DISPOSAL OF LANDS BY SENTOSACOVE DEVELOPMENT SDN BHD, OCEANVIEW REALTY SDN BHD AND STRATEGIC COVE SDN BHD, ALL OF WHICH ARE WHOLLY-OWNED SUBSIDIARIES OF BENALEC SDN BHD, WHICH IN TURN IS A WHOLLY-OWNED SUBSIDIARY OF BENALEC HOLDINGS BERHAD, TO TITANIUM HALLMARK SDN BHD 1. INTRODUCTION The Board of Directors ( the Board ) of Benalec Holdings Berhad ("Benalec" or "the Company") wishes to announce that Sentosacove Development Sdn Bhd (Company No. 825663-A) ( Vendor A ), Oceanview Realty Sdn Bhd (Company No. 898879-K) ( ) and Strategic Cove Sdn Bhd (Company No. 898838-A) ( ) (collectively known as the Vendors ), all of which are wholly-owned subsidiaries of Benalec Sdn Bhd ( BSB ), which in turn is a wholly-owned subsidiary of Benalec had on 30 October 2017 entered into a sale and purchase agreement with Titanium Hallmark Sdn Bhd (Company No. 941703-V) ( THSB or the Purchaser ) ( SPA ) for the disposal of lands measuring approximately 216,427 square meters located at, ( Lands ) ( the Disposal ) for a total consideration of RM100,172,739.16 ( Total Disposal Consideration ). 2. DETAILS OF THE DISPOSAL The Vendors have agreed to sell and the Purchaser has agreed to purchase the Lands free from all encumbrances, caveats and squatters with the benefit of vacant possession in accordance with the terms and conditions in the SPA. 2.1 Information on is a private limited company incorporated in Malaysia on 17 July 2008. As at the announcement date, the issued share capital of the is RM250,000 comprising of 250,000 ordinary shares. The principal activity of the is Property Investment. As at the announcement date, the Directors of are as follows: 1. Dato Leaw Seng Hai 2. Leaw Ai Lin 2.2 Information on is a private limited company incorporated in Malaysia on 19 April 2010. As at the announcement date, the issued share capital of the is 2 ordinary shares. The principal activity of the is Property Investment. As at the announcement date, the Directors of are as follows: 1. Dato Leaw Seng Hai 2. Leaw Ai Lin 2.3 Information on is a private limited company incorporated in Malaysia on 19 April 2010. As at the announcement date, the issued share capital of is 2 ordinary shares. The principal activity of the is Property Investment. As at the announcement date, the Directors of are as follows: 1. Dato Leaw Seng Hai 2. Leaw Ai Lin Page 1 of 8
2.4 Information on THSB THSB was incorporated in Malaysia on 22 April 2011 as a private limited company. As at the announcement date, the issued share capital of THSB is 100 ordinary shares. The principal activity of THSB is investment holding. As at the announcement date, the Directors of THSB are as follows: 1. Lim Bee Wan 2. Yap Yee Siew Audrey 3. Leong Seng Hoong 2.5 Details of the Lands The details of the Lands are set out as below: Registered Owner No. PT No. Hakmilik Mukim/ Daerah/ State Approximate Area (Square Meter) Disposal Consideration (RM) 169* HSD 80984 51,525 23,848,227.74 170* HSD 80985 42,775 19,798,310.37 Total for 43,646,538.11 176 HSD 80982 177 HSD 80983 29,214 13,521,632.71 25,032 11,586,003.62 Total for 25,107,636.33 160 HSD 80993 167 HSD 81000 22,904 10,601,063.72 23,300 10,784,351.41 Page 2 of 8
Registered Owner No. PT No. Hakmilik Mukim/ Daerah/ State Approximate Area (Square Meter) Disposal Consideration (RM) 168 HSD 81001 21,677 10,033,149.59 Total for 31,418,564.72 TOTAL DISPOSAL CONSIDERATION 100,172,739.16 The issue document of titles to the Lands are subject to the following type of land, category of land use and restrictions in interest:- Type of land 99 years leasehold land expiring on 21 April 2115* 99 years leasehold land expiring on 20 April 2115 Category of land use Restrictions in interest For commercial buildings only This land cannot be transferred or leased except with the approval of the state authority. This restriction of interest does not apply to the first transfer. The Lands were previously caveated by Sentosacove Sdn Bhd (Company No.672354-X) ( Private Caveats ). The Vendors had applied for the removal of Private Caveats and the said Private Caveats have been removed on 28 September 2017. 3. TOTAL DISPOSAL CONSIDERATION The Total Disposal Consideration is arrived at after negotiations on a willing buyer and willing seller basis after taking into consideration the market value of the Lands and the potential future earnings from the development of the area. The Total Disposal Consideration shall be satisfied in the following manner:- No Description Amount (RM) a. Prior to the execution of the SPA, a sum equivalent to two per centum (2%) of the Total Disposal Consideration of Lands has been paid by the Purchaser to the Vendors upon the Purchaser s acceptance of the letters of offer issued by the Purchaser ( Earnest Deposit ) 872,930.76 502,152.73 628,371.30 Page 3 of 8
