arising from the Proposed Disposal will enable the Group to pursue new business undertakings when the opportunity arises to diversify the Group s business portfolio which will generate recurring income. Besides, the proceeds will also be utilised to fund some of DutaLand Group s existing businesses to put the operations on-stream which will generate additional future income. 4. PROPOSED UTILISATION OF PROCEEDS The Proposed Disposal is expected to raise gross cash proceeds of RM750,000,000, which are expected to be utilised as follows: (i) (ii) Purpose Estimated timeframe for utilisation RM 000 Acquisition of new businesses and/or Within 36 months from receipt of the 707,000 assets, and funding for existing proceeds from the Proposed Disposal businesses (1) Estimated expenses in relation to the Proposed Disposal (3) Immediately upon completion of the Proposed Disposal 43,000 750,000 Notes: (1) As at the LPD, the Board is still deliberating on the new businesses and/or assets to be acquired. Should opportunities for acquisition of new businesses and/or assets arise, the Board will ensure that all relevant regulatory and disclosure requirements, including the Listing Requirements, will be complied with and the approval of the Company s shareholders will be sought, where relevant. The Company will immediately make the necessary announcement to Bursa Securities upon the acquisition of new businesses and/or assets. The Board has chosen to retain an adequate level of cash holdings following the Proposed Disposal to fund potential new investment opportunities, given concerns over the timing and availability of equity and debt funding from the capital markets. The Board has considered the need for DutaLand to have flexibility around the mix of cash and equity funding and depending on the final cash requirements for any potential investment opportunity. Besides, the proceeds will be utilised to fund some of DutaLand s existing businesses. Currently, the Board is reviewing the business plans for the Kenny Heights project in Sri Hartamas/ Mont Kiara, Kuala Lumpur, and the Duta Grand Hotels which is a mixed development project at the intersection of Jalan Sultan Ismail and Jalan Ampang. 10
(2) Approximately RM43,000,000 of the proceeds to be raised from the Proposed Disposal will be used to defray the estimated expenses for the Proposed Disposal as set out below: Expenses RM 000 Professional fees 1,200 Taxation 30,000 Commissions 11,250 Fees payable to regulatory authorities 80 Expenses to convene extraordinary general meeting (such as printing, despatch and advertisement expenses, etc.) 200 Miscellaneous expenses 270 Total 43,000 Any shortfall or excess in funds allocated for estimated expenses will be funded from or used for the acquisition of new businesses and/or assets, and funding for existing businesses. Pending such time when the proceeds are fully utilised in accordance with the allocation stated in the table above, the proceeds will be placed in interest-bearing deposits with licensed financial institutions and/or short-term money market investment funds with licensed investment management firms. The interest derived from the deposits with licensed financial institutions or any gains arising from the short-term money market investment funds with licensed investment management firms will be used for the acquisition of new businesses and/or assets, and funding for existing businesses. 5. RISK FACTORS 5.1 Completion risk The completion of the Proposed Disposal is subject to the fulfilment of the conditions precedent to the SPA as set out in Section 2.3.3 above. In the event any of these conditions precedent is not fulfilled, the SPA may be terminated and DutaLand will not be able to complete the Proposed Disposal. Notwithstanding this, the Company will take all reasonable steps to ensure the fulfilment of the conditions precedent, including obtaining the approvals/consents required which are within its control, for the purpose of completing the Proposed Disposal. 5.2 Potential risks from future investments The Board has yet to identify any new businesses or assets for investment. In the event that the Group has identified new businesses, which are outside of its core expertise areas of property development and investments, and plantation, the Group will be exposed to additional risks inherent in these new businesses. The Board takes cognisance of this and will exercise due care in evaluating its future investments, adopt prudent investment strategies and conduct feasibility assessment and reviews prior to making its investment decisions. Besides, there is also no assurance that the benefits arising from the utilisation of the proceeds to develop Kenny Height project, Duta Grand Hotel mixed development project and other future investments would yield a higher return. Nonetheless, the Board will endeavour to utilise the cash proceeds to be derived from the Proposed Disposal in the best interests of the Group to increase its earnings. 11
