PROPOSED AMENDMENTS TO THE CONSTITUTION OF S P SETIA ( CONSTITUTION )

Transcription

1 S P SETIA BERHAD ( S P SETIA OR COMPANY ) (I) (II) (III) (IV) (V) PROPOSED ACQUISITION OF 1,000,000,000 ORDINARY SHARES IN I&P GROUP SDN BERHAD ( I&P ), REPRESENTING THE ENTIRE EQUITY INTEREST IN I&P, FOR A CASH CONSIDERATION OF RM3.65 BILLION ( PROPOSED I&P ACQUISITION ); PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW ORDINARY SHARES IN S P SETIA ( S P SETIA SHARES ) ( RIGHTS SHARES ) TO RAISE GROSS PROCEEDS OF UP TO RM1.2 BILLION ( PROPOSED RIGHTS ISSUE OF SHARES ); PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW CLASS B ISLAMIC REDEEMABLE CONVERTIBLE PREFERENCE SHARES IN S P SETIA ( RCPS-i B ) TO RAISE GROSS PROCEEDS OF UP TO RM1.2 BILLION ( PROPOSED RIGHTS ISSUE OF RCPS-i B ); PROPOSED PLACEMENT OF NEW S P SETIA SHARES ( PLACEMENT SHARES ) TO INVESTORS TO BE IDENTIFIED TO RAISE GROSS PROCEEDS OF UP TO RM1.2 BILLION ( PROPOSED PLACEMENT ); AND PROPOSED AMENDMENTS TO THE CONSTITUTION OF S P SETIA ( CONSTITUTION ) (COLLECTIVELY TO BE REFERRED TO AS PROPOSALS ) 1. INTRODUCTION On 14 April 2017, announced that the Company, Permodalan Nasional Berhad ( PNB ) and AmanahRaya Trustees Berhad (as Trustee for Amanah Saham Bumiputera) ( ART-ASB ) have entered into a non-binding memorandum of intent to commence negotiations on the proposed acquisition by of the entire equity interest in I&P. Further to that announcement, on behalf of the Board of Directors of ( Board ), Maybank Investment Bank Berhad ( Maybank IB ) wishes to announce that had on 22 June 2017 entered into a conditional share purchase agreement with PNB, ART-ASB and Dato Mohd. Nizam bin Zainordin ( Dato Nizam ) (collectively, I&P Vendors ) for the Proposed I&P Acquisition ( SPA ). In conjunction with the Proposed I&P Acquisition, is also proposing to undertake equity fund raising proposals comprising the following: (iii) Proposed Rights Issue of ; Proposed Rights Issue of RCPS-i B; and Proposed Placement, (collectively to be referred to as Proposed Equity Fund Raising ) as well as the proposed amendments to the Constitution as further described in Section 2.5 of this Announcement. 1

2 2. DETAILS OF THE PROPOSALS 2.1 Proposed I&P Acquisition Background information on the Proposed I&P Acquisition The Proposed I&P Acquisition entails the acquisition of 1,000,000,000 ordinary shares in I&P, representing the entire equity interest in I&P, from the I&P Vendors for a cash consideration of RM3.65 billion ( Purchase Consideration ). Upon completion of the Proposed I&P Acquisition, I&P will become a wholly-owned subsidiary of the Company. The Proposed I&P Acquisition is subject to the terms and conditions of the SPA, the salient terms of which are set out in Section 1 of the appendix to this Announcement ( Appendix ) Background information on I&P I&P was incorporated in Malaysia as a private limited company on 15 April 2005 under the Companies Act, 1965 and is deemed registered under the Companies Act, 2016 ( Act ). I&P and its subsidiary companies (collectively, I&P Group ) was formed in 2008 following the rationalisation exercise of three (3) property companies under the umbrella of PNB, namely Island & Peninsular Berhad, Petaling Garden Berhad and Pelangi Berhad, all of which were previously listed on the Main Board (now known as Main Market) of Bursa Malaysia Securities Berhad ( Bursa Securities ) and were subsequently privatised and converted to private companies. As at 31 May 2017, being the latest practicable date prior to this Announcement ( LPD ), the issued share capital of I&P is RM1,000,000,000 comprising 1,000,000,000 ordinary shares. The principal activities of I&P are investment holding and provision of management services. Its subsidiary companies are principally involved in property development, sale of land and completed properties, sublease of land, property management services, investment holding and management and operation of golf course and golf club. As at the LPD, I&P has 30 subsidiary companies and 6 associate companies. The I&P Group has 4,276 acres of landbank located in Klang Valley and Johor Bahru ( I&P Landbank ) as at the LPD. These landbanks include on-going developments in Bandar Kinrara, Temasya Glenmarie, Alam Impian, Bandar Baru Seri Petaling, Alam Sari, Kota Bayuemas, Seri Beringin, Alam Damai and Alam Sutera in Klang Valley as well as Taman Perling, Taman Rinting, Taman Pelangi, Taman Pelangi Indah and Taman Industri Jaya in Johor Bahru. A summary of the financial information of I&P for the past three (3) financial years ended ( FYE ) 31 December 2014 to 2016 and the information on selected real estates owned by the I&P Group are set out in Sections 2 and 3 of the Appendix. 2

