IVORY PROPERTIES GROUP BERHAD ( M)

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1 Description : PROPOSED JOINT VENTURE BETWEEN IVORY VILLAS SDN BHD AND ASIA GREEN DEVELOPMENT SDN BHD TO DEVELOP ALL THOSE PIECES OF LANDS AND HEREDITAMENTS KNOWN AS LOT NOS. 4685, 4686, 4687, 4688, 4689, 163, 164, 165, 166 AND 167 HELD UNDER GERAN MUKIM NO. GM 1767,494, 495, 496, 497, 467, 468, 900, 208 AND 207 RESPECTIVELY, ALL SITUATED AT BATU UBAN, MUKIM 13, DAERAH TIMOR LAUT, PULAU PINANG ( PROPOSED JV ) 1. INTRODUCTION 1.1 The Board of Directors of Ivory Properties Group Berhad (hereinafter referred to as "Ivory") wishes to announce that Ivory Villas Sdn Bhd (Company No V) (hereinafter referred to as IVSB or Developer ), a wholly owned subsidiary, had on 17 February 2017, entered into a Joint Venture Agreement (hereinafter referred to as "JVA" or Agreement ) with Asia Green Development Sdn Bhd (Company No X) (hereinafter referred to as AGDSB or Landowner ), for the proposed development of the Land as described in Section 2.4 below. 2. DETAILS OF THE PROPOSED JV 2.1 Information on the JVA Under the JVA, AGDSB has agreed to provide the said Land to IVSB to enable IVSB to undertake in such phases or stages as IVSB deems fit, the overall development, construction and completion thereof on the said Land into a development scheme (hereinafter referred to as the Project ) in accordance with the plans to be drawn up by IVSB at IVSB s sole discretion and as may be approved by the appropriate authorities subject to such amendments or variations as may be required by the appropriate authorities and/or deemed necessary or expedient by the consultants and/or IVSB and includes every stage and/or phase of the Project and the entire project management including but not limited to sales, finance and administration of the Project subject to the terms and conditions contained in the JVA. AGDSB appoints IVSB as developer and allows IVSB at its sole cost and expense to carry out and complete the Project. AGDSB has agreed to appoint IVSB and its officers as AGDSB s Attorney to facilitate the performance of certain of AGDSB s obligations under the JVA. The JVA is subject to and conditional upon IVSB obtaining the written approval of the Chargee for IVSB to take over or restructure the Existing Banking Facilities from the Landowner or obtaining banking facilities from a licensed financial institution to refinance the Existing Banking Facilities within five (5) months from the date of the JVA or such extension as may be mutually agreed by IVSB and the Landowner. Ivory-A1703-BatuUban-F Page 1 of 7

2 2.2 Information on IVSB IVSB is a company incorporated in Malaysia under the Companies Act 2016 ( Act ) and having its registered office at 0-26-A1, Gurney Tower Office, 18, Persiaran Gurney, Penang and its place of business at Ivory Penang Times Square, , Jalan Dato' Keramat, George Town, Penang. A wholly owned subsidiary of Ivory, IVSB is involved in property development. IVSB is capitalised at RM1,530,000 represented by 1,530,000 ordinary shares. The Directors of IVSB are Dato Low Eng Hock, Dato Ooi Chin Loo and Mr Goh Chin Heng. 2.3 Information on AGDSB AGDSB is a company incorporated in Malaysia under the Companies Act 1965 and having its registered address at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, Seberang Jaya, Pulau Pinang and its business address at 36A, Jalan Sultan Ahmad Shah, George Town, Penang. AGDSB is principally involved in property development. The issued share capital of AGDSB is RM2,000,000 divided into 2,000,000 ordinary shares. The Directors and equity holders of AGDSB are: Name Designation No. of OS % of holding Tan Boon Huat Director 600, Tan Kin Nai Director - - Tan Li Ting Director - - Tan Li Mei Director - - Asia Plywood Company Sdn Bhd Equity holder 799, Tuah Sekata Development Sdn Bhd Equity holder 600, Total 2,000, Information on the Land AGDSB is the registered proprietor and beneficial owner of Lot Nos. 4685, 4686, 4687, 4688, 4689, 163, 164, 165, 166 and 167 held under Geran Mukim No. GM 1767,494, 495, 496, 497, 467, 468, 900, 208 and 207 respectively, all situated at Batu Uban, Mukim 13, Daerah Timur Laut, Pulau Pinang (hereinafter referred to as Land ). The said Land is currently charged to OCBC Bank (Malaysia) Berhad ( W) of 47, 49, 51, 53, Jalan Perniagaan Gemilang 1, Pusat Perniagaan Gemilang, Bukit Mertajam, Pulau Pinang (hereinafter referred to as the Chargee ) under Charge Presentation No: 0704SC (hereinafter referred to as the Charge ) for banking facilities ( Existing Banking Facilities ) granted by the Chargee to AGDSB. Ivory-A1703-BatuUban-F Page 2 of 7