6. EFFECTS OF THE PROPOSED DISPOSAL The effects of the Proposed Disposal are as follows: (a) Share capital and substantial shareholder s shareholdings The Proposed Disposal will not have any effect on the share capital and substantial shareholders shareholdings of DutaLand as the Disposal Consideration will be satisfied wholly in cash and does not involve any issuance of new shares in DutaLand. (b) Earnings and Earnings per Share ( EPS ) The Proposed Disposal is expected to increase the consolidated earnings and EPS of DutaLand for the financial year ended ( FYE ) 30 June 2017. The DutaLand Group is expected to realise a net gain (after deducting estimated taxation and expenses for the Proposed Disposal) of approximately RM366.76 million arising from the Proposed Disposal. For illustrative purposes, based on the latest audited consolidated financial statements of DutaLand for the FYE 30 June 2017 and assuming that the Proposed Disposal had been effected on that date, the Proposed Disposal will have the following proforma effects on the consolidated earnings of DutaLand: Proforma consolidated earnings RM 000 Proforma consolidated EPS (2) Sen Audited net profit for the FYE 30 June 2017 12,889 1.5 Add: Proforma gain from the Proposed Disposal (1) 409,758 48.4 Less: Estimated expenses for the Proposed Disposal (43,000) (5.1) Proforma net income for the FYE 30 June 2017 379,647 44.8 Notes: (1) Computed based on the Disposal Consideration of RM750 million less the aggregate net book value ( NBV ) of the Plantation Assets of approximately RM340.24 million based on the latest audited financial statements for the FYE as at 30 June 2017. (2) Computed based on 846,118,039 ordinary shares being the total issued share capital as at the LPD. The actual gain arising from the Proposed Disposal will depend on the NBV of the Plantation Assets at the time of completion of the Proposed Disposal and the actual amount of expenses to be incurred in relation to the Proposed Disposal. 12
(c) Net Assets ( NA ) and gearing For illustration purpose, the proforma effects of the Proposed Disposal on the NA and gearing position of DutaLand based on its latest audited consolidated financial statements as at 30 June 2017 are set out below: Audited as at 30 June 2017 After the Proposed Disposal RM 000 RM 000 Share capital 423,059 423,059 Capital reserve 53,109 53,109 Reserve attributable to assets classified as held for sale 107,388 - Retained profits 355,411 (1) 829,557 NA attributable to shareholders of the Group 938,967 1,305,725 Cash and cash equivalents 9,589 716,589 Total borrowings 4,541 4,541 No. of shares in issue 846,118 shares 846,118 shares NA per share (RM) 1.11 1.54 Gearing (times) ^ ^ Notes: ^ Negligible (1) The increase in the retained profits is due to: (a) the transfer of reserve attributable to assets classified as held for sale to retained profits upon disposal of the Plantation Assets; and (b) the proforma net gain from the Proposed Disposal (after deducting estimated taxation and expenses for the Proposed Disposal) of approximately RM366.76 million. 