Stock Name : TATGIAP Stock Code : 5178 Type : GENERAL ANNOUNCEMENT Description : PROPOSED DISPOSAL OF ALL THE PIECE OF LEASEHOLD LAND HELD UNDER ISSUE DOCUMENT OF TITLE HS(D) NO. 167366 PT-, MUKIM DAMANSARA, DAERAH PETALING, NEGERI SELANGOR DARUL EHSAN TOGETHER WITH A SINGLE STOREY DETACHED WAREHOUSE AND A DOUBLE STOREY OFFICE BUILDING ERECTED THEREON BY TATT GIAP HARDWARE SDN BHD, A WHOLLY-OWNED SUBSIDIARY, FOR A TOTAL DISPOSAL PRICE OF RM15,500,000 1. INTRODUCTION The Board of Directors of Tatt Giap Group Berhad ("TatGiap" or the "Company") wishes to announce that its wholly-owned subsidiary, Tatt Giap Hardware Sdn Bhd (39286-X) ( TGH or the Vendor ) had, on 27 July 2016, entered into a Sale and Purchase Agreement ("SPA" or the Agreement ) with Tan Chong Ekspres Auto Servis Sdn Bhd (168783-A) ( Tan Chong Ekspres or the Purchaser ) to dispose of all the piece of leasehold land held under issue document of Title HS(D) No. 167366 PT-, Mukim Damansara, Daerah Petaling, Negeri Selangor Darul Ehsan ( Land ) together with a single storey detached warehouse and a double storey office building ( Building ) erected on the Land bearing postal address No. 63, Jalan Sesiku 15/2, Seksyen 15, 40200 Shah Alam, Selangor Darul Ehsan (collectively be referred to as the Shah Alam Property ) to Tan Chong Ekspres for a total disposal price of Ringgit Malaysia Fifteen Million and Five Hundred Thousand (RM15,500,000) only ( Disposal Price ) subject to the terms and conditions as stipulated in the SPA ( the Proposed Disposal ). 2. BACKGROUND INFORMATION 2.1 Information on TatGiap TatGiap was incorporated in Malaysia on 3 May 2006 under the Companies Act, 1965 (the Act ) as a private limited company under the name of Tatt Giap Group Sdn Bhd and was converted into a public limited company on 8 May 2006 under its present name. The principal activity of the Company is investment holding. The present authorised share capital of TatGiap is RM80,000,000 comprising 160,000,000 ordinary shares of RM0.50 each ( OS ) of which 155,103,402 OS were issued and fully paidup. The Directors of TatGiap are Dato Siah Kok Poay, Mr Siah Lee Beng, Ms Tan Lu Eng, Mr Loh Eng Wee, Mr Foo Kee Fatt, Mr Siah Chin Soon and Mr Siah Chin Hoo. 2.2 Information on TGH TGH was incorporated in Malaysia on 11 May 1978 as a private limited company under the Act. The present authorised share capital of TGH is RM25,000,000 comprising 25,000,000 OS of which 20,000,000 OS were issued and fully-paid-up. TGH is a wholly-owned subsidiary of the Company. The principal activities of TGH are as importer, wholesaler and retailer of stainless steel and steel products. The Directors of TGH are Dato Siah Kok Poay, Siah Chin Joo and Tan Lu Eng. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 1 of 11
2.3 Information on Tan Chong Ekspres Tan Chong Ekspres was incorporated in Malaysia on 27 February 1988 under the Act as a private limited company. The present authorised share capital of Tan Chong Ekpres is RM25,000,000 comprising 25,000,000 OS of which 23,500,000 OS were issued and fully paidup. Tan Chong Ekspres is a wholly-owned subsidiary of Tan Chong Motor Holdings Berhad. Tan Chong Ekpres is principally involved in automotive workshop services. The Directors of Tan Chong Ekspres are Dato Yew Hock Tat, Dato Dr Ang Bon Beng, Cheng Mun Kean, Loke Kwong Cheong and Ng Koon Wah. 2.4 Information on the Shah Alam Property The Shah Alam Property refers to all the piece of leasehold land held under issue document of Title HS(D) No. 167366 PT-, Mukim Damansara, Daerah Petaling, Negeri Selangor Darul Ehsan (the Land ) together with a single storey detached warehouse and a double storey office building erected on the Land bearing postal address No. 63, Jalan Sesiku 15/2, Seksyen 15, 40200 Shah Alam, Selangor Darul Ehsan (the Building ). Details of the Land and the Building are as tabulated: Item Description Land Title No. HS(D) No. 167366 Lot/PT No. Tenure of Land Town Area/Mukim Daerah State Category of Land Use Area of Land (approximate) Gross floor area (approximate) Lot 73 (as identified in the Certified Plan No. PA-10-057867 prepared by the Jabatan Ukur dan Pemetaaan Selangor Darul Ehsan Leasehold interest for 99 years expiring on 24 September 2066 with an unexpired term of about 50 years as at the date of the valuation on 30 March 2016 Mukim Damansara Petaling Selangor Darul Ehsan Perusahaan 8,071 square metres (sq m) or 86,876 square feet (sq ft) 4,160.07 sq m or 44,780 sq ft with details as tabulated: Types of building sq m sq ft Single storey warehouse 2,591.91 27,900 A double-storey office annexed 735.77 7,920 Double storey office building 802.66 8,640 Guard house 4.65 50 Pump house 25.08 270 TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 2 of 11
