Y&G CORPORATION BHD (6403-X) (Incorporated in Malaysia) Subject : OTHERS Y&G CORPORATION BHD ( Y&G ) PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF MAHA HARAPAN SDN BHD (CO. NO. 1099576-T) ( MHSB ) 1) INTRODUCTION The Board of Directors of Y&G ( the Board ) wishes to announce that Y&G has, on 27 July 2015 entered into a Share Sale Agreement ( the SSA ) with four (4) individuals, namely, Ms Ng Yoke Lan (NRIC No. 810123-08-5150), Mr Tan Wah Kok (NRIC No. 650311-10-5171), Dato Yap Jun Jien (NRIC No. 820723-10-5521) and Mr Yap Jun Wei (NRIC No. 840922-10-5899) ( the Vendors ) for the proposed acquisition of the entire issued share capital of MAHA HARAPAN SDN BHD (Co. No. 1099576-T) ( MHSB or the Company ), details of which are as stated in Section 2 below. 2) DETAILS OF THE PROPOSED ACQUISITION 2.1) Details of the Proposed Acquisition On 27 July 2015, Y&G has entered into the SSA with the Vendors to acquire One Hundred Thousand (100,000) ordinary shares of RM1.00 each representing the entire issued share capital of MHSB ( the Sale Shares ) for a total consideration of RM4,680,000 (Ringgit Malaysia: Four Million Six Hundred Eighty Thousand) only ( the Proposed Acquisition ), which will result in MHSB becoming a wholly-owned subsidiary of Y&G. 2.2) Information on MHSB MHSB was incorporated in Malaysia on 30 June 2014 as a private limited company under the Companies Act, 1965 and is currently inactive. The authorised share capital of the Company is RM400,000.00 comprising 400,000 ordinary shares of RM1.00 each, of which RM100,000.00 comprising 100,000 ordinary shares of RM1.00 each have been issued and fully paid-up. MHSB had entered into a Sale and Purchase Agreement dated 6 April 2015 (hereinafter referred to as the SPA ) with Sapphire Plenitude Sdn Bhd ( SPSB ) to acquire all that parcel of leasehold land held under Title No. H.S.(D) 24643, PT 10316, Mukim Rawang, Daerah Gombak, Negeri Selangor, measuring approximately in area of 41.500 acres (16.794 hectares) ( the Land ) subject to terms and conditions stated therein. The SPA has become unconditional on 25 June 2015 upon SPSB s attainment of the approval of the State Authority to the transfer of the Land in favour of the Company via the State Authority s Approval Letter dated 22 June 2015 ( the State Consent ).
2.3) Information on the Land The details of the Land are set out below: Particulars Descriptions Title No,/Lot No. Description : Title No. H.S.(D) 24643, PT 10316, Mukim Rawang, Daerah Gombak, Negeri Selangor Land area : Approximately 41.500 acres (16.794 hectares) Tenure : Leasehold for a term of 99 years, expiring 24 November 2093 Category of land use : Perusahaan Express conditions : Perusahaan Encumbrances : Charged in favour of Sabah Development Bank Berhad, registered on 16 January 2013 & 17 July 2013 Restriction-in-interest : Tanah yang diberi milik ini, tidak boleh dipindah milik, dipajak atau digadai melainkan dengan kebenaran Pihak Berkuasa Negeri Registered owner : Sapphire Plenitude Sdn Bhd Unaudited net book value of the Land as at 30 June 2015 : RM37,270,500 (inclusive of the balance purchase price under the SPA) The Land is currently free from all encumbrances except for the charge in favour of Sabah Development Bank Berhad (Co. No. 34638-W) (hereinafter referred to as the Chargee Bank ) for loan facilities granted by the Chargee Bank to SPSB in which SPSB has an outstanding sum of RM33,205,461.85 due to the Chargee Bank as at 5 March 2015 plus interest accrued thereon until its full settlement (hereinafter referred to as the Outstanding Loan ). The Land is located off Jalan Bandar Tasik Puteri in Rawang, Selangor Darul Ehsan and is currently vacant and overgrown with bushes, wild grass and trees, with immediate neighbourhood comprising agricultural land, development lands, industrial and residential properties. Y&G is proposing to develop the Land primarily into a mixed development ( the Proposed Development ). However, the Proposed Development is still in its preliminary stages and is still subject to the planning and the development approvals from the relevant authorities upon the completion of the Proposed Acquisition. Therefore, it is too preliminary to ascertain the indicative gross development value at this juncture. 2.4) Basis of arriving at the purchase consideration and mode of satisfaction The total consideration of RM4,680,000 ( the Purchase Consideration ) for the Proposed Acquisition was arrived at on a willing buyer-willing seller basis, after taking into consideration the unaudited net assets of MHSB as at 30 June 2015, fair value adjustment of
the Land and deferred tax. The Proposed Acquisition shall be satisfied by cash, which will be funded via internally generated funds arising from the recently completed Proposed Private Placement with Warrants and Proposed Rights Issue with Warrants as announced on 21 November 2014. No valuation was carried out on the Land. 2.5) Details of the Vendors All the Vendors, namely, Ms Ng Yoke Lan, Mr Tan Wah Kok, Dato Yap Jun Jien and Mr Yap Jun Wei, are Malaysian citizens of full age. 2.6) Salient Features of the SSA The salient terms of the SSA are as follows: 2.6.1) Terms of Payment The Purchase Consideration of the Proposed Acquisition shall be paid in the following manner: (a) The deposit of RM468,000 equivalent to Ten percent (10%) of the Purchase Consideration ( the Deposit ) shall be payable to the Vendors upon the execution of the SSA; (b) The balance Purchase Consideration of Ninety percent (90%) or RM4,212,000 shall be payable to Y&G s Solicitors within Three (3) months from the date of the SSA or the Unconditional Date, whichever shall be later ( the Completion Date ); and (c) In the event that Y&G is unable to settle the balance Purchase Consideration within the time as stipulated above, the Vendors agree to grant an extension period of one (1) month to allow Y&G to pay the balance Purchase Consideration Provided That Y&G shall pay interest at the rate of 8% per annum on the said balance Purchase Consideration which shall remain unpaid after the expiry of the stipulated time above. 