7. LISTING STATUS AND FUTURE PLANS Upon completion of the Proposed Disposal, Bursa Securities may classify DutaLand as an Affected Listed Issuer under paragraph 8.03A of the Listing Requirements as DutaLand will be deemed to have triggered the following prescribed criteria: (a) (b) suspended or ceased all of its business or its major business, or its entire or major operations as a result of the Proposed Disposals; or have an insignificant business or operations after the Proposed Disposal. DutaLand is required to regularise its condition within 12 months from the day it becomes an Affected Listed Issuer. In the event the Company fails to regularise its condition within the stipulated timeframe, DutaLand s listed securities may be suspended and DutaLand may be delisted from the Official List of Bursa Securities. The Board intends to maintain the listing status of DutaLand. The Board endeavours to take the necessary steps to identify new businesses and/or assets to be acquired by DutaLand and considers the commencement of its existing businesses such as the Kenny Heights project in Sri Hartamas/ Mont Kiara, Kuala Lumpur, and the Duta Grand Hotels. This will enable DutaLand to regularise its condition and to maintain its listing status on the Main Market of Bursa Securities after the completion of the Proposed Disposal. 13
8. APPROVALS REQUIRED The Proposed Disposal is subject to the following approvals being obtained: (a) (b) the shareholders of DutaLand and Boustead Plantations at their respective extraordinary general meeting to be convened; any other relevant authorities and/or parties, if required. The Proposed Disposal is not conditional upon other corporate exercise undertaken by DutaLand. 9. DIRECTORS AND/OR SUBSTANTIAL SHAREHOLDERS INTEREST AND/OR PERSONS CONNECTED TO THEM None of the Directors or substantial shareholders or persons connected to them has any interest, direct or indirect, in relation to the Proposed Disposal. 10. OUTSTANDING PROPOSALS ANNOUNCED BUT PENDING COMPLETION Save for the Proposed Disposal, there are no other outstanding proposals announced by the Company but pending completion as at the date of this announcement. 11. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Disposal is 79.88% based on the latest audited consolidated financial statements of DutaLand for the FYE 30 June 2017. 12. ADVISERS RHB Investment Bank has been appointed as the Principal Adviser to the Company for the Proposed Disposal. As the Proposed Disposal represents a major disposal pursuant to Paragraph 10.11A of the Listing Requirements, DutaLand has appointed MIDF Amanah Investment Bank Berhad on 30 October 2017 as the Independent Adviser in relation to the Proposed Disposal for the following: (a) (b) (c) to comment as to whether the Proposed Disposal is fair and reasonable in so far as the shareholders of DutaLand are concerned, including the reasons for the key assumptions made and the factors taken into consideration in forming such opinion; to advise the shareholders of DutaLand on whether they should vote in favour of the Proposed Disposal; and to take all reasonable steps to satisfy itself that it has a reasonable basis to make the comments and advice in subparagraphs (a) and (b) above. 14
13. DIRECTORS STATEMENT The Board, having considered all aspects of the Proposed Disposal, including but not limited to the salient terms of the SPA, the valuation of the Plantation Assets, the basis of the Disposal Consideration, rationale for the Proposed Disposal and the financial effects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of the Company and is not detrimental to the interests of the shareholders of DutaLand. The Board is also satisfied that BRN has adequate financial resources to acquire the Plantation Assets for cash based on its latest audited financial statements for the FYE 31 December 2016. In view of the above, the Board is not seeking other alternative bids for the Proposed Disposal. 14. ESTIMATED TIME FRAME FOR SUBMISSION TO RELEVANT AUTHORITIES AND COMPLETION The applications to the relevant authorities in relation to the Proposed Disposal are expected to be made within 2 months from the date of this announcement. Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed in the first half of the calendar year 2018. 15. DOCUMENTS AVAILABLE FOR INSPECTION The following documents are available for inspection at the registered office of the Company at Level 23, Menara Olympia, No. 8, Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia during normal business hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement: (a) (b) the SPA dated 30 October 2017; and the Land Valuation Certificate dated 2 October 2017 prepared by C H Williams in relation to valuation of the Plantation Assets. This announcement is dated 30 October 2017. 15
