Type : TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) RELATED PARTY TRANSACTIONS Subject : JOINT VENTURE ON RECLAMATION IN MELAKA The Board of Directors of Oriental Holdings Berhad ( OHB ) wishes to make the following announcement: 1. INTRODUCTION Reference is made to the announcement of 25 January 2008 in relation to the reclamation of 204 acres of the portion of the coast of the township of Melaka embracing the foreshore, a total of 624 acres has been reclaimed. OHB wishes to announce that Ultra Green Sdn Bhd ( UG ) is expected to enter into a Joint Venture agreement ( JVA ) with Oriental Boon Siew (M) Sdn Bhd ( OBSM ), to allow OBSM to carry out and complete the reclamation works on selected phases of Foreshore Land (as defined under item 2 below) for reclamation ( Reclamation Works ) subject to the terms and conditions of the JVA. The selected phases referred to under the Joint Venture are Phases 2A, 3A and 3B of Foreshore Land covering 275 acres. 2. DETAILS OF THE RECLAMATION An agreement entered into between the Government of the State of Melaka ( State Government ) and UG dated 7 September 1994 stipulated the grant of rights by the State Government to UG, as concession owner for the reclamation of the portion of the coast of the township of Melaka embracing (i) the land between the shore line and the boundaries of land lying contiguous to such land and (ii) the foreshore and the sea measuring approximately 1,125 acres in total ( Foreshore Land ) of which UG had completed the reclamation works of totaling 624 acres. OBSM has appointed Benalec Sdn Bhd which has the requisite expertise in reclaiming foreshore land as the contractor to undertake the reclamation on the 275 acres of the Foreshore Land at an estimated cost of RM135.1 million. In consideration of the State Government granting the said concession rights to UG, the State Government shall be entitled to retain one sixth of the total area of the duly reclaimed land. The entitlement to the 275 acres of Foreshore Land is as tabulated: Entitled parties Phase 2A, 3A and 3B (acres) State Government of Melaka 45.84 UG 41.58 OBSM 187.58 275.00 OHB-A1410_Reclaim 275 acres v6_141203 Page 1 of 5
3. BACKGROUND INFORMATION 3.1 UG is a wholly owned subsidiary of Kah Motor Company Sdn Bhd which in turn is a wholly owned subsidiary of OHB. It was incorporated on 5 March 1994 under the Companies Act, 1965 ( Act ). The authorized share capital of UG is RM15 million divided into RM12 million Ordinary Shares of RM1 each and RM3 million Redeemable Preference Shares of RM1 each and its paid up share capital is RM7.73 million divided into RM7 million Ordinary Shares of RM1 each and RM0.73 million Redeemable Preference Shares of RM1 each. UG is an investment holding company and is principally engaged in land reclamation. 3.2 OBSM is 51% owned by Oriental Rubber & Palm Oil Sdn. Bhd which in turn is a wholly owned subsidiary of OHB and the remaining 49% is held by Boontong Estates Sdn Bhd. OBSM was incorporated on 21 September 2007 under the Act. The authorized and paid up share capital of OBSM is RM200 million and RM187 million respectively. OBSM is an investment holding company. 3.3 Benalec Sdn Bhd ( Benalec ), a company incorporated on 29 April 1978 as Leaw Eng Chang Construction Sdn Bhd under the Act and having changed its name to Benalec on 2 September 1996. The authorized and paid up share capital of Benalec is RM10 million and RM9 million respectively. Benalec is principally engaged in marine construction and civil engineering. 4. INFORMATION ON THE FORESHORE LAND 4.1 The Foreshore Land refers to the portion of the coast of the township of Melaka embracing (i) the land between the shore line and the boundaries of land lying contiguous to such land and (ii) the foreshore and the sea measuring approximately 1,125 acres in total of which UG had completed the reclamation works of totaling 624 acres in 2012. The balance of 501 acres consists of 479 acres to be reclaimed includes 22 acres classified as lagoon area. 4.2 Pursuant to the Agreement with State Government as mentioned in item 1, the State Government shall issue document of title to the Land, including the conditions that it will be a 99 years leasehold land and any transfer of title to the land will be subject to consent from the State Government of Melaka. 4.3 The reclamation project is for future development and will allow for synergy of resources within OHB Group. 5. SALIENT FEATURES OF JVA The salient terms of the JVA, as extracted from the JVA, include among others, are as set out below. All definitions in this section shall have the same meaning as in the JVA: 5.1 UG agrees and allows OBSM at its own cost and expense to carry out and complete all and every stage and/or phase of the reclamation works for the Foreshore Land. OHB-A1410_Reclaim 275 acres v6_141203 Page 2 of 5
