LION DIVERSIFIED HOLDINGS BERHAD ( LDHB OR THE COMPANY ) I. disposal by CPB Enterprise Sdn Bhd, a wholly-owned subsidiary of the Company, of a piece of leasehold land in Mukim Cheng, Daerah Melaka Tengah, Melaka measuring 1.873 hectares in area ( 1st Property ) to LTB Power Performance (M) Sdn Bhd for a cash consideration of RM4.64 million (excluding 6% Goods and Services Tax ( GST ) of RM0.28 million); and II. disposal by CPB Enterprise Sdn Bhd of a piece of leasehold land in Mukim Cheng, Daerah Melaka Tengah, Melaka measuring 2.135 hectares in area together with a single-storey building erected thereon ( 2nd Property ) to Imponotive Auto Sdn Bhd for a cash consideration of RM13.56 million (excluding 6% GST of RM0.81 million). 1. INTRODUCTION The Board of Directors of LDHB ( Board ) wishes to announce that CPB Enterprise Sdn Bhd ( CPB Enterprise ), a wholly-owned subsidiary of the Company, had on 17 March 2017: entered into a sale and purchase agreement ( SPA ) ( 1st SPA ) with LTB Power Performance (M) Sdn Bhd ( LTB Power ) for the disposal of the 1st Property for a cash consideration of RM4.64 million (excluding 6% GST of RM0.28 million) ( 1st Sale Consideration ) ( 1st Disposal ); and entered into a SPA ( 2nd SPA ) with Imponotive Auto Sdn Bhd ( Imponotive Auto ) for the disposal of the 2nd Property for a cash consideration of RM13.56 million (excluding 6% GST of RM0.81 million) ( 2nd Sale Consideration ) ( 2nd Disposal ). (The 1st SPA and the 2nd SPA shall collectively be referred to as the SPAs. The 1st Property and the 2nd Property shall collectively be referred to as the Properties. LTB Power and Imponotive Auto shall collectively be referred to as the Purchasers. The 1st Sale Consideration and the 2nd Sale Consideration shall collectively be referred to as the Total Sale Consideration. The 1st Disposal and the 2nd Disposal shall collectively be referred to as the Disposals.) 2. DETAILS OF THE PROPOSED DISPOSALS 2.1 Information on the Properties 2.1.1 Information on the 1st Property Issue Document of PN 54144, Lot 19402, Mukim Cheng, Daerah Melaka Title Tengah, Melaka Address No. 8401, Taman Teknologi Cheng, 75250 Melaka Property Type Leasehold land Tenure 99-year leasehold land expiring on 23 December 2109 Provisional Land Area 1.873 hectares Registered Proprietor Narajaya Sdn Bhd ( Narajaya ) Category of Land Use Perusahaan The 1st Property was acquired by CPB Enterprise in 2007 at a purchase consideration of RM1.11 million. 1
2.1.2 Information on the 2nd Property Issue Document of PN 54145, Lot 19403, Mukim Cheng, Daerah Melaka Title Tengah, Melaka Address No. 19403-1, Jalan TTC 17, Taman Teknologi Cheng, 75250 Melaka Property Type Leasehold land with a single-storey building erected thereon Tenure 99-year leasehold land expiring on 23 December 2109 Provisional Land Area 2.135 hectares Registered Proprietor Narajaya Category of Land Use Perusahaan The 2nd Property was acquired by CPB Enterprise in 2007 at a purchase consideration of RM11.50 million. 2.2 Information on the Purchasers 2.2.1 Information on LTB Power LTB Power, incorporated in Malaysia under the Companies Act, 1965 on 9 March 2007 as a private limited liability company, is principally involved in trading of performance oil and related products. As at 17 March 2017, (iii) the issued and paid-up share capital of LTB Power is RM2,000,000 comprising 2,000,000 ordinary shares; the Directors of LTB Power are Dato Sri Lim Teck Boon and Yong Thien Wieo; and the shareholders of LTB Power are Dato Sri Lim Teck Boon (97.50%) and Yong Thien Wieo (2.50%). 2.2.2 Information on Imponotive Auto Imponotive Auto, incorporated in Malaysia under the Companies Act, 1965 on 2 May 2003 as a private limited liability company, is principally involved in trading of all kinds of automobile exhaust mounting and related accessories. As at 17 March 2017, (iii) the issued and paid-up share capital of Imponotive Auto is RM3,001,000 comprising 3,001,000 ordinary shares; the Directors of Imponotive Auto are Dato Sri Lim Teck Boon and Dato Lim Chaw Teng; and the shareholders of Imponotive Auto are Dato Sri Lim Teck Boon (99%) and Dato Lim Chaw Teng (1%). 2
2.3 Basis and justification for the Total Sale Consideration The Total Sale Consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the following: the net book value ( NBV ) of the Properties of RM10.05 million based on the audited financial statements as at 30 June 2016 of CPB Enterprise; and the market value of the Properties of RM17.70 million as appraised by PPC International Sdn Bhd ( PPC ), an independent registered valuer, as set out in the valuation letter dated 15 March 2017 ( Valuation Letter ), the details of which are set out below: Disposals 1st Disposal 2nd Disposal Sale Consideration (RM million) NBV (RM million) PPC s Valuation (RM million) Premium / (Discount) over PPC s Valuation 4.64 0.93 4.60 Premium of 1% or approximately RM0.04 million 13.56 9.12 13.10 Premium of 3% or approximately RM0.46 million Total 18.20 10.05 17.70 Premium of 3% or approximately RM0.50 million 2.4 Payment terms for the Disposals The payment terms in relation to the Disposals are set out below: Percentage (%) 1st Disposal 2nd Disposal Total Deposit Earnest deposit (a) 2 92.8 271.2 364.0 Retention sum (b) 3 139.2 406.8 546.0 (iii) Balance deposit (c) 5 232.0 678.0 910.0 10 464.0 1,356.0 1,820.0 Balance Payment (d) 90 4,176.0 12,204.0 16,380.0 Total Sale Consideration 100 4,640.0 13,560.0 18,200.0 (e) Notes: (a) Paid on 11 December 2015, which was prior to the execution of the SPAs. (b) Paid upon the execution of the SPAs ( SPAs Date ) and retained by the Purchasers solicitors as stakeholders for payment of real property gains tax to the Inland Revenue Board. (c) Paid on the SPAs Date. (d) Within 90 days from either the SPAs Date or the unconditional date where the SPAs become unconditional on the date which all the conditions precedent had been satisfied, payable to the CPB Enterprise s solicitors as stakeholders. (e) Excluding GST of RM1.09 million which shall be borne by the Purchasers. 3
