BERJAYA LAND BERHAD ( BLAND OR THE COMPANY ) PROPOSED DISPOSAL OF THE BERJAYA (CHINA) GREAT MALL RECREATION CENTRE IN SANHE CITY, HEBEI PROVINCE, PEOPLE S REPUBLIC OF CHINA FOR A CASH CONSIDERATION OF RMB2.08 BILLION ( PROPOSED DISPOSAL ) 1. INTRODUCTION The Board of Directors of BLand wishes to announce that Berjaya (China) Great Mall Co. Ltd ( GMOC ), a 51%-owned subsidiary of Berjaya Leisure (Cayman) Limited ( BL-Cayman ), which in turn is a wholly-owned subsidiary of BLand had on 16 December 2015 entered into a Construction Project Transfer Agreement ( Contract ) with Beijing SkyOcean International Holdings Limited ( Beijing SkyOcean or the Purchaser ), for the proposed disposal of the Berjaya (China) Great Mall Recreation Centre which is under construction and located in Sanhe City, Hebei Province, the People s Republic of China ( Great Mall Project ) for a cash consideration of RMB2.08 billion (equivalent to approximately RM1.39 billion). Unless otherwise stated, all RM figures in this Announcement were translated based on the exchange rate of RMB1:RM0.6679 as at 14 December 2015. (Source: Bank Negara Malaysia) 2. DETAILS OF THE PROPOSED DISPOSAL 2.1 Brief Information on GMOC GMOC was incorporated in the People s Republic of China ( PRC ) on 28 July 2004 as a limited liability company. GMOC is principally involved in the Great Mall Project comprising the development and construction of a hotel, serviced apartments, restaurants, recreational centres and commercial shops. Currently, GMOC has a registered capital of RMB1,269.12 million. GMOC is 51% owned by BL-Cayman whilst the remaining 49% stake is owned by Berjaya Times Square (Cayman) Limited ( BTS-Cayman ), a company owned by Tan Sri Dato Seri Vincent Tan Chee Yioun ( TSVT ) and his son, Mr. Rayvin Tan Yeong Sheik ( RTYS ). The current directors of GMOC are Mr. Pua Lean Soon, Dato Ng Sooi Lin, Mr. Tan Thiam Chai, Mr. Lim Meng Kwong and Ms. Vivienne Cheng Chi Fan. At present, GMOC does not have any subsidiary and associated company. GMOC will cease operations upon the completion of the Proposed Disposal. 2.2 Brief Information of the Great Mall Project The Great Mall Project which spans across about 306,260 square metres of land area with about 1.21 million square metres of gross floor area, is situated in the Yanjiao Economic Development Area, Sanhe, Langfang City of Hebei Province in the PRC. It takes about 45 minutes by road transportation from central Beijing and Beijing Capital International Airport. The land use rights of the Great Mall Project were granted for a term expiring on 25 January 2045 for commercial, entertainment and commercial (car park) uses. 1
The Great Mall Project will be developed over Phases 1, 1E and 2 and will consist of, amongst others, the following:- (i) (ii) (iii) (iv) (v) (vi) (vii) retail outlets; three indoor theme parks; a conference and exhibition centre; a hotel and serviced apartments; office lots; 500 covered car parking spaces; and various entertainment portions including aquarium, theatre, cinema, bowling alley. Phase 1 of the Great Mall Project is currently under construction whilst Phases 1E and 2 are vacant. 2.3 Salient Terms of the Contract The salient terms of the Contract, include inter-alia, the following:- (a) The cash consideration of RMB2.08 billion shall be payable in the currency of renminbi (RMB). (b) The cash consideration is payable in the following manner:- (i) (ii) (iii) Beijing SkyOcean shall upon the execution of the Contract, pay GMOC a deposit of RMB50.00 million (equivalent to approximately RM33.40 million) ( Deposit ); On or before 1 February 2016, a joint bank account ( Escrow Account ) shall be opened with Industrial and Commercial Bank of China ( ICBC ) and RMB1,015.00 million (equivalent to about RM677.92 million) ( Escrow Amount ) shall be remitted into the Escrow Account by Beijing SkyOcean so as to release the mortgage. The Escrow Amount shall be released to GMOC within 5 working days after all conditions precedents in the Contract ( CP ) have been fulfilled ( Completion Date ). Within 13 months after the Completion Date, Beijing SkyOcean shall pay GMOC the balance of the cash consideration of RMB1,015.00 million (equivalent to about RM677.92 million) ( Second Instalment ). (c) The CP to be fulfilled within a period of 6 months (with an extension of another 3 months) are as follows:- (i) (ii) (iii) (iv) GMOC has obtained all the governmental approvals and that all the licenses held by GMOC for the Great Mall Project have been changed to a wholly-owned subsidiary of Beijing SkyOcean; GMOC has terminated all the contracts with third parties in relation to the Great Mall Project, including but not limited to the general contractor contract, the construction contracts and the procurement contracts; The completed portion and the portion under construction of the Great Mall Project shall have passed the acceptance inspection conducted by a supervision company engaged by the Purchaser ( Mall Inspection ), or relevant remedies have been made; and The on-site delivery of the Great Mall Project to Beijing SkyOcean after the Great Mall Project has passed Mall Inspection. 2