Item Description of Building Age of Building (approximate) Description A single storey warehouse with a double-storey office annexed, a double storey office building, a guard house and a pump house The age of the various buildings is as tabulated: Types of building Age (years) Single storey warehouse 41 A double-storey office annexed 43 Double storey office building 42 Restriction in interest - Express Condition Registered Proprietor Encumbrances Other Endorsement(s) Perusahaan TGH The Vendor has created two (2) charges in favour of Malayan Banking Berhad ( Maybank ) at Regional Corporate Banking- Penang, Suite 9-03, 9 th Floor, Plaza MWE, No. 8, Lebuh Farquar, 10200 Pulau Pinang under Presentation No. 16205/2012 and 16206/2012 respectively Nil The Shah Alam Property is presently tenanted to the Purchaser vide a Tenancy Agreement commencing 3 March 2016 through 31 March 2019. The Shah Alam Property shall be disposed on as is where is basis free from all encumbrances and caveats (save and except the caveat lodged by the Purchaser) with legal possession subject to all restrictions-in-interest and conditions and upon the terms and conditions contained in the Agreement. The net book value of the Shah Alam Property was RM12,233,251 based on the audited financial statements of TGH as at financial year ended 31 December 2014. The Shah Alam Property was valued by an independent firm of registered valuers, PA International Property Consultants (KL) Sdn Bhd ( Valuer ), on 30 March 2016 with a Market Value of RM15,000,000.00 which was arrived at following an assessment based on cost method. In the cost approach, the value of the land is added to the replacement depreciated cost of the buildings and other site improvements. The depreciated replacement cost of the buildings is derived from estimation of reproduction cost of similar new buildings based on current market prices for materials, labour and present construction techniques and deducting therefrom the accrued depreciation due to use and disrepair, age and obsolescence through technology and market changes. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 3 of 11
A valuation report, in compliance with Securities Commission s Asset Valuation Guidelines, will be finalised for submission to Bursa Malaysia Securities Berhad ( Bursa Securities ) in due course pursuant to Paragraph 10.04 of the Main Market Listing Requirements ( MMLR ) of Bursa Securities. 3. CONSIDERATION 3.1 Basis on arriving at the Disposal Price The Disposal Price was arrived at on a willing buyer and willing seller basis after having considered the following: (a) (b) 3.2 Manner of Payment Market Value of the Shah Alam Property of RM15,000,000 as assessed by the Valuer; and Comparison of the Shah Alam Property with transactions of vacant industrial land and detached factories within same scheme in the surrounding area. The characteristics, merits, and demerits of these properties are noted and appropriate adjustments thereof are then made to arrive at the market price of the Shah Alam Property. The Disposal Price is also referred to as Purchase Price particularly under this sub-section and item 4 below and shall be settled by the Purchaser in the following manner: No. Description Amount (RM) 1. Prior to the execution of the Agreement, the Purchaser has paid to the Vendor the earnest deposit, the receipt of which the Vendor acknowledged 2. Simultaneously with the execution of the Agreement, the Purchaser will pay the Vendor the balance deposit equivalent to 3% of the Disposal Price 3. The balance Disposal Price ( Balance Disposal Price ) payable on Completion Date 310,000 465,000 14,725,000 Total Disposal Price 15,500,000 The Completion Date shall be the date of full payment of the Balance Disposal Price together with interest (if any) and the Good Services Tax ( GST ) amount to the Vendor s Solicitors in accordance with Clause 3.2 in the Agreement on or before the last day of the ninety (90) days from the date of the Agreement ( Completion Period ) or the last day of the Extended Completion Period as defined below (if applicable) and within which the Disposal Price, the GST amount and interest, if applicable, must be paid subject to Clauses 3.6.1, 3.7.1 and 10.1 below. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 4 of 11
