KENCANA AGRI LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number: E) (the Company )

Transcription

1 KENCANA AGRI LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number: E) (the Company ) PROPOSED INVESTMENT BY ENCO HOLDINGS SENDIRIAN BERHAD IN KENCANA BIO ENERGY PTE LTD, A SUBSIDIARY OF KENCANA AGRI LIMITED 1. INTRODUCTION The Board of Directors (the Board ) of the Company wishes to announce that the Company and its wholly-owned subsidiary, Kencana Bio Energy Pte Ltd ( KBE, and together with its subsidiaries, the KBE Group ), have entered into an investment agreement dated 28 November 2013 (the Investment Agreement ) with Enco Holdings Sendirian Berhad (the Investor, and together with its subsidiaries, the Investor Group ) (each of the Company, KBE and the Investor hereafter referred to as a Party and, collectively, the Parties ) in relation to the proposed investment by the Investor in KBE (the Proposed Investment ). The Company believes that the Proposed Investment will allow the Company to tap on the Investor s expertise in biomass fired steam plants, as well as enhance the financial position of KBE Group to support future expansion. KBE has an issued and paid-up capital of IDR221,748,450 comprising 31,126 ordinary shares ( Shares ). The Investor shall invest a total of the IDR equivalent of MYR15,000,000 in KBE, of which: (a) (b) MYR3,403,038 (the Investment Amount ) shall be used for the subscription for 1,767,386 Shares (the Investment Shares ), representing 30.0% of the voting shares in the capital of KBE on an enlarged basis; and the remainder shall be extended as a convertible loan to KBE and/or its subsidiaries (the Investor Loan ). The Company shall also subscribe for 4.092,774 new Shares (the KAL Additional Shares ), representing 70% of the voting shares in the capital of KBE on an enlarged basis, by capitalising its existing loan of IDR29,157,816,845 due to the Company. In addition, the existing loans extended to the KBE Group by the Company s subsidiaries (excluding the KBE Group), of which IDR174,398,412,648 remained outstanding as at 31 October 2013, will be converted into a convertible loan on terms which are generally similar to that of the Investor Loan (the SWK Loan ). 1

2 2. INFORMATION ON KBE 2.1 Ownership Structure of KBE and its subsidiaries (collectively the KBE Group ) KBE is a wholly owned subsidiary of the Company, and is used by the Company to hold its subsidiaries in the Company s renewable biomass power generation arm. KBE owns 95.0% of the issued and paid up capital of PT Cahaya Permata Gemilang, which in turn owns 99.99% in each of PT Belitung Energy ( BE ) and PT Listrindo Kencana ( LK ). Mr. Henry Maknawi, the Chairman and Chief Executive Officer of the Company, holds the remaining share in each of BE and LK in order to comply with Indonesian law. 2.2 Business of the KBE Group The KBE Group is the renewable biomass power generation arm of the Company. The KBE Group owns and operates two biomass power plants on Bangka Island and Belitung Island which generate electricity by utilising biomass available within their respective locations. 3. INFORMATION ON THE INVESTOR The Investor is an investment holding company, and Mr. Ng Lam Chun and Mr. Chee Teck Hee currently own 56.14% and 33.86% of its ordinary paid up share capital respectively, PNB-SBI Asean Gateway Investment Management Ltd ( PNB-SBI ) owns 6% and PNB Equity Resource Corporation Sdn Bhd ( PERC ) owns 4% of its remaining ordinary shares. Permodalan Nasional Berhad ( PNB ) is a wholly owned subsidiary of Yayasan Pelaburan Bumiputra, which is a government trustee company which in turn owns 100% of PERC and 50% of PNB-SBI. Both PNB-SBI and PERC have also subscribed for MYR12 million and MYR8 million worth of redeemable convertible preference shares in the Investor, and collectively these preference shares can be converted into ordinary shares in the Investor representing approximately 24% of its paid up share capital. The Investor Group is in the business of providing thermal energy solutions by using boiler systems. In particular it specialises in biomass fuel fired boiler systems apart from conventional fuel fired systems such as fuel oil, diesel and gas. It is able to provide designs, engineering, procurement and commissioning services. The Investor Group includes subsidiaries that fabricate custom made boilers, including co-generation boiler systems that cater for electrical power generation. The Investor Group also includes a subsidiary that builds, owns and operates its own biomass fired steam plant to supply steam to its dedicated customer on a long term contract basis. The Investor Group also has experience in preparing various biomass fuel, in particular oil palm residue fuel for combustion, as it also sells biomass pellets to its own customers as a value added service in its value chain capabilities. 2