3 2.1.3 Background information on the I&P Vendors PNB PNB is an investment holding company with a diversified portfolio of interests that include asset management, unit trusts, institutional property trusts and property management. It owns the country s largest unit trust management companies including, amongst others, Amanah Saham Nasional Berhad and Amanah Mutual Berhad. Together with its proprietary fund, PNB currently manages more than RM260 billion worth of assets. As at the LPD, the directors of PNB are as follows: (iii) (iv) (v) (vi) (vii) (viii) (ix) Tan Sri Abdul Wahid bin Omar; Dato Abdul Rahman bin Ahmad; Tan Sri Dr. Wan Abdul Aziz bin Wan Abdullah; Tan Sri Dr. Mohd. Irwan Serigar bin Abdullah; Tan Sri Dr. Ali bin Hamsa; Dato Dr. Awang Adek bin Hussin; Tuan Haji Soedirman bin Haji Aini; Datuk Dr. Mohd. Yaakub bin Haji Johari; and Tan Sri Zarinah Sameehah binti Anwar. As at the LPD, the directors of PNB do not hold any shares in PNB. As at the LPD, the shareholders of PNB are as follows: Name Yayasan Pelaburan Bumiputra ( Yayasan ) Minister of Finance, Incorporated Direct Indirect shares % shares % 99,999, * - - Note: * Negligible ART-ASB ART-ASB was incorporated in Malaysia under the Companies Act, 1965 on 23 March 2007 and is deemed registered under the Act. It was registered as a trust company under the Trust Companies Act, 1949 on 7 August It was registered by the Securities Commission Malaysia ( SC ) as an eligible trust corporation to act as trustee to unit trust schemes, corporate bonds and private retirement schemes on 6 November 2007, 29 November 2007 and 22 June 2012 respectively. 3

4 ART-ASB is a subsidiary of Amanah Raya Berhad with an issued share capital of RM2.0 million. As at the LPD, the directors of ART-ASB do not hold any shares in ART- ASB. As at the LPD, the substantial shareholders of ART-ASB are as follows: Name Direct Indirect shares % shares % Amanah Raya Berhad 40, Amanah Raya Capital Sdn. 40, Bhd. AmanahRaya Legacy 40, Services Sdn Bhd Amanah Raya Nominees 40, (Tempatan) Sdn. Bhd. AmanahRaya Ventures Sdn Bhd 40, (iii) Dato Nizam Dato Nizam, 53 years old, is a director and shareholder of I&P who currently owns 1 ordinary share in I&P Basis and justification for the Purchase Consideration The Purchase Consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the adjusted unaudited consolidated net assets ( NA ) of I&P as at 30 April 2017 which was arrived at as follows: Amount (RM mil) Unaudited consolidated NA as at 30 April ,230 Add : Net revaluation surplus based on the effective interest 2,779 (1) owned by I&P Adjusted unaudited consolidated NA 6,010 (2) Notes: (1) The net revaluation surplus was arrived at as follows: Amount (RM mil) Aggregated market value of the I&P Properties (as defined 7,391 below) Less : Unaudited aggregated net book value ( NBV ) as at 30 (3,139) April 2017 Less : Estimated deferred tax liabilities to be accrued arising (1,045) from the revaluation Net revaluation surplus 3,207 Net revaluation surplus based on the effective interest owned by I&P (2) Rounding adjustment 2,779 4

5 The Company appointed three (3) independent valuers, namely Messrs Jones Lang Wootton, Messrs CH Williams Talhar & Wong Sdn Bhd and Messrs Khong & Jaafar Sdn Bhd ( Valuers ) to undertake the valuation of all the developed properties, land held for property development, on-going property development projects and investment properties of the I&P Group ( I&P Properties ). The aggregate market value of the I&P Properties as ascribed by the Valuers vide their respective valuation letters, is RM7,391 million, arrived at using the comparison approach and income approach, which are further elaborated in Section 3 of the Appendix. The Purchase Consideration represents a discount of approximately 39.3% of the adjusted unaudited consolidated NA of I&P Source of funding The Purchase Consideration will be funded via the following: Amount (RM mil) Proceeds from the Proposed Rights Issue of 1,000 Proceeds from the Proposed Rights Issue of RCPS-i B 1,000 Bank borrowings 1,500 Internally generated funds 150 Total 3, Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by pursuant to the Proposed I&P Acquisition Additional financial commitment The Company does not expect to incur any additional financial commitment to put the assets/businesses of I&P on-stream as I&P s businesses are already on-going Original cost of investment The original cost and date of investment by the I&P Vendors in I&P are as follows: I&P Vendor Date of investment shares Amount (RM) PNB 31 December ,999,999 1,276,443,215 ART-ASB 9 January ,000, ,000, February ,000, ,000, April ,000, ,500, ,000,000 1,552,500,000 Dato Nizam 19 April