Extended Completion Date is a period of thirty (30) days calculated from the expiry of the Completion Period, or such other extended period as may be mutually agreed between the parties of the Agreement in writing. 4. SALIENT TERMS OF THE SPA 4.1 The salient terms of the SPA, as extracted from the SPA, are as set out below. All definitions in this section shall have the same meaning as in the SPA: 3.2. Payment of the Balance Purchase Price 3.2.1. The Balance Purchase Price and Interest (if applicable) must be paid by the Purchaser to the Vendor s Solicitors as stakeholders not later than the Last Day in exchange for the Said Documents whereupon the Purchaser will be deemed to have discharged in full the Purchaser s obligations to pay the Balance Purchase Price to the Vendor. 3.2.2. Payment of the Balance Purchase Price by bank draft or cashier s order will be deemed to have been made upon receipt of the same by the Vendor s Solicitors. Out of the Balance Purchase Price, the Purchaser shall pay the redemption amount due to the Chargee as per Clause 3.4.3 in this Agreement on behalf of the Vendor. 3.2.3. In the event the Purchaser fails to pay the Balance Purchase Price upon expiry of the Completion Period, the Extended Completion Period will be automatically invoked PROVIDED ALWAYS that the Balance Purchase Price and the Interest must be paid on or before the Last Day. 3.2.4. Within five (5) Working Days from the payment of the Balance Purchase Price, the Tenancy Agreement shall automatically terminate and the Vendor shall return all deposits paid therein to the Purchaser less any amounts due from the Purchaser under it. 3.3. Application of the Balance Purchase Price The Parties expressly agree and the Vendor s Solicitors are expressly authorised by the Parties to utilise and deal with the Balance Purchase Price upon receipt of the same in the following manner and priority:- 3.3.1. FIRSTLY, subject to Clause 3.7, to settle for and on behalf of the Vendor all sums payable for the purposes of discharging the Charge and Encumbrance (if any) over the Property PROVIDED THAT if the Purchase Price is insufficient to secure a full discharge of such Charge or Encumbrance the Vendor shall furnish within fourteen (14) Working Days upon receipt of request from the Purchaser s Solicitors forthwith such additional sum as is necessary to secure the full discharge of such Charge or Encumbrance failing which the Completion Date shall be extended for such number of days delayed in excess of the stipulated fourteen (14) Working Days until full payment thereof free of interest. 3.3.2. SECONDLY, towards payment of all fees, charges, expenses and other payments, if any, due and payable by the Vendor by virtue of this Agreement; and TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 5 of 11
3.3.3 LASTLY, and subject to Clause 3.4, to release the remaining balance to the Vendor five (5) Working Days after the presentation of the discharge of the Charge and Instrument of Transfer with the original issued document of title to the Property at the relevant Land Office or fourteen (14) days after the delivery by the Vendor s Solicitors and the due receipt by the Purchaser s Solicitors of the duly and properly executed discharge of the Charge with the original issued copy of the title and any other relevant documents to the Property, as the case may be, whichever is the earlier. 3.4. Execution and Delivery of Documents 3.4.1. Simultaneously upon the execution of this Agreement, the Vendor will as soon as practicable after the execution of this Agreement but in any event not later than seven (7) days from the date hereof:- (a) (b) deposit with the Vendor s Solicitors as stakeholders, copies of the quit rent and assessment receipts for such payments made in respect of the Property for the current year or period; execute and deposit with the Purchaser s Solicitors as stakeholders, valid and registrable Instruments of Transfer in respect of the Property in favour of the Purchaser to be held as stakeholders duly completed and executed. 3.4.2. The Vendor will procure and immediately forward a copy of the certificate of fitness for occupation, complete building plans, approvals for renovations, permits and licences given pertaining to the Property to the Vendor s Solicitors to be held as stakeholders prior to the Completion Date and be delivered to the Purchaser s Solicitors upon Completion Date. 3.4.3. The Vendor will within fourteen (14) Working Days from the date of this Agreement, procure and deliver a letter of redemption from the Chargee of the Property showing the amount due to the Chargee under the Charge upon the Chargee s usual terms and conditions to the Purchaser s Solicitors. 3.4.4. Upon the receipt of the Balance Purchase Price by the Chargee, the Vendor s Solicitors shall within five (5) Working Days, after the receipt of the original issued document of title of the Property, the duplicate copy of the Charge and the duly and properly executed Discharge of Charge from the Chargee deliver or cause to be delivered the original issue document of title of the Property, the duplicate copy of the Charge, original stamped Discharge of Charge, the Statutory Declaration (in such format as provided by the Land Office) declaring that the Vendor has acquired the Property before 15/4/2014 OR for more than 3 years, whichever is applicable together with the current year quit rent and assessment receipts to the Purchaser s Solicitors. 3.4.5. Upon the receipt of the documents stated in Clause 3.4.4 of this Agreement, the Purchaser s Solicitors must within five (5) Working Days present such documents at the relevant land office for registration and to furnish a copy of the presentation receipt to the Vendor s Solicitors immediately. 3.6 Delivery of Legal Possession 3.6.1. The legal possession of the Property shall be deemed to be delivered to the Purchaser within five (5) Working Days from the date of the settlement of the Balance Purchase Price, the late payment Interest and the GST, if any, on Completion Date. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 6 of 11