3 4. CONDITIONS TO THE PROPOSED INVESTMENT The Proposed Investment shall be subject, inter alia, to: (a) (b) (c) (d) (e) (f) all necessary corporate and regulatory approvals being obtained by KBE, the Company and/or the Investor, including those from the board of directors of the Company and the Investor; the execution of various agreements, including in connection with the supply of palm waste by PT Sawindo Kencana ( SWK ) to LK, the supply of steam from LK to SWK, the management and operation of KBE, the renewal of the lease between SWK and LK; there being no material adverse change between the date of the Investment Agreement and date of completion of the Proposed Investment; the representations and warranties given remaining true and correct in all respects at all times from execution of the Investment Agreement until (and including at) completion of the Proposed Investment; receipt by KBE of all applicable third party consents or waivers in connection with the Investment Agreement; and receipt by the Company of a confirmation from the Investor s Malaysian solicitors regarding approvals from the Central Bank of Malaysia in relation to, inter alia, the remittance of the Investment Amount and the Investor Loan. 5. KEY TERMS OF THE PROPOSED INVESTMENT 5.1 Subscription Price and Loan Amount The Investment Amount and the quantum of the Investor Loan was determined based on the projected book value of the KBE Group of IDR137,076,421,773 as at 31 December Option to Subscribe for Additional Shares in KBE KBE has granted the Investor the option (the Additional Subscription Option ) to subscribe for such number of new Shares (the Investor Additional Shares ) as will result in the Investor holding approximately 49.0% of the voting shares in the capital of the Company on an enlarged basis. The option price will be based on the fair value of the Investor Additional Shares as determined by an independent valuer appointed by KBE, and such price to be agreed on by the Investor and the Company. The Additional Subscription Option shall be exercisable during the period commencing on (and including) the earlier of (i) the day steps are taken to commence the listing of KBE, or such other entity as the parties may agree, on a 3

4 stock exchange and (ii) the day immediately after 37 calendar months from the date of completion of the Proposed Investment, and ending on (and including) the earlier of (a) the listing of the Company, or such other entity as the parties may agree, on a stock exchange and (b) the date falling 56 calendar months from the date of completion of the Proposed Investment. The Additional Subscription Option is subject to the Company obtaining the requisite approval of its shareholders (if required under applicable law or regulation or any stock exchange rules). 5.3 Put Option The Company has granted the Investor the option to, upon the occurrence of a Kencana Event of Default (as defined in the Investment Agreement) require the Company to purchase from the Investor all (and not some only) of the Investment Shares then held by it at an aggregate price equivalent to (a) the aggregate initial subscription price attributable to such Investment Shares (b) plus the cumulative undistributed profits attributable to such Investment Shares or less the cumulative losses attributable to such Investment Shares (as the case may be) for the period commencing on (and including) the date of completion of the Proposed Investment and ending on and including the date of the relevant Kencana Event of Default. Such option is subject to the Company obtaining the requisite approval of its rules). 5.4 Call Option The Investor has granted the Company the option to, upon the occurrence of an Investor Event of Default (as defined in the Investment Agreement), require the Investor to sell to the Company all (and not some only) of the Investment Shares then held by the Investor at an aggregate price equivalent to (a) the aggregate initial subscription price attributable to such Investment Shares (b) plus the cumulative undistributed profits attributable to such Investment Shares or less the cumulative losses attributable to such Investment Shares (as the case may be) for the period commencing on (and including) the date of completion of the Proposed Investment and ending on and including the date of the relevant Investor Event of Default. Such option is subject to the Company obtaining the requisite approval of its rules). 5.5 Right of First Refusal & Tag Along Right Subject to, inter alia, the Company obtaining the requisite approval of its rules), any transfer by a shareholder of KBE of all (and not some only) of its Shares 4