(d) SkyOcean Holdings Group Limited ( SkyOcean Holdings ), which holds 100% stake in Beijing SkyOcean, and its major shareholder, namely Mr. Zhou Zheng ( Zhou Zheng ), shall guarantee the performance of the obligations by Beijing SkyOcean pursuant to the Contract. Zhou Zheng together with SkyOcean Holdings, shall also be jointly and severally liable with Beijing SkyOcean for Beijing SkyOcean s obligation to pay the cash consideration under the Contract including the Second Instalment. 2.4 Brief information on Beijing SkyOcean Beijing SkyOcean was incorporated in 2011 in the PRC with limited liability and its principal activity comprises property development. Beijing SkyOcean is a whollyowned subsidiary of SkyOcean Holdings which was incorporated in 2006 in the PRC. The major shareholder of SkyOcean Holdings is Zhou Zheng, who holds 80% equity interest while the remaining 20% equity interest is held by his sister, Ms. Zhou Jin. Zhou Zheng has many years of experience in real estate development, retail and financial investment. He is currently the controlling shareholder and Chairman/Chief Executive Officer of SkyOcean International Holdings Limited, a company listed on the Hong Kong Stock Exchange with 74.32% stake (as at 30 June 2015) and a director of China Minerals Mining Corporation, a company listed on the Toronto Stock Exchange with a 44.22% stake (as at 21 May 2015). 2.5 Cash Consideration The cash consideration will be paid to GMOC in the following manner:- RMB million (i) Paid on signing of the Contract 50.00 (ii) Released from the Escrow Account within 5 working days after Completion Date 1,015.00 (iii) Paid within 13 months after Completion Date 1,015.00 Total cash consideration 2,080.00 2.6 Basis in Arriving at the Cash Consideration The cash consideration for the Proposed Disposal of RMB2.08 billion was arrived at on a willing-buyer willing-seller basis after taking into consideration, inter-alia, the market valuation of the Great Mall Project of RMB2.018 billion as appraised by Messrs Cushman & Wakefield on 28 February 2015 and the carrying amount of the Great Mall Project as at 31 October 2015 of RMB1.75 billion. The cash consideration of RMB2.08 billion represents a premium of 3.07% over the market valuation and a premium of 18.86% over the said carrying amount. 3
2.7 Utilisation of Proceeds The cash consideration of RM2.08 billion (approximately RM1.39 billion) will be receivable by GMOC over a maximum of 24 months from the signing of the Contract as stipulated in Section 2.5 above. It is envisaged that RMB1,112.52 million (approximately RM743.05 million) will be utilized to repay borrowings, creditors, contractors, and to defray taxes on sale of the Great Mall Project and incidental expenses within 12 months from the respective dates of receipt of the cash portion. Subject to authorities approvals, the cash balance of RMB967.48 million (approximately RM646.18 million) is proposed to be distributed to the shareholders of GMOC which BL-Cayman, upon receipt, will utilize such cash for working capital of the BLand Group. 2.8 Liabilities to be assumed pursuant to the Proposed Disposal There are no liabilities to be assumed by the Purchaser pursuant to the Proposed Disposal. 3. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal provides an opportunity for the BLand Group to cash-out its Great Mall Project which is still under construction. 4. RISK FACTORS The key risk factors in relation to the Proposed Disposal, which may not be exhaustive, are as follows:- 4.1 Completion Risk The Proposed Disposal is conditional upon the terms and conditions set out in the Contract. There is no assurance that the Proposed Disposal can be completed within the time timeframe stipulated in the Contract. Nevertheless, GMOC will take all reasonable steps to monitor the status and progress of the Proposed Disposal to enable the completion of the Proposed Disposal within the stipulated period. 4.2 Financial or Legal Risks GMOC may be subject to certain financial or legal risks pursuant to the Contract or any related documents executed in relation to, including termination of contracts with third parties relating to the Great Mall Project. GMOC endeavours to ensure full compliance in relation to fulfilment of their obligations under the Contract. 4.3 Timing Risk The completion of the Proposed Disposal is conditional upon the CP being satisfied within the timeframe stipulated in the Contract. Any delay would have a consequential impact on the timeliness of the completion of the Proposed Disposal and the receipt of cash proceeds by GMOC. Notwithstanding the above and to the extent possible, GMOC will take all reasonable steps to facilitate the timely completion of the Proposed Disposal. 4
5. EFFECTS OF THE PROPOSED DISPOSAL 5.1 Share Capital and Substantial Shareholders Shareholdings The Proposed Disposal does not have any effect on the issued share capital and substantial shareholders shareholdings in BLand as the Proposed Disposal is transacted entirely in cash. 5.2 Net Assets ( NA ) and Gearing The Proposed Disposal will not have any material effect on the NA or gearing of the BLand Group. 5.3 Earnings The BLand Group is expected to record a loss of approximately RMB51.28 million (equivalent to about RM34.25 million) pursuant to the Proposed Disposal. 6. INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS TSVT is a major shareholder of BLand and holds an 80% stake in BTS-Cayman. The remaining 20% stake in BTS-Cayman is held by his son, RTYS. GMOC is 49% owned by BTS-Cayman. None of the Directors or other major shareholders and/or persons connected to them has any interest, direct or indirect, in the Proposed Disposal. 7. APPROVALS REQUIRED FOR THE PROPOSED DISPOSAL The Proposed Disposal is subject to the approvals of the regulatory and/or governmental authorities in the PRC. The Proposed Disposal is not conditional upon any other proposals undertaken or to be undertaken by the BLand Group. Save as disclosed, there will be no other approvals required for the Proposed Disposal. 8. DIRECTORS' STATEMENT The Board of Directors of BLand, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of the BLand Group. 9. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by the end of 2017. 10. PERCENTAGE RATIOS The highest percentage ratio applicable pursuant to Paragraph 10.02(g) of the Listing Requirements based on the audited consolidated financial statements of BLand for the financial year ended 30 April 2015 is approximately 14.39%. 5
11. DOCUMENTS FOR INSPECTION The Contract will be made available for inspection at the Registered Office of BLand at Lot 13-01A, Level 13 (East Wing), Berjaya Times Square, No. 1 Jalan Imbi, 55100 Kuala Lumpur during normal business 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 16 December 2015. 6