TROPICANA CORPORATION BERHAD (FORMERLY KNOWN AS DIJAYA CORPORATION BERHAD) ( TROPICANA OR COMPANY ) PROPOSED DISPOSAL BY SAPPHIRE INDEX SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF TROPICANA, OF LEASEHOLD LAND MEASURING APPROXIMATELY 308.72 ACRES OF NET LAND AREA WITHIN THE VICINITY OF KOTA KEMUNING IN THE STATE OF SELANGOR TO PROMINENT STREAM SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF ECO WORLD DEVELOPMENT GROUP BERHAD (FORMERLY KNOWN AS FOCAL AIMS HOLDINGS BERHAD) 1. INTRODUCTION The Board of Directors of Tropicana wishes to announce that Sapphire Index Sdn Bhd ( Sapphire or Vendor ), a wholly-owned subsidiary of Tropicana, had on 19 March 2014, entered into a sale and purchase agreement ( SPA ) with Prominent Stream Sdn Bhd ( Prominent Stream or Purchaser ), a wholly-owned subsidiary of Eco World Development Group Berhad (formerly known as Focal Aims Holdings Berhad) for the proposed disposal of approximately 308.72 acres of net leasehold land forming part of the Original Land (as defined in Section 2.3 below) for a total cash consideration of RM470,674,512 or RM35 per square foot ( Sales Consideration ) ( Proposed Disposal ). 2. THE PROPOSED DISPOSAL 2.1 Information on the Vendor Sapphire is a private limited company incorporated on 8 January 2013 in Malaysia under the Companies Act, 1965 ( Act ). The present authorised share capital of Sapphire is RM400,000 comprising 400,000 ordinary shares of RM1.00 each which 250,000 ordinary shares of RM1.00 each have been issued and fully paid-up. Sapphire is principally involved in property development and construction of properties. 2.2 Information on the Purchaser Prominent Stream is a private limited company incorporated on 16 January 2014 in Malaysia under the Act. The present authorised share capital of Prominent Stream is RM400,000 comprising of 400,000 ordinary shares of RM1.00 each which have been issued and fully paidup. The nature of business of Prominent Stream is in the trading of goods without any particular specialisation. 2.3 Information on the Land The Vendor has on 15 April 2013 executed a sale and purchase cum development agreement with the Menteri Besar Selangor (Pemerbadanan) (as registered owner) ( MBI ) and Permodalan Negeri Selangor Berhad (as beneficial owner) ( PNSB ) to purchase the following (11) parcels of leasehold land under held under the following documents of title: H.S.(D) 30645 PT 33010; H.S.(D) 30646 PT 33019; (iii) H.S.(D) 30647 PT 33020; (iv) H.S.(D) 30649 PT 33021; (v) H.S.(D) 30650 PT 33022; (vi) H.S.(D) 30651 PT 33023; (vii) H.S.(D) 30648 PT 33024; (viii) H.S.(D) 30652 PT 33025; (ix) H.S.(D) 30653 PT 33026; (x) H.S.(D) 30654 PT 33027; and (xi) H.S.(D) 30655 PT 33028, all in Mukim of Tanjong Duabelas, District of Kuala Langat, State of Selangor ( Original Land ). The sale and purchase of the Original Land by the Vendor from PNSB has become unconditional with effect from 13 February 2014 pursuant to the satisfaction of its conditions precedents. 1
Pursuant to the Proposed Disposal, the Vendor has agreed to sell and the Purchaser has agreed to purchase such portions of the Original Land measuring approximately 308.72 acres of net land area and which is delineated in RED on the layout plan as annexed in Appendix 1 ( Land ). The Vendor has prior to the SPA obtained the master development planning and layout approval known as Kelulusan Permohonan Kebenaran Merancang Mengikut Seksyen 21 Akta 172 Bagi Tujuan Serahbalik Dan Berimilik Semula Dibawah Seksyen 204B Kanun Tanah Negara Diatas Lot PT 33010, PT 33019-PT 33028, Mukim Tanjung DuaBelas, Selangor Darul Ehsan dated 21 January 2014 for the whole of the Original Land. Details of the Land are as follows: Postal address and identification : The Land are such portions of the Original Land measuring approximately 308.72 acres of net land area and delineated in RED on the layout plan as annexed in Appendix 1. in the Mukim of Tanjong Duabelas, District of Kuala Langat, State of Selangor. As at the date hereof, the separate titles to the Land have not been issued by the relevant authorities. Land area : Approximately 308.72 acres (13,447,843.2 square feet) Restriction-in-interest : Tanah ini boleh dipindahmilik, dipajak atau digadai setelah mendapat kebenaran Pihak Berkuasa Negeri. Category of land use : Bangunan Perniagaan, Bangunan Kediaman Existing use : Vacant land Purpose use : Mixed development comprising residential and commercial properties Tenure : Leasehold interest for 99 years expiring on 9 November 2110 (unexpired term of approximately 96 years) Net book value as at 31 December 2013 : Nil Encumbrances : Nil Original cost of investment/ Date of investment 2.4 Basis of consideration : Approximately RM242 million / 13 February 2014 The Sales Consideration was arrived at based on negotiations between the parties on a willingbuyer willing-seller basis after taking into consideration among others, the following: The original cost of investment of the