ANNOUNCEMENT UNITED MALAYAN LAND BHD ( UMLand or the Company ) SHAREHOLDERS AGREEMENT BETWEEN SERI ALAM PROPERTIES SDN BHD (SERI ALAM), A WHOLLY OWNED SUBSIDIARY OF UMLAND, AND RAFFLES CAMPUS PTE LTD (RAFFLES) TO GOVERN A JOINT VENTURE COMPANY, NAMELY RAFFLES CAMPUS (SERI ALAM) SDN BHD (RCSA) (PROPOSED JOINT VENTURE) OPTION TO PURCHASE SHARES AGREEMENT BETWEEN SERI ALAM AND RAFFLES TO GRANT RAFFLES THE OPTION TO PURCHASE THE REMAINING 51% OF THE TOTAL ISSUED AND PAID UP SHARE CAPITAL OF RCSA (PROPOSED CALL OPTION) SALE AND PURCHASE AGREEMENT BETWEEN SERI ALAM AND RCSA FOR THE ACQUISITION BY RCSA OF A PARCEL OF FREEHOLD LAND MEASURING 19.71 ACRES HELD UNDER THE MASTER TITLE HS(D) 310781, PT NO. 158257, MUKIM OF PLENTONG, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR FROM SERI ALAM (PROPOSED ACQUISITION) (Collectively known as the Proposals ) 1. INTRODUCTION Further to our announcement dated 18 April 2011 on the MOU signed between Seri Alam and Raffles, the Board of Directors (Board) of UMLand wishes to announce that Seri Alam had on 11 December 2011, entered into the following agreements with Raffles: i) Shareholders Agreement (SA) to govern a joint venture company, RCSA, for the proposed development of an international school for use by Raffles as its Johor campus ; and ii) Option to Purchase Shares Agreement (OPSA) granting Raffles the option to purchase the remaining 51% of the total issued and paid up share capital of RCSA from Seri Alam. On even date, Seri Alam entered into a Sale and Purchase Agreement (SPA) with RCSA for the proposed acquisition of a parcel of freehold land measuring approximately 19.71 acres held under the master title HS(D) No. 310781 PTD No. 158257, Mukim of Plentong, District of Johor Bahru, State of Johor Darul Ta zim (the Land) for a total consideration of RM10.83 million. 2. PROPOSED JOINT VENTURE RCSA is a private limited company incorporated in Malaysia under the Companies Act 1967 with an authorised share capital of RM5 million comprising 5 million ordinary shares of RM1.00 each, of which 100 ordinary shares of RM1.00 each have been issued and are fully paid up. The RM100 issued and paid up capital of RCSA are currently held in trust for Raffles by Ng Boon Yew and Ng Eet Foong in the proportion of 80% and 20% respectively. The principal business of RCSA is to develop, build, own, establish, specialize, operate and manage campus facilities for education purposes. Page 1 of 6
Pursuant to the SA, Seri Alam and Raffles will acquire 51 ordinary shares and 49 ordinary shares of RM1 each respectively in RCSA at its par value. The respective shareholdings of Seri Alam and Raffles in RCSA shall be in the following proportion: Shareholders No. of ordinary shares of RM1.00 each in RCSA to be acquired pursuant to the SA Eventual Shareholding % Seri Alam 51 51% Raffles 49 49% Total 100 100% 2.1 Information on Raffles Raffles is a private limited company incorporated in Singapore under the Singapore Companies Act. Raffles is a wholly-owned subsidiary of Strategic Technology for Education and Academic Management Pte Ltd which in turn is 70% held by Strategic Foundation Ltd (a not-for-profit organization), 27.5% held by Ng Boon Yew and 2.5% held by Lai E-Lan. Based on its last audited financial statements as at 31 July 2011, the paid up share capital is SGD4,721,002. Its principal activity is in investment holding and provision of education and training services. 2.2 Salient terms of the SA The salient terms of the SA are as follows: i) Seri Alam and Raffles shall each acquire 51 ordinary shares and 49 ordinary shares of RM1 each in RCSA respectively at par value in order that the shareholdings of RCSA are held in the proportion of 51:49 by SAP and Raffles respectively (Percentage Interests); ii) iii) iv) The shareholding of the shareholders in RCSA shall at all times be held in accordance with the Percentage Interests; The shareholders agree to procure the increase of the paid up capital of RCSA and the quantum of such increase shall be decided by the Board of RCSA; The shareholders shall, amongst others, undertake to be jointly responsible to develop the Land and commence, manage, implement and complete all aspects of the Land into an international school/campus for use by Raffles; v) The shareholders shall jointly assist and complete the necessary applications by RCSA for the relevant licenses and approvals from the relevant authorities for RCSA to undertake the business and the operation of an international school; vi) vii) viii) The shareholders agree to make advances to RCSA to the amount of RM15 million in proportion of the Percentage Interests; The Board of RCSA shall comprise 6 members, with 3 directors each nominated by Seri Alam and Raffles respectively. The representation on the Board shall at all times reflect the shareholders respective Percentage Interests; The Board from time to time shall appoint a Chairman from one of their numbers who shall be a director representing either Seri Alam or Raffles. The first Chairman of the Board of RCSA shall be a director from amongst the nominees of Seri Alam; Page 2 of 6