The summary of the details of Plantation Assets is set out in the table below: Appendix I Estate Ladang Pertama/Ladang Sapa Payau Lot Nos. 1 2 3 4 5 6 7 8 9 Title Nos. CL 085317344 CL 085314816 CL 085314825 CL 085314414 CL 085314861 CL 085314834 CL 085314870 CL 085313177 CL 085313453 District/State Locality District of Labuk-Sugut, Beluran and Tongod/Sabah Off Km 109-113, Sandakan-Kota Kinabalu Highway Area (Hectares) 363.60 249.20 205.10 365.40 118.50 278.10 118.80 365.50 136.20 Category of land use Conditions Tenure Agricultural land All the titles held are subject to provisions and conditions contained in the Land Ordinance, Cap 68 and to the special terms as per Title Conditions and Special Terms. 01 Jan 1983 01 Jan 1983 01 Jan 1983 01 Jan 1983 Registered Owner PLD PLD PLD Majusa PLD PLD PLD Majusa Majusa Restriction-in-interest Encumbrances Caveats Other applicable endorsements on the land title Existing usage Oil palm plantation, cultivated with oil palm trees and erected with building structures, access roads, drains, bridges and other amenities. Annual rent (RM) 5,390.50 3,695.00 3,041.50 5,417.50 1,757.00 4,142.00 1,761.00 5,419.00 2,020.50 Market value/nbv Plantation profit Fresh fruit bunch production Refer to Note (1) below. Refer to Note (2) below. Refer to Note (3) below. Maturity of trees Oil palm is the sole crop planted on the 5 estates. The palms mainly planted during the period between 1996 and 2000, currently at age ranging from 17 to 21 years old. In addition, some of the palms were planted and replanted after year 2000. Amount of lettable space available for letting & occupancy Occupancy (%) Not applicable as the Plantation Assets does not have any lettable space. Not applicable as the Plantation Assets does not have any lettable space. 16
Estate Ladang Pertama/Ladang Sapa Payau Ladang Sg. Ruku Ruku Lot Nos. 10 11 12 13 14 15 16 17 18 Title Nos. CL 085314683 CL 085314692 CL 085314843 CL 085312616 CL 085313622 CL 085313168 CL 085312947 CL 085312956 CL 085312974 District/State Locality District of Labuk-Sugut, Beluran and Tongod/Sabah Off Km 109-113, Sandakan-Kota Kinabalu Highway Area (Hectares) 222.90 221.90 174.90 400.60 375.90 347.50 290.20 289.00 282.99 Category of land use Conditions Tenure Agricultural land All the titles held are subject to provisions and conditions contained in the Land Ordinance, Cap 68 and to the special terms as per Title Conditions and Special Terms. 01 Jan 1983 01 Jan 1983 01 Jan 1982 Registered Owner PLD Majusa PLD PLD PLD PLD Labuk Estate Telupid Plantation Restriction-in-interest Encumbrances Caveats Other applicable endorsements on the land title Existing usage Oil palm plantation, cultivated with oil palm trees and erected with building structures, access roads, drains, bridges and other amenities. Labuk Palm Annual rent (RM) 3,305.50 3,290.00 2,593.50 5,940.00 5,574.00 5,152.00 4,303.00 4,285.50 4,195.50 Maturity of trees Oil palm is the sole crop planted on the 5 estates. The palms mainly planted during the period between 1996 and 2000, currently at age ranging from 17 to 21 years old. In addition, some of the palms were planted and replanted after year 2000. Market value/nbv Plantation profit Fresh fruit bunch production Amount of lettable space available for letting & occupancy Occupancy (%) Refer to Note (1) below. Refer to Note (2) below. Refer to Note (3) below. Not applicable as the Plantation Assets does not have any lettable space. Not applicable as the Plantation Assets does not have any lettable space. 17
Estate Ladang Sg. Ruku Ruku Lot Nos. 19 20 21 22 23 24 25 26 27 Title Nos. CL 085312983 CL 085313024 CL 085313006 CL 085312992 CL 085313015 CL 085314807 (New Title No. CL 255314802) District/State Locality District of Labuk-Sugut, Beluran and Tongod/Sabah Off Km 109-113, Sandakan-Kota Kinabalu Highway CL 085318092 CL 085317693 CL 085314790 CL 255314795 Area (Hectares) 282.10 386.70 273.30 289.50 288.70 317.60 120.00 60.39 315.70 Category of land use Conditions Tenure Registered Owner Restriction-in-interest Encumbrances Caveats Other applicable endorsements on the land title Existing usage Agricultural land All the titles held are subject to provisions and conditions contained in the Land Ordinance, Cap 68 and to the special terms as per Title Conditions and Special Terms. Ladang Anak Jati 01 Jan 1982 Moyog Tawai Telupid Estate Labuk Plantation 01 Jan 1982 01 Jan 1983 01 Jan 1982 01 Jan 1982 Majusa PLD PLD PLD Oil palm plantation, cultivated with oil palm trees and