3.6.2. The Vendor and Purchaser will conduct a joint inspection of the Property prior to the delivery of legal possession of the Property to the Purchaser. 3.7 Removal of Encumbrance 3.7.1. If at any time during the continuance of this Agreement the Property is encumbered in any way whatsoever or subjected to any caveats (other than the caveats lodged by the Purchaser), the Vendor must immediately remove them or procure their removal at its own cost and expense. 3.7.2. The Vendor s Solicitors are expressly and irrevocably authorised by the Vendor to utilise the Balance Purchase Price to remove the said Encumbrance or caveats, as the case may be, for and on behalf of the Vendor. 10.1 Exclusion of Time 10.1.1. It is expressly agreed by the Parties that the period commencing from the date of discovery (and including) of any Encumbrance or caveat on the Property (other than the caveats lodged by the Purchaser) and ending on the day of receipt by the Purchaser s Solicitors a confirmation from the Vendor s Solicitors that such Encumbrance and/or caveat has been removed will not be taken into consideration in the computation of time for the Completion Period or Extended Completion Period, whichever is applicable. 10.1.2. The Parties further agree that where any act (including but not limited to the making available of undertakings, confirmations or consents) required by the Vendor or the Vendor s Solicitors to be performed pursuant to the terms of this Agreement is not performed, then the number of days in excess of those days stipulated in this Agreement (and where it is not expressly stated, then upon the expiry of ten (10) Working Days from the day such act is required to be performed) will not be taken into consideration in the computation of time for the Completion Period or Extended Completion Period, whichever is applicable. 5. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal provides an avenue for TatGiap to unlock and realise the value of the Shah Alam Property and to strengthen the TatGiap Group s financial position. The Disposal Price of RM15,500,000 represents an appreciation in the value of the Shah Alam Property since its acquisition. 6. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL 6.1 Share Capital and Substantial Shareholders Shareholding The Proposed Disposal will not have any effect on the issued and paid-up share capital of TatGiap and the substantial shareholders shareholding in TatGiap as no new ordinary shares will be issued pursuant to the Proposed Disposal. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 7 of 11
6.2 Loss and loss per share The Disposal is expected to have no material effect on the net assets of TatGiap Group save for a one-off net loss on disposal of about RM93,705. The said net loss will be recognised upon completion of the Proposed Disposal. The basis of arriving at the loss from the Proposed Disposal and the effect on the loss per share ( LPS ) are as follows: Amount (RM) Disposal Price 15,500,000 less: Carrying value of the Shah Alam Property and related expenditure Estimated provision for income tax / real property gains tax (net of deferred tax) Estimated expenses in relation to the Proposed Disposal 14,940,085 553,620 100,000 Net loss from Proposed Disposal 93,705 Issued share capital LPS from the Disposal Share capital as to-date 155,103,402 0.06 sen 6.3 Net Assets and Gearing The Proposed Disposal is expected to have no material effects on the net assets of TatGiap Group save for a loss on disposal as mentioned above. The Group s finance costs will be reduced due to the utilisation of the proceeds raised from the Proposed Disposal for the repayment of borrowings and the gearing ratio is expected to be further improved accordingly. The proforma effects of the Proposed Disposal on the consolidated net assets and gearing of TatGiap Group based on its audited consolidated financial statements for the financial year ended 31 December 2014 are as set below: Audited as at 31 December 2014 After the Proposed Disposal Share capital 60,988,849 (a) 77,551,702 Reserves (12,464,015) (29,120,573) Total equity attributable to owners of the Company 48,524,834 48,431,129 No. of OS in issue 121,977,698 (a) 155,103,402 Net assets per share (RM) 0.40 0.31 Total borrowings 163,093,514 153,093,514 Gearing ratio (times) 3.36 3.16 TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 8 of 11