3. PROPOSED CALL OPTION Seri Alam and Raffles had on 11 December 2011 entered into an OPSA, whereby Seri Alam had granted Raffles the option at a cash consideration of RM1.00 to acquire the remaining 51% shares in RCSA not owned by Raffles (Option Shares). The price of the Option Shares will be calculated based on the net tangible assets (NTA) or par value of the Option Shares, whichever is higher. 3.1 Salient terms of the OPSA The salient terms of the OPSA are as follows: i) The Option shall be exercised at any time within 3 years from the commencement of a Lease Agreement to be entered into between RCSA and Raffles or its nominee upon completion of the campus; ii) Raffles irrevocably offers Seri Alam the right to retain up to 30% of the shares in RCSA, which option shall be exercised by Seri Alam prior to Raffles s exercise of the Option over the whole of the Option Shares. 4. PROPOSED ACQUISITION RCSA had on 11 December 2011, entered into the SPA with Seri Alam for the proposed acquisition of the Land for a total cash consideration of RM10.83 million. 4.1 Information on the Land Seri Alam is the beneficial owner of that piece of freehold land held under the master title HS(D) 310781, PT No. 158257, Mukim of Plentong, District of Johor Bahru, State of Johor. The Land measuring approximately 19.71 acres forms part of the master title and is currently vacant and free from encumbrances. The net book value of the Land based on the last audited financial statements as at 31 December 2010 was RM2.4 million. 4.2 Information on the Vendor Seri Alam is a wholly-owned subsidiary of UMLand with an authorized share capital of RM200 million comprising 200 million shares of RM1.00 each and an issued and paid up capital of RM70 million comprising 70 million shares of RM1.00 each. The directors of Seri Alam are Dato Ng Eng Tee, Mr. Pee Tong Lim and Mr. Ng Eng Soon. The principal activity of Seri Alam is property development and other related activities. 4.3 Salient terms of the SPA The salient terms of the SPA are: i) Condition Precedent The SPA is conditional upon the relevant approvals of the Land Administrator for the subdivision of the Master Land which shall be obtained within 6 months from the date of the SPA or such extended period as may be mutually agreed to by the parties. Page 3 of 6
ii) Terms of Settlement The purchase consideration shall be settled as follows: Purchase Consideration Timing of Payment RM 10% Deposit 1,082,600 Upon execution of the SPA Balance of purchase consideration 9,743,400 Within 3 months from the Unconditional Date of the SPA (Completion Period) Total 10,826,000 4.4 Basis of determining the purchase consideration The purchase consideration for the Land was arrived at after negotiations between the parties on a willing-buyer-willing-seller basis and taking into consideration recently transacted prices of land sold within the area. There was no formal market valuation carried out on the Land. 4.5 Prospects of the Land The Land is strategically located within the Bandar Seri Alam township where several private and public educational concerns have already been established. Bandar Seri Alam is a fully integrated township spanning over 3,700 acres and has been recognized by the Iskandar Regional Development Authority as the educational hub for the Eastern Corridor of Iskandar Malaysia. Bandar Seri Alam is well equipped with a multitude of amenities and facilities including, amongst others, a private specialist hospital, banks, hyperrmarket, fast food restaurants, hotel and golf course that cater to an estimated population of 130,000. 4.6 Proposed Development of the Land The Land will be developed into an international school that will be leased to Raffles over 21 years as its Johor campus to be named the Excelsior International School (Proposed Development). The school will offer international curricula for children from Kindergarten to High School with age ranging from 3 years to 18 years of age. Details of the lease arrangement will be agreed upon by the parties. The campus will be equipped with advanced educational facilities. The gross development cost of the initial phase is estimated at RM45 million and construction is expected to commence in 2012 and completed by mid 2013. 4.7 Liabilities to be Assumed UMLand will not be assuming any liabilities from the Proposed Acquisition. 4.8 Source of Funding RCSA shall secure financing for the purposes of undertaking the Proposed Development, as may be decided by the Board of RCSA from time to time provided always that neither Seri Alam nor Raffles shall be required at any time to provide any corporate guarantee to secure the financing granted to RCSA. Page 4 of 6