No Description Amount (RM) b. Ninety eight per centum (98%) of the balance Total Disposal Consideration shall be payable by the Purchaser in the following manner:- (i) subject to Item 4.1 below, upon execution of the SPA, a sum equal to eight per centum (8%) of the Total Disposal Consideration ( 1 st Balance ) shall be paid by the Purchaser to the Vendors directly 3,491,723.05 2,008,610.91 2,513,485.18 (ii) subject to Item 4.1 below, on or before two (2) months from the date of the SPA, a sum equal to ten per centum (10%) of the Total Disposal Consideration ( 2 nd Balance ), shall be paid by the Purchaser to the Vendors solicitors as stakeholders; and 4,364,653.81 2,510,763.63 3,141,856.47 (iii) subject to Item 4.1 below, on or before five (5) months from the date of the SPA, a sum equal to eighty per centum (80%) of the Total Disposal Consideration ( 3 rd Balance ), shall be paid by the Purchaser to the Vendors solicitors as stakeholders. 34,917,230.49 20,086,109.06 25,134,851.77 Total Disposal Consideration 100,172,739.16 The 1 st Balance, 2 nd Balance and 3 rd Balance shall be collectively referred to as Balance and the last day of the period referred to in Item 3(b)(iii) above shall be the Completion Date. If the Lands are not free from encumbrances, caveats, squatters and/or the Condition Precedent (as defined in Item 4.1 below) is yet to be fulfilled by the relevant payment deadline for the 1 st Balance, 2 nd Balance and/or 3 rd Balance, the relevant payment deadline shall be deferred to such date which is within fourteen (14) days from the date of receipt by the Purchaser or Purchaser s Solicitors of such notice evidencing that the Lands are free from the aforesaid event(s). If the Purchaser is unable to pay the 1 st Balance, 2 nd Balance and/or 3 rd Balance by the relevant payment deadline, the Vendors shall grant the Purchaser an extension of one (1) month from the relevant payment deadline to fully settle the 1 st Balance, 2 nd Balance or 3 rd Balance (as the case may be) ( Extended Completion Date ). For the avoidance of doubt, otherwise than the situation in the paragraph above, any payment of Balance not made within the relevant payment deadline shall be subject to the Purchaser paying the respective Vendor(s) interest at the rate of 8% per annum on the outstanding 1 st Balance, 2 nd Balance and/or 3 rd Balance. Such interest is calculated on the actual number of days elapsed in a 365-day year from the Completion Date to the date of actual payment of the Balance or any part outstanding thereof, as the case may be. 4. SALIENT TERMS OF THE SPA 4.1 Conditions to be satisfied The SPA is conditional upon the Vendors successfully removing the Private Caveats from the title to the Lands within six (6) months from the date of the SPA or such later date as the parties mutually agree ( Condition Precedent ). Page 4 of 8
If the above condition is not fulfilled within the time period stipulated, both parties may mutually agree to extend the period further for the fulfillment of the Condition Precedent, or alternatively elect to terminate the SPA in which event the Vendors shall refund all the money paid by the Purchaser towards the Total Disposal Consideration free of interest within 14 days from the date of termination failing which the Vendors shall be liable to pay interest at the rate of 8% per annum calculated on a daily basis from the expiry of the said 14 days until the date of full refund and thereafter neither party shall have any claim against each other. 4.2 Inter-Conditionality Subject to Item 4.3.2 below, the SPA is inter-conditional upon completion of the Lands and the parties agree that the Lands are sold and bought together as a whole and not separately. 4.3 Completion 4.3.1 The completion of the SPA shall take place upon full payment of the Total Disposal Consideration, the late payment interest (if any) and the apportioned outgoings, on or before the Completion Date or the Extended Completion Date (as the case may be) in accordance with the provisions of the SPA. 4.3.2 Notwithstanding the Completion as provided in Item 4.3.1 above, the parties agree that and subject always to the consent of the respective Vendor(s) of the Lands to have early completion of the individual plot of the Lands based on the following mechanism ( Early Completion of the Individual Plot ):- 4.3.2.1 any part payment including the Earnest Deposit, 1 st Balance, 2 nd Balance and/or 3 rd Balance may, at the mutual consensus of the parties, be utilised towards the full payment and to facilitate in completion of the sale and purchase of any individual plot of the Lands based on the following sequence: (i) (ii) (iii) (iv) (v) (vi) (vii) PT160 PT167 PT170 PT168 PT177 PT169 PT176 (hereinafter referred to as Early Completion of the Individual Plot ). 