Land; and The prevailing market value of land at the surrounding area. 2.5 Salient Terms of the Proposed Disposal The salient terms of the SPA include, amongst others, the following: 2.5.1 Computation of the Sales Consideration The Sales Consideration for the Land is based on the net area of 308.72 acres (13,447,843.2 square feet) amounting to RM470,674.512 only. The parties will be entitled to an adjustment in the Purchase Consideration at the rate of RM35 per square foot in the event the actual total area which excludes lands required for common infrastructure of the Land based on the layout plan ("Actual Area") differs from 308.72 acres by up to five per cent (5%) thereof based on a survey to be conducted by a surveyor appointed by the Purchaser; 2
If the Actual Area differs from 308.72 acres by more than five per cent (5%), the Vendor and the Purchaser shall negotiate in good faith as to whether the sale and purchase of the Land Parcels should be proceeded with and/or whether there should be any adjustment in the Sales Consideration; 2.5.2 Payment terms of the Sales Consideration Upon the execution of the SPA, the Purchaser shall pay directly to the Vendor an amount of RM47,067,451.20 being 10% of the Sales Consideration ( Deposit ) and the Vendor shall deliver a corporate guarantee issued by Tropicana in favour of the Purchaser, to guarantee the repayment of the Deposit in the event of a termination due to unfulfilled conditions precedent pursuant to the SPA; and The balance sum of RM423,607,060.80 being the Sales Consideration less the Deposit ( Balance Sum ) shall be paid by the Purchaser to the Vendor s solicitors as stakeholders within a period of 60 days from the SPA becoming unconditional subject to an automatic extension of 30 days from the expiry of the said 60 days period. The Balance Sum shall be released by the Vendor s Solicitors to the Vendor upon presentation of the transfer and the Purchaser s charge at the relevant land registry/land office. 2.5.3 Conditions Precedent The SPA is subject to and conditional upon the fulfilment of the following conditions precedent within a period of 3 months from the date of the SPA, with an automatic extension of 3 months thereafter, or such further period(s) as may be requested by the Purchaser and agreed upon by the Vendor in accordance with the SPA ( Approval Period ) ( Conditions Precedent ): (iii) (iv) (v) (vi) the approval of the shareholders of the Purchaser s holding company at an extraordinary general meeting to be convened ( Purchaser s Shareholders Approval ); the approval of the relevant land authority having been obtained by the Vendor for the surrender and re-alienation of the Original Land ( Subdivision Approval ) and the Vendor having obtained the issue documents of title to the Land in block titles; if required, the approval of the Economic Planning Unit having been obtained by the Purchaser for the purchase of the Land ( EPU Approval ); the approval of the state authority having been obtained by the Vendor for the transfer of the Land to the Purchaser ( State Authority Transfer Approval ); the approval of the state authority having been obtained by the Vendor for the charge of the Land in favour of a licensed bank or financial institution in Malaysia from whom the Purchaser obtains a loan or credit facility to part finance the acquisition of the Land ( Financier ) ( State Authority Charge Approval ) provided that the name of the Financier is provided to the Vendor within 5 days from the date the Vendor obtains the subdivision approval and the issuance of documents of title to the land; and the approvals of any other relevant authorities arising from any new laws and/or regulations effective as at or after the date of the SPA. In the event that any of the Conditions Precedent shall have been refused and appeal or appeal(s) to the respective authorities or persons against such refusal have not been successful, or any of the Conditions Precedent shall not have been fulfilled by the expiry of the Approval Period, either party may, where legally possible, waive any of such Conditions Precedent by giving written notice to the other party within fourteen (14) business days from the business day following the receipt of such refusal or expiry of the Approval Period (as the case may be) and proceed with the terms and conditions of the SPA, failing which the SPA shall, unless extended by mutual agreement of the parties, terminate and be of no further effect whatsoever in accordance with the terms and conditions of the SPA. The SPA shall become unconditional on the date on which the last of the Conditions Precedent has been duly fulfilled or waived (as the case may be) in accordance with the terms and conditions of the SPA ( Unconditional Date ); 3