erected with building structures, access roads, drains, bridges and other amenities. Annual rent (RM) 4,182.00 5,734.00 4,052.50 4,292.50 4,280.50 4,709.00 1,779.00 895.50 4,681.50 Market value/nbv Plantation profit Fresh fruit bunch production Refer to Note (1) below. Refer to Note (2) below. Refer to Note (3) below. Maturity of trees Oil palm is the sole crop planted on the 5 estates. The palms mainly planted during the period between 1996 and 2000, currently at age ranging from 17 to 21 years old. In addition, some of the palms were planted and replanted after year 2000. Amount of lettable space available for letting & occupancy Occupancy (%) Not applicable as the Plantation Assets does not have any lettable space. Not applicable as the Plantation Assets does not have any lettable space. 18
Estate Ladang Sg. Lokan/Ladang Sg. Lokan Baru Lot Nos. 28 29 30 31 32 33 34 35 36 Title Nos. CL 085326021 New Title no: CL 255326026 District/State Locality CL 085326012 CL 255326017 CL 085312652 CL 255312657 CL 085312643 CL 255312648 CL 085317540 New Title No : CL 255317545 CL 085317559 CL 255317554 District of Labuk-Sugut, Beluran and Tongod/Sabah Off Km 109-113, Sandakan-Kota Kinabalu Highway CL 085317568 CL 255317563 CL 085321713 CL 255321718 CL 085319222 CL 255319227 Area (Hectares) 363.61 360.78 358.47 323.47 284.70 365.00 361.40 329.70 185.20 Category of land use Conditions Tenure Agricultural land All the titles held are subject to provisions and conditions contained in the Land Ordinance, Cap 68 and to the special terms as per Title Conditions and Special Terms. 01 Jan 1982 01 Jan 1982 01 Jan 1982 01 Jan 1983 01 Jan 1989 Registered Owner PLD PLD PLD PLD PLD PLD Majusa PLD PLD Restriction-in-interest Encumbrances Caveats Other applicable endorsements on the land title Existing usage Oil palm plantation, cultivated with oil palm trees and erected with building structures, access roads, drains, bridges and other amenities. Annual rent (RM) 5,391.00 5,349.00 5,315.00 4,796.00 4,222.00 5,413.00 5,359.00 4,869.50 2,746.00 Market value/nbv Plantation profit Fresh fruit bunch production Refer to Note (1) below Refer to Note (2) below Refer to Note (3) below Maturity of trees Oil palm is the sole crop planted on the 5 estates. The palms mainly planted during the period between 1996 and 2000, currently at age ranging from 17 to 21 years old. In addition, some of the palms were planted and replanted after year 2000. Amount of lettable space available for letting & occupancy Occupancy (%) Not applicable as the Plantation Assets does not have any lettable space. Not applicable as the Plantation Assets does not have any lettable space. 19
Estate Ladang Sg. Lokan/Ladang Sg. Lokan Baru Lot Nos. 37 38 39 40 41 42 Title Nos. CL 085321704 New Title no: CL 255321709 District/State Locality CL 085321722 CL 255321727 CL 085312634 CL 255312639 CL 085312705 CL 255312700 District of Labuk-Sugut, Beluran and Tongod/Sabah Off Km 109-113, Sandakan-Kota Kinabalu Highway 20 CL 085312698 New Title No : CL 255312693 CL 085312689 Area (Hectares) 158.70 123.70 283.40 277.90 279.40 383.60 Category of land use Conditions Tenure Agricultural land All the titles held are subject to the provisions and conditions contained in the Land Ordinance, Cap 68 and to the special terms as per Title Conditions and Special Terms. 01 Jan 1989 01 Jan 1989 01 Jan 1981 01 Jan 1981 Registered Owner PLD PLD PLD Majusa PLD PLD Restriction-in-interest Encumbrances Caveats Other applicable endorsements on the land title Existing usage Oil palm plantation, cultivated with oil palm trees and erected with building structures, access roads, drains, bridges and other amenities. Annual rent (RM) 2,353.00 1,834.00 4,202.50 4,121.00 4,143.00 5,687.50 Market value/nbv Plantation profit Fresh fruit bunch production Maturity of trees Amount of lettable space available for letting & occupancy Occupancy (%) Refer to Note (1) below Refer to Note (2) below Refer to Note (3) below Oil palm is the sole crop planted on the 5 estates. The palms mainly planted during the period between 1996 and 2000, currently at age ranging from 17 to 21 years old. In addition, some of the palms were planted and replanted after year 2000. Not applicable as the Plantation Assets does not have any lettable space. Not applicable as the Plantation Assets does not have any lettable space.