2.5 Salient terms of the SPAs The salient terms of the SPAs in relation to the Disposals include, inter alia, the following: (iii) (iv) (v) (vi) The Purchasers shall acquire the Properties free from charges, lease, tenancy, liens or any other encumbrances. The Disposals are conditional upon the conditions precedent being satisfied within a period of 3 calendar months from the SPAs Date or such other later date as may be mutually agreed by the parties in writing ( Conditional Period ). In the event that any or all of the conditions precedent is or are not fulfilled within the Conditional Period, each party has the right to terminate the respective SPAs and the Deposit (including any interest accrued) thereon shall be refunded to the respective Purchasers within 14 business days from the date of termination. The completion of the 1st Disposal and the 2nd Disposal shall be inter-conditional upon each other. The Purchaser shall be entitled to lodge a private caveat against the Properties. Currently, the pipings and cablings underneath the ground of the Properties are supplying electricity, water and other utilities to other adjacent lands or buildings owned by CPB Enterprise or the LDHB Group. Within 8 months from SPAs Date or 6 months from the date of delivery of vacant possession to the Purchasers, whichever is the later, CPB Enterprise shall do the necessary to regularise the supply of utilities to the other lands/buildings owned by CPB Enterprise or the LDHB Group at its sole cost and expenses. 2.6 Liabilities to be assumed by the Purchasers There is no liability to be assumed by the respective Purchasers arising from the Disposals. 2.7 utilisation of proceeds The proceeds arising from the Disposals are proposed to be utilised as follows: Utilisation Amount Estimated Utilisation Timeframe Real Property Gains Tax 280 Within 1 year To regularise the supply of utilities 1,000 As stated in Section 2.5(vii) to the other lands/buildings owned by the LDHB Group (iii) Working capital for the LDHB 16,920 Within 1 year Group Total 18,200 4
2.8 Estimated gain arising from the Disposals The LDHB Group is expected to record a gain after tax of approximately RM7.8 million arising from the Disposals. 3. RATIONALE FOR THE PROPOSED DISPOSALS The Disposals will enable the LDHB Group to unlock the value of its fixed assets and transact the Properties based on the current market value in order to raise funds for its working capital requirements. 4. EFFECTS OF THE PROPOSED DISPOSALS 4.1 Share Capital and Substantial Shareholders Shareholdings There will be no effect on the existing issued and paid-up capital of LDHB and the substantial shareholders shareholdings in LDHB as the Disposals do not involve any issuance of new shares by LDHB. 4.2 Earnings and Earnings per Share ( EPS ) The Disposals are expected to result in a net gain of RM7.8 million or 0.6 sen per share to the LDHB Group for the financial year ending 30 June 2017. 4.3 Net Liabilities ( NL ) and NL per Share On a proforma basis, the Disposals are expected to reduce the NL of RM7.8 million and the NL per share of 0.6 sen of the LDHB Group based on the audited consolidated statement of financial position of LDHB as at 30 June 2016. 4.4 Gearing The Disposals are not expected to have material impact on the gearing of the LDHB Group based on the audited consolidated statement of financial position of LDHB as at 30 June 2016. 5. APPROVALS REQUIRED The Disposals are subject to the fulfilment of the following conditions precedent: the approval of the shareholders of the Company; and any other relevant authorities, if required. The completion of the 1st Disposal and the 2nd Disposal shall be inter-conditional upon each other. 5
6. TIMEFRAME FOR SUBMISSION TO THE AUTHORITIES Application(s) to the relevant authorities in relation to the Disposals is expected to be made within 3 months from the date of this announcement. 7. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors and major shareholders of the Company and/or persons connected with them has any interest, direct or indirect, in the Disposals. 8. STATEMENT BY THE BOARD OF DIRECTORS The Board, after having considered all relevant aspects of the Disposals, is of the opinion that the Disposals are in the best interest of LDHB. 9. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED DISPOSALS Barring any unforeseen circumstances, the Disposals are estimated to be completed by 2nd quarter of 2017. 10. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE PROPOSED DISPOSALS The highest percentage ratio applicable to the Disposals pursuant to Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 35.78%. 11. DOCUMENTS FOR INSPECTION A copy each of the 1st SPA and the 2nd SPA both dated 17 March 2017 and the Valuation Letter dated 15 March 2017 are available for inspection by the shareholders of the Company at the Registered Office of the Company at Level 14, Lion Office Tower, No. 1 Jalan Nagasari, 50200 Kuala Lumpur, during normal business hours from Mondays to Fridays (except for public holidays) for a period of three (3) months from the date of this announcement. 6