ACQUISITION OF LAND BY CYCLE & CARRIAGE BINTANG BERHAD ( CCB or Purchaser ) PROPOSED ACQUISITION OF ALL THAT PIECE OF LEASEHOLD LAND TOGETHER WITH A FACTORY BUILDING ERECTED THEREON BY CCB FOR A PURCHASE CONSIDERATION OF RM59,800,000 ONLY 1.0 Introduction The Board of Directors of CCB ( Board ) wishes to announce that CCB has, on 26 January 2017, entered into a conditional sale and purchase agreement ( SPA ) with Kamco Aluminium Sdn Bhd (Company No.: 116345-P) ( Kamco or Vendor ) to acquire all that piece of leasehold land measuring approximately 4,240 square meters and held under PN 38146, Lot 338 Seksyen 92, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur (the Land ) together with a factory building erected thereon bearing the postal address Lot 338, Jalan Sungai Besi, 57100 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur ( Building ) (the Land and the Building shall collectively be referred to as the Property ) for a total cash consideration of RM59,800,000 only, excluding GST, ( Purchase Price ) subject to the terms and conditions as stipulated in the SPA (the Proposed Acquisition ). 2.0 DETAILS OF THE PROPOSED ACQUISITION 2.1 Details of the Property Descriptions of the Property are set out below. Location of Land : PN 38146, Lot 338 Seksyen 92, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur. Size of Land : 4,240 square meters (45,638.98 square feet) Tenure of Land : Leasehold, 60 years with approximately 45 years remaining, expiring on 17 September 2062 Description of Land : Nil Category of Land Use : Industrial Registered Lessee : Kamco Aluminium Sdn Bhd Express Condition : (a) This land shall only be used as an industrial site. (b) The Lessee shall, within 2 years from the date of registration of this title, erect a building of the type and design which is approved by the Mayor of Kuala Lumpur. Restriction in Interest : This land cannot be transferred, leased, pledged or charged without the consent from the Land Executive Committee, Federal Territory of Kuala Lumpur. Description of Building : Single storey detached factory Encumbrances : The Property is presently charged to Public Bank Berhad of No.82, Lebuh Beringin, Off Jalan Berangan, 42000 Port Klang, Selangor vide the Charge presentation no. 39740/2010. 1
2.2 Salient Terms and Conditions of the SPA The salient terms and conditions of the SPA include, amongst others, the following: (a) Upon signing the SPA, CCB has paid RM5,980,000 or 10% of the Purchase Price (the Deposit ) to Adnan Sundra & Low ( Purchaser s Solicitors ) of which RM1,794,000 or 3% of the Purchase Price shall be retained by Purchaser s Solicitors for payment of real property gains tax and the balance RM4,186,000 shall be held by Purchaser s Solicitors as stakeholders, to be released to the Vendor on the Unconditional Date (as defined below) or to be refunded to CCB if the SPA is terminated due to non-fulfilment of the Conditions Precedents (as defined below) contained in the SPA. (b) CCB shall pay the balance Purchase Price of RM53,820,000 ( Balance Purchase Price ) in the following manner: (i) for the redemption of the Property and discharge of existing charge; and (ii) the remainder of the Balance Purchase Price to the Vendor s Solicitors as stakeholders, within 3 months from the date all Conditions Precedent under the SPA are fulfilled and/or waived ( Unconditional Date ), with an automatic extension of 1 month during which a late payment interest of 8% per annum is payable on a daily basis. (c) The SPA is conditional upon fulfilment of the following conditions precedent ( Conditions Precedent ) within 6 months from the date of the SPA or such longer period as the parties may agree (the Compliance Period ): (i) the Vendor having obtained: (aa) the approval of the State of Wilayah Persekutuan Kuala Lumpur for the consent to transfer the Property to Purchaser; and (bb) a letter of confirmation or approval from the relevant authority namely the Municipal Council of Kuala Lumpur or Dewan Bandaraya Kuala Lumpur addressed to the Vendor that an automobile centre which has a showroom, provides service and sales of spare parts or any other services as CCB deems fit ( 3-S Centre ) can be erected by CCB on the Property subject to compliance with all applicable laws and regulations; (ii) CCB having obtained: (aa) the approval of the Ministry of Domestic Trade, Co-operatives and Consumerism, Malaysia for the development and operation of a 3-S Centre on the Property by the Purchaser; and (bb) the approval of the State of Wilayah Persekutuan for consent to purchase the Property pursuant to Section 433B National Land Code 1965 consent (if applicable). (d) In the event of the Conditions Precedent not being satisfied and not waived by CCB on or before the expiry of the Compliance Period and the SPA is terminated, the Purchaser s Solicitors shall refund the Deposit and all other monies paid to CCB. (e) It is a term of the SPA that the Vendor will enter into a tenancy agreement with CCB to rent the Property for up to 18 months from the Completion Date at market rent (the TA ). 2