Note: (a) (b) Increase in share capital and number of OS in issue following mandatory conversion of irredeemable convertible unsecured loan stocks ( ICULS ) upon its maturity on 3 June 2015 Assuming RM10.0 million from the gross proceeds raised is used for repayment of Redemption Sum to Maybank 7. THE PERCENTAGE RATIO APPLICABLE TO THE TRANSACTION PURSUANT TO PARAGRAPH 10.02(g) The highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the MMLR of Bursa Securities is 31.94%. 8. ORIGINAL COST AND DATE OF INVESTMENT The Shah Alam Property was acquired by TGH on 4 November 2011 at a cost of approximately RM12,200,000 and revalued on 30 March 2016 for RM15,000,000. 9. LIABILITIES TO BE ASSUMED BY THE PURCHASER Save and except for the Purchaser assuming full responsibility for repayment to Maybank of the Redemption Sum of RM10,000,000, there are no other liabilities to be assumed by the Purchaser pursuant to the Proposed Disposal. 10. CASH COMPANY OR PRACTICE NOTE 17 ( PN17 ) COMPANY The Proposed Disposal is not expected to result in the Company becoming a cash company or PN17 company as defined under the MMLR of Bursa Securities. 11. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances and subject to the fulfilment of all conditions precedent as set out in the SPA, the Board expects the Proposed Disposal to be completed by November 2016. The tentative timetable in relation to the Proposed Disposal is as follows: Tentative date October 2016 November 2016 Event Extraordinary General Meeting ( EGM ) Completion of the Proposed Disposal TatGiap has considered a longer time frame to address the legal compliance including removal of encumbrances in relation to the Shah Alam Property as this is at the discretion of parties to which TatGiap has no control. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 9 of 11
12. PROPOSED UTILISATION OF PROCEEDS FROM THE PROPOSED DISPOSAL The proceeds arising from the Proposed Disposal shall be utilised within twelve (12) months from the date of receipt of the full amount of Disposal Price in the following manner:- RM 000 Repayment of bank borrowings 10,000 Working capital of the Group 5,400 Defray estimated expenses in relation to the Proposed Disposal 100 Total estimated proceeds 15,500 13. APPROVALS REQUIRED The Proposed Disposal is subject to the following approvals being obtained: (i) Shareholders of TatGiap at an EGM to be convened; and (ii) Any other relevant authorities/parties, as required. 14. INTEREST OF THE DIRECTORS AND MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM None of the Directors and or major shareholders, persons connected to Directors or persons connected to the major shareholders of the Company and of the Group has any interest, direct or indirect, in the Proposed Disposal. 15. STATEMENT BY THE BOARD OF DIRECTORS Premised upon the rationale as described under item 5 above, the Board of Directors are of the opinion that the Proposed Disposal is established under normal commercial terms and is in the best interest of the Group. 16. RISK FACTORS There are no foreseeable risk factors involved in the Proposed Disposal save as below and the Proposed Disposal is not expected to change the risk profile of TatGiap Group. 16.1 Failure and / or Delay in the Approval from the Authorities and / or Parties The completion of the Proposed Disposal is conditional upon, inter-alia, the obligations and covenants of the SPA being satisfied and/or varied as the case maybe. There can be no assurance that the Proposed Disposal will not be exposed to risks such as the inability to fulfil the obligations and conditions. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 10 of 11
If any of the conditions precedent of the SPA is not fulfilled or not waived by the respective parties, including the failure to secure the approval from the shareholders of the Company within the period of time set out in the SPA, the Proposed Disposal may be delayed or terminated. Nevertheless, the management shall use its best endeavours to ensure every effort is made to satisfy the conditions precedent amongst others, to obtain the approval from the shareholders of the Company for the Proposed Disposal in a timely manner. 16.2 Contractual Risk The Group may be subjected to certain contractual risks such as specific performance or payment of liquidated damages as a result of non-fulfilment of its obligations under the SPA. Nevertheless, the Group will endeavour to ensure full compliance in relation to its part of the obligations under the SPA. 17. DOCUMENTS FOR INSPECTION The Agreement and Valuation Report will be made available for inspection at the Registered Office of the Company at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang during normal working hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 28 July 2016. TGG-BursaAnn-160727-Disp Shah Alam-v7 Page 11 of 11