5 is subject to the right of first refusal and tag along right of the other shareholders of KBE. 5.6 Dividend Policy Subject to the paragraph below and provided that KBE or its relevant subsidiary (as the case may be) maintains a sufficient level of cash in order to fulfil its normal working capital needs, any scheduled debt repayments and approved capital expenditure for the following financial year, no less than 20% of the audited consolidated net profits of KBE or its relevant subsidiary (as the case may be) in any given fiscal year shall be declared and distributed as dividends. KBE or its relevant subsidiary (as the case may be) shall not declare and distribute any dividends until all amounts due by the relevant entity under the Investor Loan and/or the SWK Loan have been repaid in full. 5.7 Board Composition The board of directors of KBE will initially comprise four members, comprising of two directors appointed by the Company and two directors appointed by the Investor. 5.8 Convertible Loan Subject to, inter alia, the Company obtaining the requisite approval of its rules), the Investor may elect, at any time and from time to time during the period commencing on the day immediately after two years from the completion of the Proposed Investment and ending on the date falling four years from the completion of the Proposed Investment, to convert (where the amount under the Investor Loan is extended to KBE) or exchange (where the amount under the Investor Loan is extended to any subsidiary of KBE) the entire outstanding principal amount of the Investor Loan (or such part as the Investor shall elect) into Shares (the Investor Conversion Shares ) on the basis of IDR1,000,000 per Investor Conversion Share. In the event of such conversion or exchange, the Company shall be entitled to procure the conversion or exchange (as the case may be) of the entire outstanding principal amount of the SWK Loan (or such part as the Company shall elect) into Shares which shall be issued to the Company, at the same conversion or exchange (as the case may be) price as that of the Investor Conversion Shares, so as to ensure that the Company holds the same proportion of the voting shares in the capital of the Company (on an enlarged basis subsequent to the allotment and issuance of the Investor Conversion Shares) as that prior to the allotment and issuance of the Investor Conversion Shares. The full amount drawn down on the Investor Loan and the SWK Loan (less any amount in respect of which a conversion has been effected, and less any amount 5

6 which may have already been repaid by the Company) shall be due and payable on the date falling four years from the completion of the Proposed Investment. The Investor Loan and the SWK Loan shall bear interest at a rate of 10.75% per annum. 6. CHAPTER 10 OF THE LISTING MANUAL The book value ( BV ) and net tangible asset ( NTA ) value of the dilution, being approximately 30% of the BV and NTA value of KBE, as at 30 September 2013 was IDR58,231,810,604. The Proposed Investment is not expected to have a material impact on the financial results of the Company for the financial year ending 31 December Based on the latest announced consolidated accounts of the Company as at 30 September 2013 and assuming a dilution of 30% of the Company s equity interest in KBE, the Proposed Investment is classified as a non-discloseable transaction within the meaning of Rule 1006 of the SGX-ST Listing Manual. 7. MISCELLANEOUS 7.1 Interests of directors and controlling shareholders Save as disclosed above and other than interests held through the Company as shareholders, none of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the Proposed Investment. 7.2 Further Announcements Further announcements on this matter will be made in due course to provide Shareholders with an update on the transaction as and when appropriate. Shareholders should note that the Proposed Investment is conditional, inter alia, on the fulfilment of certain conditions precedent. Shareholders or potential shareholders are advised to exercise caution when trading in the shares of the Company. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers. 7.3 Documents Available for Inspection A copy of the Investment Agreement will be available for inspection during normal business hours at the Company's registered office at 36 Armenian Street, #03-02 Singapore for a period of three (3) months from the date of this announcement. 6

7 By Order of the Board Ratna Maknawi Deputy Chief Executive Officer 29 November