4.4 Default 4.4.1 In the event the Purchaser:- 4.4.1.1 fails to pay the 1 st Balance, 2 nd Balance and/or 3 rd Balance in accordance with the terms of the SPA; 4.4.1.2 materially breaches any of its obligations under the SPA or any of the warranties set out in the SPA; 4.4.1.3 is or becomes insolvent or a winding-up petition is filed against the Purchaser; or 4.4.1.4 fails, refuses or neglects to comply with its obligations under Clause 3.2 of the SPA, Page 5 of 8
the Vendors shall be entitled (but not obliged) to (a) seek the remedy of specific performance or (b) terminate the SPA and in such event, the sum amounting to 10% of the Total Disposal Consideration ( Forfeiture Sum ) shall be forfeited by the Vendors absolutely but all other monies paid by the Purchaser to the Vendors (if any) towards account of the Total Disposal Consideration for the purchase of the Lands shall be refunded by the Vendors to the Purchaser free of interest within fourteen (14) days of such termination and subject to terms of the SPA shall be of no further force and effect and neither party shall have any further claim against the other under or in respect of the SPA save for any antecedent breach. In the event the Vendors fail to refund to the Purchaser all such money refundable within the said fourteen (14) days, the Vendors shall be liable to pay interest at the rate of 8% per annum calculated on a daily basis from the expiry of the due for refund until the date of full refund. For the avoidance of doubt, in the event any payment of the Earnest Deposit, 1 st Balance, 2 nd Balance and/or 3 rd Balance paid by the Purchaser to the Vendors have been utilised towards the full payment of the Early Completion of the Individual Plot, and as a result, the Vendors are not able to forfeit the Forfeiture Sum, the Purchaser undertakes to pay the Forfeiture Sum or any shortfall thereof to the Vendors within fourteen (14) days of such termination, failing which the Purchaser shall be liable to pay interest at the rate of 8% per annum calculated on a daily basis from the expiry of the due for payment of the Forfeiture Sum until the date of full payment of the Forfeiture Sum. 4.4.2 In the event any of the Vendors:- 4.4.2.1 fails, refuses, neglects to comply or materially breaches any of its obligations under the SPA or any of the warranties set out in the SPA; or 4.4.2.2 is or becomes insolvent or a winding-up petition is filed against the Vendor; or 4.4.2.3 fails, refuses or neglects to comply with its obligations under Clause 3.2 of the SPA; the Purchaser shall be entitled (but not obliged) to (a) seek the remedy of specific performance or (b) terminate the SPA whereupon all the Vendor(s) shall refund to the Purchaser (except for the Earnest Deposit, 1 st Balance, 2 nd Balance and/or 3 rd Balance paid by the Purchaser to the Vendor(s) which have been utilised towards the full payment of the Early Completion of the Individual Plot), the remaining monies paid by the Purchaser under the SPA and in addition, pay to the Purchaser agreed liquidated damages equivalent to 10% of the purchase prices of the uncompleted plot of Lands, both free of any interest within fourteen (14) days of receipt of such notice of termination and thereafter the SPA shall be of no further force and effect and neither party shall have any further claim against the other under or in respect of the SPA save for any antecedent breach. In the event the Vendor(s) fails to refund to the Purchaser all such money refundable within the said fourteen (14) days, the Vendor(s) shall be liable to pay interest at the rate of 8% per annum calculated on a daily basis from the expiry of the due for refund until the date of full refund. 4.5 Shore protection and rock revetment 4.5.1 The Vendors shall complete the following at its own costs:- (a) (b) shore protection and rock revetment around the perimeter of the Lands fronting the straits of Melaka in accordance with the specification of the Vendors; and an access road up to crusher run level only together with drainage parallel to the access road in accordance to the plan which has been appended to the SPA, (collectively referred to as Infrastructure ), Page 6 of 8