3 2.5 Details of the proposed development IVSB agrees and confirms that IVSB shall construct the parcels or units in the Project and complete the Project in accordance with terms and conditions contained in the JVA and the plans to be drawn up by IVSB as may be approved by the government, semigovernment, quasi-government, statutory or public authority, agency, body, department or organisation (including a ministry or minister or other public official or statutory person) which has the jurisdiction over, or the right, power and authority, to control, administer, determine or otherwise decide on such matter or issue relating to the Project (hereinafter referred to as the Appropriate Authorities ) subject to such amendments or variations as may be required by the Appropriate Authorities and/or deemed necessary or expedient by the Consultants. 2.6 Salient Terms and Conditions of the JVA The salient terms and conditions of the JVA as extracted from the JVA are as follows: 6. ENTITLEMENT OF THE PARTIES 6.1 The Company shall be entitled to twenty five per cent (25%) of the Gross Development Value of the Project less the total amount owing by the Company to the Chargee on the Existing Banking Facilities as at the Unconditional Date ( Redemption Sum ) as evidenced by the monthly statement of the Chargee to the Company for the month immediately preceding the Unconditional Date or the sum to be paid to the Chargee to redeem the Charge, as the case may be ( Redemption Bank Statement ). In the event the Company has paid any instalment interests or any other sum towards repayment of the Existing Banking Facilities since the Redemption Bank Statement and/or are not reflected in the Redemption Bank Statement the amount of such instalment(s) interests or other sum shall promptly be repaid by the Developer to the Company ( Company s Entitlement ). 6.2 The Developer shall pay to the Company the Company s Entitlement in the following manner:- (a) (b) (c) prior to the execution of this Agreement, the Developer has paid to the Company the sum of Ringgit Malaysia One Million Nine Hundred and Forty Thousand (RM1,940,000.00) as earnest deposit and part payment of the Company s Entitlement ( Earnest Deposit ), the receipt of which the Company hereby acknowledge; upon execution of this Agreement, the Developer shall pay to the Company Ringgit Malaysia Three Million and Sixty Thousand (RM3,060,000.00) ( the Earnest Deposit and the said sum of RM3,060, are collectively referred to as the Deposit ); and the remaining of the Company s Entitlement ( Balance Company s Entitlement ) shall be payable by the Developer to the Company before the Project Completion Date in the following manner:-. Ivory-A1703-BatuUban-F Page 3 of 7

4 in respect of the sold Units the Developer shall pay the Company progressively upon collection of the sale proceeds for the sold Units within 14 days after the closing of each month; and in respect of the unsold units the Company shall have the absolute discretion to either:- (i) (ii) distribute the unsold Units between the Company and the Developer in the ratio of 25:75; or the Developer to absorb all unsold Units whereby the Balance Company s Entitlement shall be calculated based on the prevailing market price and shall be payable to the Company over a period of 6 months after the certificate of completion and compliance is issued for the Units 6.3 Save for the Company s Entitlement under Clause 6.1, the Developer shall be entitled to the entire Project and its proceeds ( Developer s Entitlement ). 9. CONDITION PRECEDENT 9.1 The parties hereto hereby expressly agree that this Agreement is subject to and conditional upon the Developer obtaining the written approval of the Chargee for the Developer to take over or restructure the Existing Banking Facilities from the Company or obtaining banking facilities from a licensed financial institution ( Developer s Financier ) to refinance the Existing Banking Facilities within five (5) months from the date of this Agreement or such extension as may be mutually agreed by the parties ( Cut-Off Date ). 9.2 The Condition Precedent shall be deemed satisfied or fulfilled upon the Developer delivering to the Company the complete letter of offer from the Chargee or the Developer s Financier and the Company confirms in writing to the Developer that it agrees to the terms and conditions in the said letter of offer. 3. RATIONALE FOR THE PROPOSED JV The Proposed JV is in line with the Group s strategy to seek for potential land banks to enhance its current business activities. 4. SOURCES OF FUNDING FOR THE PROPOSED JV IVSB s participation in the Proposed JV would be funded through internally generated funds or bank borrowings. The exact manner in which the funding will be satisfied would vary depending on several factors, including but not limited to the use of its internally-generated funds, the gearing level, interest costs, as well as internal cash requirements of Ivory Group. Ivory-A1703-BatuUban-F Page 4 of 7