(f) It is a term of the SPA that CCB will proceed to apply for planning approvals to erect a 3-S Centre on the Property. The Vendor acknowledges that if a condition is imposed by the relevant authority as a condition which must be complied with in order for CCB to obtain the development order, the Vendor shall fully comply with those conditions which may relate to payment of summons, fines or other charges due to use and occupation of the Property by the Vendor prior to the date of vacant possession or which requires the demolition of any illegal structures erected on the Property prior to the date of vacant possession. 2.3 Basis and Justification of the Purchase Price The Purchase Price was arrived at based on a willing-buyer willing-seller basis, calculated at the rate of RM1,100 per square foot, after taking into consideration the estimated market value of the properties surrounding the Property, the suitability and strategic location of the Property as well as the potential growth and re-development of the whole area with the launch of the Bandar Malaysia project opposite the Property. CCB is unable to disclose the net book value of the Property as it is not privy to such information. 2.4 Source of Funding The Purchase Price for the Proposed Acquisition will be satisfied entirely in cash, which will be financed through internally-generated funds and/or bank borrowings. The exact mix of the internally-generated funds and/or bank borrowings will be decided by CCB at a later stage taking into consideration of interest costs of the bank borrowings. 2.5 Liabilities to be Assumed CCB will not be assuming any liability, including contingent liabilities and guarantees with regards to the Proposed Acquisition. 2.6 Information on CCB CCB is a public company, listed on Bursa Malaysia, incorporated in Malaysia under the Companies Act, 1965 ( Act ). CCB is principally involved in the retailing of motor vehicles, sale of spare parts and servicing of vehicles. As at 26 January 2017, being the latest practicable date of this announcement ( LPD ), CCB has an authorised share capital of RM200,000,000 comprising 200,000,000 ordinary shares of RM1.00 each, of which RM100,744,500 comprising 100,744,500 ordinary shares of RM1.00 each have been issued and fully paid-up. Further information on CCB is available on Bursa Malaysia Securities Berhad s website at: www.bursamalaysia.com. 2.7 Information on Kamco Kamco was incorporated in Malaysia under the Act on 12 March 1984 as a private limited company under the name of Chankamco Aluminium Sdn. Bhd. It assumed its present name on 16 September 1997. Kamco is principally involved in manufacturing and trading of aluminium products. As at the LPD, Kamco has an authorised share capital of RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each, of which RM500,000 comprising 500,000 ordinary shares of RM1.00 each have been issued and fully paid-up. 3
3. RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition is to establish a 3-S Centre in Sungai Besi which forms a strategic part of CCB s on-going network expansion plans across Malaysia. The location is currently an important location for various motor brands and is expected to be further enhanced with the development of the Bandar Malaysia project opposite the Property. The Property is a prominent double-frontage site located along Jalan Sungai Besi with excellent access and visibility from the main highway. 4. RISK FACTORS IN RELATION TO THE PROPOSED ACQUISITION The completion of the Proposed Acquisition is conditional upon the fulfilment of all necessary conditions as set out in Section 2.2(c) above. In the event that such approvals and/or conditions are not obtained and/or satisfied, the Proposed Acquisition will not be completed and CCB will not be able to meet its objective as stated in Section 3 of this announcement. However, CCB will take reasonable steps to ensure the fulfilment of the Conditions Precedent in the SPA to facilitate the completion of the Proposed Acquisition. The Purchase Price is expected to be financed via external bank borrowings to be procured by CCB and CCB may incur an interest expense on the bank borrowings. In view that the interest charged on bank borrowings is dependent on prevailing interest rates, future fluctuation of interest rates could have an effect on the CCB s cash flows and profitability. 5. EFFECTS OF THE PROPOSED ACQUISITION 5.1 Issued and Paid-Up Share Capital and Substantial Shareholders Shareholdings The Proposed Acquisition will not have any effect on the issued and paid-up share capital and the substantial shareholders shareholdings of CCB as the Purchase Price is to be satisfied entirely by cash and does not involve any issuance of CCB shares. 5.2 Net Assets ( NA ) and Gearing The Proposed Acquisition is not expected to have a significant impact on the consolidated NA of the CCB and NA per share of CCB. As the Purchase Price is to be satisfied by internally-generated funds and/or bank borrowings and the exact manner in which the Purchase Price will be satisfied has not been finalised hence the effect of the Proposed Acquisition on the gearing of CCB cannot be ascertained at this juncture. 5.3 Earnings and Earnings Per Share The Proposed Acquisition is expected to result in rental savings and capital appreciation on the Property in the medium term. Overall, the Proposed Acquisition is not expected to have a significant impact on the Earnings and Earnings Per Share of CCB. 6. APPROVALS REQUIRED Pursuant to Chapter 10, Parts B and D, paragraphs 10.02(g) and 10.06 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Proposed Acquisition is not subject to the approval of the shareholders of CCB as it falls below 25% of the percentage ratios. 4
7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM None of the Directors, major shareholders of CCB and/or persons connected to them have any interest, direct or indirect, in the Proposed Acquisition. 8. DIRECTORS STATEMENT Having considered all aspects of the Proposed Acquisition, the Board is of the opinion that the Proposed Acquisition is in the best interest of the CCB. 9. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 23%. 10. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, subject to the fulfilment of all conditions as set out in the SPA and the required approvals (in principle) being obtained, the Proposed Acquisition is expected to be completed by the final quarter of 2017. 11. DOCUMENTS AVAILABLE FOR INSPECTION The SPA and TA will be made available for inspection at the registered office of CCB at Unit 30-01, Level 30 Tower A, Vertical Business Suite Avenue 3, Bangsar South No 8 Jalan Kerinchi, 59200 Kuala Lumpur, Wilayah Persekutuan 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 26 January 2017. 5