5.2 UG has at its own costs and expense to obtain the approvals for Environmental Impact Assessment Report in respect of the Phase 2A, 3A and 3B Reclamation Project and other approvals relating thereto as well as such licences, permits or approvals from the relevant authorities as may be required under any written law for the time being in force relating to the Reclamation Works. 5.3 OBSM shall within one (1) month from the date of receipt of the Approvals but subject to OBSM producing the insurance policies referred to in Clause 10 of the JVA, commence the Reclamation Works (hereinafter referred to as "Commencement of Works") and complete the whole and every parcel of the Reclamation Works within thirty (30) months from the date of Commencement of Works (hereinafter called the "Date of Completion") and shall on or before the Date of Completion furnish UG with the Certificate of Practical Completion or the Take Over Certificate, as the case may be of the Reclamation Works issued by the Engineer appointed by UG for the Phase 2A, 3A and 3B Reclamation Project. 5.4 All the costs and expenses of and incidental to the preparation, submission to and obtaining of the Approvals from the appropriate authorities including all fees due to the surveyor and engineer shall be solely borne by UG. 6. RATIONALE FOR THE JOINT VENTURE The Board of Directors of OHB is of the opinion that the Joint Venture with OBSM is beneficial as OBSM has the necessary financial resources to fund the reclamation cost and allow UG to focus on other aspects of development on the reclaimed land. 7. SOURCES OF FUNDING The sources of funding for the Reclamation Works under the Joint Venture will be financed by OBSM s internally generated funds. 8. LIABILITIES TO BE ASSUMED There are no liabilities including contingent liabilities and guarantees to be assumed by OHB pursuant to the Joint Venture. 9. FINANCIAL EFFECTS OF THE JOINT VENTURE 9.1 Earnings The Joint Venture is not expected to have any material impact on OHB Group s earnings for the financial years ending 31 December 2014 and 2015. 9.2 Net Assets The Joint Venture will not have any material effect on the consolidated net assets of OHB Group. OHB-A1410_Reclaim 275 acres v6_141203 Page 3 of 5
9.3 Share Capital The Joint Venture will not have any effect on the issued and paid-up share capital of the OHB as it does not involve any allotment or issuance of new shares. 9.4 Substantial Stockholders Stockholding The Joint Venture will not have any significant effect on the stockholdings of substantial stockholders as it does not involve any allotment or issuance of new shares. 9.5 Gearing The Joint Venture is not expected to have any impact on the gearing of the Group. 9.6 Highest Percentage Ratio The highest percentage ratio aggregated pursuant to the Main Market Listing Requirements is approximately 4.89% based on the latest consolidated audited financial statements of the Group for the financial year ended 31 December 2013. 10. RISK FACTORS Risk factors that might affect the JVA are inclusive of but not limited to changes in conditions of competition, economic, business, political, and legal framework environment. OHB will undertake the necessary efforts to mitigate the various business risks identified. 11. APPROVAL OF STOCKHOLDERS AND RELEVANT GOVERNMENT AUTHORITIES The Joint Venture does not require the approval of stockholders of OHB. The Reclamation Works are subject to approval from Jabatan Alam Sekitar and other relevant regulatory authorities. 12. DIRECTORS AND MAJOR STOCKHOLDERS INTERESTS AND PERSON CONNECTED TO DIRECTORS AND MAJOR STOCKHOLDERS None of the Directors and/or major stockholders and/or persons connected with a director or major stockholder of OHB have any interest, direct and indirect in the JVA save as disclosed below: (a) (b) (c) Boon Siew Sdn Bhd ( BSSB ) is a major stockholder of OHB holding 43% in OHB and indirectly holds 85.3% in Boontong Estates Sdn Bhd ( Boontong ). Dato Seri Loh Cheng Yean ( Dato Seri Loh ), Dato Robert Wong Lum Kong, DSSA, JP ( Dato Robert Wong ) and Dato Seri Lim Su Tong ( Dato Seri Lim ) are Directors and stockholders of OHB as well as Directors and indirect shareholders of BSSB and Boontong Estates Sdn Bhd via their respective owned family companies. Datuk Loh Kian Chong ( Datuk Loh ) is a Director and major stockholder of OHB. He is also a Director and indirect major shareholder of OBSM by virtue of his deemed interest in BSSB and Boontong. OHB-A1410_Reclaim 275 acres v6_141203 Page 4 of 5
(d) (e) (f) Dato Sri Tan Hui Jing ( Dato Sri Tan ) is a Director of OHB. Datin Loh Ean and Ms Tan Kheng Hwee are Alternate Directors to Dato Robert Wong and Dato Seri Loh respectively and they are indirect major shareholders of BSSB via their respective owned family companies. Datin Loh Ean is the spouse of Dato Robert Wong. Dato Seri Loh is the sister of Datin Loh Ean, sister-in-law of Dato Robert Wong and Dato Seri Lim, mother of Ms Tan Kheng Hwee and the aunt to Datuk Loh and Dato Sri Tan. 13. STATEMENT BY THE BOARD OF DIRECTORS AND AUDIT COMMITTEE The Audit Committee and the Board (save and except for interested Directors), after taking into consideration all aspects of the Joint Venture including but not limited to the rationale, financial effects, is of the opinion that the Joint Venture is in the best interest of OHB, fair, reasonable and on normal commercial terms and not detrimental to the interest of the minority stockholders. 14. ESTIMATED TIME FRAME FOR COMPLETION The reclamation is expected to be completed within thirty months from commencement of works under the JVA and more particularly described under item 5. 15. DOCUMENT FOR INSPECTION The JVA is available for inspection at the registered office of OHB at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang within 3 months of the signing of the Agreement. 16. TOTAL AMOUNT TRANSACTED WITH THE SAME RELATED PARTY FOR THE PRECEDING TWELVE (12) MONTHS The total amount transacted with the same related party for the preceding 12 months is RM230 million. This Announcement is dated 3 December 2014. OHB-A1410_Reclaim 275 acres v6_141203 Page 5 of 5