5 5. FINANCIAL EFFECTS OF THE PROPOSED JV 5.1 Share Capital and Substantial Shareholders Shareholding The Proposed JV will not have any effect on the issued and paid-up share capital of Ivory as well as the shareholdings of its substantial shareholders as there is no issuance of new shares by Ivory. 5.2 Earnings and earnings per share The Proposed JV is not expected to have any effect on the earnings of the Ivory Group for the financial year ending 31 March Barring unforeseen circumstances, the Board believes the Development is expected to contribute positively to the earnings of the Ivory Group in the future. 5.3 Net Assets ( NA ) and Gearing The Proposed JV is not expected to have any material impact on the Group s net assets for the financial year ending 31 March The gearing of Ivory might be impacted by any successful arrangement of financing for the Proposed JV. 6. RISK FACTORS The key risks factors pertaining to the Proposed JV are set out below: 6.1 Transaction Risk The completion of the Proposed JV is conditional upon, inter-alia, the salient terms and conditions of the JVA being satisfied and/or varied as the case maybe. There can be no assurance that the Proposed JV will not be exposed to risks such as the inability to fulfil the salient terms and conditions and/or inability to obtain the approvals from the relevant authorities, if any. However, Ivory will take and continue to take all reasonable steps to ensure completion of the Proposed JV. 6.2 Delays in Commencement and Completion The timely completion of property development projects pursuant to the Development is dependent on many external factors, including inter-alia obtaining the necessary approvals from land offices, planning authorities and local councils as scheduled, securing construction materials in adequate amounts and the satisfactory performance by our appointed building contractors. Ivory-A1703-BatuUban-F Page 5 of 7

6 It has consistently been Ivory Group s commitment to closely monitor the progress of development projects and endeavour to promptly rectify any setback in order to ensure the Group s performance is not adversely affected. However, there can be no assurance that there will not be any delays in the completion of a project which could adversely affect Ivory Group s business, financial condition, results of operations and prospects. 6.3 Business risks The future earnings of Ivory will be dependent on various factors such as the location of the property, types of the development, rising costs of material and overheads, quality of building contractors as well as holding costs for completed properties. Ivory will endeavour to minimise these risks by hiring strong and competent workforce, implementing prudent business strategies and continuous review of its business performance and ways to improve its efficiency. 7. LIABILITIES TO BE ASSUMED Other than the taking over or the restructuring of the Existing Banking Facilities (subject to the approval of the Chargee), Ivory and IVSB will not assume any liabilities, including contingent liabilities and guarantees pursuant to the Proposed JV. 8. ESTIMATED TIME FRAME FOR COMPLETION IVSB shall complete the construction of the units on or before the Project completion date, which is within thirty six (36) months from the date of commencement of work order with the Certificate of Completion and Compliance issued by the Project architect. 9. APPROVALS REQUIRED The Proposed JV is not subject to the approval of the shareholders of Ivory. All other such consents and approvals from relevant authorities shall be obtained in due course. 10. INTEREST OF THE DIRECTORS AND MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM None of the major shareholders and Directors of Ivory and/or persons connected with them have any interest, direct or indirect in the Proposed JV. Ivory-A1703-BatuUban-F Page 6 of 7

7 11. STATEMENT BY THE BOARD After having considered all relevant aspects of the Proposed JV, the Board is of the opinion that the Proposed JV is in the best interest of the Group. 12. DOCUMENTS FOR INSPECTION The JVA 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 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 17 February Ivory-A1703-BatuUban-F Page 7 of 7