5. RATIONALE OF THE PROPOSALS The Proposals are in line with the Company s vision of transforming Bandar Seri Alam into a City of Knowledge for the Eastern Corridor of Iskandar Malaysia. The presence of an internationallyrenowned school in Bandar Seri Alam will also add prestige to the township, enhance capital values of Bandar Seri Alam and provide quality and wholesome living for its residents. Additionally, upon completion of the campus, the lease rental from the campus will contribute to the Company s recurring income base for a period of 21 years. 6. FINANCIAL EFFECTS OF THE PROPOSALS 6.1 Share Capital, Substantial Shareholders Shareholdings, Net Assets Per Share, The Proposals will not have any material effect on the share capital, substantial shareholders shareholdings or net assets per share of UMLand. 6.2 Earnings Per Share The Proposals are not expected to have any material effect on the earnings of the UMLand Group for the financial year ending 31 December 2011 as the Proposed Acquisition is expected to complete within the next financial year whereas the Proposed Development will be completed in 2013. 6.3 Gearing The Proposals will not have any material effect on the gearing of UMLand for the financial year ending 31 December 2011, save for the bank borrowings to finance the Proposed Development, the proportion of which will be determined at a later stage. 7. RISK FACTORS Adverse developments in political, economic and regulatory conditions in Malaysia, could materially and adversely affect the Proposals. Political, economic and regulatory uncertainties include but are not limited to, changes in labour laws, availability of labour, a switch in political leadership and/or changes in the government s policies on interest rates, methods of taxation and licensing regulations. These factors affect all players and are generally beyond the management s control. Other business risks may include but are not limited to, termination of the lease, changes in general economic conditions, competition from existing players and new entrants, and nonrenewal of licenses. The management continuously seeks to limit and mitigate these risks through the implementation of prudent business strategies, continuous review of the operations strategies, efforts taken to improve efficiency, as well as, close monitoring of the Proposed Development and cash flows. Notwithstanding that, there can be no assurance that any change to these risks would not have any material adverse impact on UMLand Group s business. Page 5 of 6
8 HIGHEST PERCENTAGE RATIO APPLICABLE PURSUANT TO PARAGRAPH 10.02(G) BURSA MALAYSIA SECURITIES BERHAD MAIN MARKET LISTING REQUIREMENTS (MMLR) The ratio of 2.6% pursuant to paragraph 10.02(g) of the MMLR is the highest percentage ratio applicable to the Proposals. 9. APPROVALS REQUIRED Save for those disclosed in paragraph 4.3, the Proposals are not subject to the approval of the shareholders of UMLand or other government authorities. 10. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the directors or major shareholders and/or person(s) connected to them has any interest, direct or indirect in the Proposals. 11. DEPARTURE FROM THE SECURITIES COMMISSION S GUIDELINES ON THE OFFERING OF EQUITY AND EQUITY-LINKED SECURITIES (SC GUIDELINES) The Proposals are not subject to the approval of the Securities Commission and does not fall under the SC Guidelines. However, to the best knowledge of the Board, the Proposals have not departed from the SC Guidelines. 12. DIRECTORS RECOMMENDATION The Board, having taken into consideration all aspects of the Proposals, is of the opinion that the Proposals are fair and reasonable, and is in the best interest of the UMLand Group. 13. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSALS Barring any unforeseen circumstances and subject to all the required approvals, the Proposals are expected to be completed within 12 months from the date of the agreements. 14. DOCUMENTS AVAILABLE FOR INSPECTION The SA, OPSA and SPA are available for inspection at UMLand s registered office at Suite 1.1, 1 st Floor, Kompleks Antarabangsa, Jalan Sultan Ismail, 50250 Kuala Lumpur between 9.00 a.m. and 5.00 p.m. on Mondays to Fridays (except on public holidays), for the time being, for a period of 3 months from the date of this announcement. This announcement is dated 12 December 2011. Page 6 of 6