prior to the Completion or such other extended period as the parties may mutually agree upon in writing ( Infrastructure Completion Deadline ). 4.5.2 A sum of 5% of the Total Disposal Consideration ( Stakeholding Sum ), shall be retained from the 3 rd Balance which shall be released to the Vendors within 21 days from the receipt of Release Notice (as hereinafter defined) from the parties. On or before the Infrastructure Completion Deadline, the Vendors shall issue a written notice to the Purchaser for joint inspection of the Infrastructure. The parties shall, upon satisfaction of the completion of construction of Infrastructure, jointly furnish the Vendors Solicitors with a written notice to release the Stakeholding Sum to the Vendors ( Release Notice ). Vendor Stakeholding Sum (RM) RM2,182,326.91 RM1,255,381.82 RM1,570,928.24 5. UTILISATION OF PROCEEDS Proceeds arising from the Disposal are intended to be used to finance the Company s on-going reclamation projects and to meet the Company s working capital requirements. Proceeds arising from the Disposal are expected to be utilised within 12 months from the completion of the land disposal. 6. RATIONALE FOR THE DISPOSAL The Disposal is in the ordinary course of business of Benalec. The Disposal provides an avenue for Benalec to monetise and crystallise the value of its landbank; while at the same time, improve the cash flow of the Company. 7. FINANCIAL EFFECTS OF THE DISPOSAL 7.1 Share capital and substantial shareholders shareholdings The Disposal will not have any effect on the issued share capital of Benalec nor the substantial shareholders shareholdings in Benalec, as the Disposal does not involve any issuance of shares in Benalec. 7.2 Earnings and Earnings Per Share ( EPS ), Net Assets ( NA ) Per Share and Gearing The Disposal is expected to realise a net gain of RM24.7 million representing earnings per share of approximately RM0.03. Benalec s NA per share will increase from RM0.77 to RM0.80 (after accounting for the gain on the Disposal) based on Benalec s total issued share capital of 799,097,100 ordinary shares (excluding 12,705,400 treasury shares) as at 30 June 2017. The Disposal will not have any effect on Benalec s gearing. 7.3 Cash Company or PN17 Company The Disposal is not expected to result in Benalec becoming a cash company or PN17 Company. Page 7 of 8
8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM None of the Directors of the Company and/or major shareholders of the Company and/or persons connected to them has any interests, direct or indirect, in the Disposal. 9. STATEMENT BY THE BOARD OF DIRECTORS The Board, after having considered all aspects of the Disposal, is of the opinion that the Disposal is in the best interest of Benalec and is not detrimental to the interests of the minority shareholders of Benalec. 10. APPROVAL REQUIRED Save for the approval from relevant authorities, the Disposal is not subject to the approval of the shareholders of the Company as it falls below the percentage ratio of 25%. 11. PERCENTAGE RATIO The highest percentage ratio triggered for the Disposal pursuant to Paragraph 10.02(g) of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 16.03%, being the aggregate value of the Total Disposal Consideration compared to the NA of Benalec based on the Company s latest audited consolidated financial statements for the financial year ended 30 June 2017. 12. RISK FACTORS Despite the execution of the SPA, there can be no assurance that the Vendors and Purchaser would be able to fulfill the terms and conditions stated in the SPA, therefore the Disposal may not be completed. There can also be no assurance that the Disposal can be completed within the time frame set. Any delay or non-completion of the Disposal will delay or preclude the Company from receiving the proceeds from the Disposal. Notwithstanding this, the management and the Board will endeavor to take all steps necessary to complete the Disposal by inter-alia ensuring that all conditions precedents of the SPA which are within the Company s control are met on a timely basis. As at the announcement date, the Condition Precedent has been fulfilled. 13. DOCUMENT AVAILABLE FOR INSPECTION The SPA in relation to the Disposal is available for inspection at the registered office of Benalec at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur during normal business hours from Monday to Friday (excluding public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 31 October 2017. Page 8 of 8