2.6.2) Conditions Precedent The SSA is conditional upon and subject to the followings:- (a) Y&G being satisfied with the results of its due diligence investigations into the Vendors title to the Sale Shares, the Management Accounts including (but not limited to) the financial, legal, contractual, tax position and prospects of the Company, and the Company s title to its assets and liabilities; (b) The procurement by the Vendors of all necessary approvals and consents from the appropriate authorities as to the disposal, sale and transfer of the Sale Shares from the Vendors to Y&G (if applicable). If any of the above Conditions Precedent is not fulfilled within Three (3) months from the date of the SSA ( the Conditional Period ) or at such later date as the Parties may agree in writing, then Y&G shall at its absolute discretion be entitled to terminate the SSA by notice in writing to the Vendors, whereupon:- (i) The Vendors shall within Fourteen (14) days from the date of such termination notice refund to Y&G the Deposit and all monies paid; and
(ii) Y&G s Solicitors shall concurrently with such refund return the Share Certificates and other documents to the Vendors, thereafter the SSA shall be rendered null and void and of no force and effect and thereafter no party shall have any claim against any other under it save and except for any antecedent breach and the Vendors shall be at liberty to deal with the Sale Shares as it deems fit. The parties undertake to use all reasonable endeavor to ensure the satisfaction of the foregoing Conditions Precedent which concern or require their respective actions. The SSA shall become unconditional on the Unconditional Date. 2.7) Assumption of Liabilities There are no liabilities, including contingent liability and guarantee, to be assumed by Y&G Group arising from the Proposed Acquisition. 3) EFFECTS OF THE PROPOSED ACQUISITION Earnings The Proposed Acquisition is not expected to have any material impact on Y&G Group s earnings for the current financial year ending 31 December 2015. Net Assets The Proposed Acquisition will not have any significant effect on the consolidated net assets of Y&G Group. Gearing The Proposed Acquisition has no impact on the gearing of Y&G Group as the Proposed Acquisition does not involve any bank borrowings. Share Capital and Substantial Shareholders Shareholdings The Proposed Acquisition has no impact on the issued and paid-up share capital of Y&G and the substantial shareholders shareholdings of Y&G as the Proposed Acquisition is to be satisfied in cash and does not involve issuance of new ordinary shares of Y&G. 4) RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition is part of Y&G Group s objective of concentrating on its core businesses of property development by further increasing its land bank size and is expected to contribute positively to Y&G Group s revenue, profit and cash flow from the financial year ending 31 December 2016 onwards. 5) PROSPECTS AND RISK FACTORS The Board envisages that the prospects of the property development of Y&G Group are favourable. The Proposed Acquisition is subject to inherent risks of the property development industry in Malaysia, which is cyclical in nature.
6) ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by the third quarter of the current financial year ending 31 December 2015. 7) APPROVALS REQUIRED Save for the approvals and consents mentioned under Item 2.6.2) above (Conditions Precedent), the Proposed Acquisition is not subject to any other conditions precedent nor the approval of shareholders of Y&G nor any other government authorities approval. 8) DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS AND PERSONS CONNECTED TO DIRECTORS AND SUBSTANTIAL SHAREHOLDERS Save for Dato Yap Jun Jien who is an Executive Director and a major shareholder of Y&G and Mr Yap Jun Wei who is a major shareholder of Y&G in which both having insignificant interests in the Proposed Acquisition by virtue of them being two of the Vendors, none of the directors and/or major shareholders of Y&G and/or persons connected with them have any interests, whether directly or indirectly, in the Proposed Acquisition. 9) STATEMENTS BY DIRECTORS Having considered all aspects of the Proposed Acquisition, the Board is of the opinion that the Proposed Acquisition is in the best interest of Y&G Group. 10) HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02(g) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements is 1.82%, based on the latest audited financial statements of Y&G Group for the financial year ended 31 December 2014. 11) DOCUMENTS FOR INSPECTION The SSA and the SPA are available for inspection at the registered office of Y&G at 2-1, Jalan Sri Hartamas 8, Sri Hartamas, 50480 Kuala Lumpur, Wilayah Persekutuan (KL), 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 27 July 2015.