2.5.4 Completion The completion of the Proposed Disposal shall be the date falling on or before the expiry of the period of 60 days from the Unconditional Date subject to an automatic extension of 30 days from the expiry of the said 60 days period. 2.5.5 Sharing of primary infrastructure The parties agree that the Vendor may at any time after completion of the Proposed Disposal, undertake and carry out the construction of any of the primary infrastructure facilities and amenities for and serving the proposed developments by the parties on the Land and the balance of the Original Land that are not sold to the Purchaser ( Vendor s Retained Portion ), including without limitation, the main roads, reservoir(s), sewerage mains and sewerage treatment plant(s), main drains and culverts, detention basin(s), electric main distribution, and infrastructure identified and marked in the shared primary infrastructure plan which encompass special and major infrastructure ( Shared Primary Infrastructure ). The total cost and expenses incurred by the Vendor for the purpose of and in connection with the construction and completion of the Shared Primary Infrastructure shall be borne by the parties and such proportions shall be computed based on: (a) (b) in respect of the relevant proportion of costs to be borne by the Vendor, the area of the Vendor's Retained Portion against the total area of the Vendor's Retained Portion and the Land collectively, expressed as a percentage; and in respect of the relevant proportion of costs to be borne by the Purchaser, the area of the Land against the total area of the Vendor's Retained Portion and the Land collectively, expressed as a percentage. 2.6 Expected net gain and utilisation of proceeds The expected gain from the Proposed Disposal is approximately RM170 million (net of tax payable); and The net proceeds arising from the Proposed Disposal are expected to be utilised for the working capital and/or repayment of bank borrowings of Tropicana and its group of companies ( Tropicana Group ). 2.7 Liabilities to be assumed by Purchaser There is no liability to be assumed, including any contingent liability and guarantee to be assumed, by the Purchaser pursuant to the Proposed Disposal. 3. RATIONALE The rationale for the Proposed Disposal are: To realise gain via sale of land; and To raise funds as working capital and/or repayment of bank borrowings of Tropicana Group. The Proposed Disposal is also in line with Tropicana Group s de-gearing exercise to strengthen its financial footing. 4
4. EFFECTS OF THE PROPOSED DISPOSAL 4.1 Share capital and substantial shareholders shareholding The Proposed Disposal will not have any effect on the issued and paid-up share capital of Tropicana and the substantial shareholders shareholding in Tropicana, as the Proposed Disposal does not involve any issuance of shares in Tropicana. 4.2 Earnings, earnings per share, net assets per share and gearing The Proposed Disposal is expected to be completed in the 2 nd half of 2014 and is expected to generate a one-off net gain of approximately RM170 million for Tropicana and based on the current issued and paid-up share capital as at 12 March 2014 of RM1,365,587,472 divided into 1,365,587,472 ordinary shares of RM1.00 each of Tropicana, the Proposed Disposal is expected to increase the earnings per share of Tropicana by approximately 12 sen and to increase the net assets per share for Tropicana from RM2.32 to RM2.47 for the financial year ending 2014. 5. APPROVALS REQUIRED The Proposed Disposal is not subject to the approval of the shareholders of Tropicana but is subject to the following approvals being obtained: (iii) (iv) (v) (vi) Purchaser s Shareholders Approval; Subdivision Approval; EPU Approval (if required); State Authority Transfer Approval; State Authority Charge Approval; and the approvals of any other relevant authorities arising from any new laws and/or regulations effective as at or after the date of the SPA; The Proposed Disposal is not conditional upon any corporate exercise undertaken or to be undertaken by Tropicana. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors and/or major shareholders of Tropicana and its subsidiaries and/or persons connected to them have any interest, direct or indirect in the Proposed Disposal. 7. DIRECTORS RECOMMENDATION The Board of Directors, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of Tropicana. 8. HIGHEST PRECENTAGE RATIO The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Bursa Malaysia Securities Berhad s Main Market Listing Requirements is approximately 18.3% based on the latest audited financial statements of Tropicana as at 31 December 2013. 5
9. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed in the 2 nd half of 2014. 10. DOCUMENTS FOR INSPECTION The SPA is available for inspection by the shareholders of Tropicana at the registered office of Tropicana at C-06-02, 6 th floor, Block C, Wisma TT, No.1, Jalan PJS 8/15, Dataran Mentari, 46150 Petaling Jaya, Selangor Darul Ehsan, during normal business hours from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 19 March 2014. 6
APPENDIX 1: LAND LAYOUT PLAN PROPOSED DISPOSAL 7