6 2.2 Proposed Rights Issue of Details of the Proposed Rights Issue of The Proposed Rights Issue of entails the issuance of the Rights to the entitled shareholders of the Company whose names appear in the Record of Depositors of the Company on the entitlement date to be determined by the Board at a later date ( Entitlement Date ) ( Entitled Shareholders ) and/or their renouncee(s). The Proposed Rights Issue of is intended to raise gross proceeds of up to RM1.2 billion. The quantum of gross proceeds has been determined upfront while the entitlement basis for the Proposed Rights Issue of and issue price for the Rights have not been determined at this juncture in order to provide flexibility to the Board in respect of the pricing of the Rights and also to minimise unnecessary equity issuance. Due to potential share price movements, pricing of the Rights closer to the implementation of the Proposed Rights Issue of will enable the issue price to be more reflective of the prevailing market price of at that point in time. The Rights will be provisionally allotted to the Entitled Shareholders. In determining shareholders entitlements under the Proposed Rights Issue of, fractional entitlements, if any, will be disregarded and shall be dealt with in such manner as the Board in its sole and absolute discretion deems fit and expedient, and in the best interest of the Company. For illustrative purposes only, based on 2, million in issue as at the LPD and the intended gross proceeds of RM1.2 billion, the capital outlay for a shareholder holding 1,000 who wishes to subscribe for his/her entitlement is approximately RM420. The actual outlay required by the Entitled Shareholders to fully subscribe for their entitlements will depend on the entitlement basis and the issue price for the Rights to be determined by the Board. The actual number of Rights to be issued pursuant to the Proposed Rights Issue of will be determined based on the total number of in issue as at the Entitlement Date and the entitlement basis for the Proposed Rights Issue of. The Proposed Rights Issue of is renounceable in full or in part. Accordingly, the Entitled Shareholders can subscribe for and/or renounce their entitlements to the Rights in full or in part. The Rights which are not taken up or validly taken up will be made available for excess application by the other Entitled Shareholders and/or their renouncee(s). It is the intention of the Board to allocate the excess Rights in a fair and equitable manner on a basis to be determined by the Board. 6

7 2.2.2 Basis and justification for the issue price of the Rights The issue price for the Rights will be determined by the Board on a pricefixing date to be determined ( Price-Fixing Date ) after taking into consideration, inter-alia, the prevailing market price of as well as the pricing for recent rights issue exercises implemented by other listed companies in Malaysia. In any event, the issue price shall be at a discount of approximately 20% to the theoretical ex-rights price ( TERP ) of based on the five (5)-day volume weighted average market price ( VWAMP ) of immediately preceding the Price-Fixing Date Ranking of the Rights The Rights will, upon allotment and issuance, rank equally in all respects with the then existing, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the Rights Listing and quotation of the Rights An application will be made to Bursa Securities for the listing and quotation of the Rights on the Main Market of Bursa Securities. [The rest of this page is intentionally left blank] 7

8 2.3 Proposed Rights Issue of RCPS-i B Details of the Proposed Rights Issue of RCPS-i B The Proposed Rights Issue of RCPS-i B entails the issuance of the RCPS-i B to the Entitled Shareholders and/or their renouncee(s). The Proposed Rights Issue of RCPS-i B is intended to raise gross proceeds of up to RM1.2 billion. Similar to the Proposed Rights Issue of, the quantum of gross proceeds has been determined upfront while the entitlement basis for the Proposed Rights Issue of RCPS-i B, issue price and conversion ratio for the RCPSi B have not been determined at this juncture due to the same reason as set out in Section of this Announcement. The RCPS-i B will be provisionally allotted to the Entitled Shareholders. In determining shareholders entitlements under the Proposed Rights Issue of RCPSi B, fractional entitlements, if any, will be disregarded and shall be dealt with in such manner as the Board in its sole and absolute discretion deems fit and expedient, and in the best interest of the Company. For illustrative purposes only, based on 2, million in issue as at the LPD and the intended gross proceeds of RM1.2 billion, the capital outlay for a shareholder holding 1,000 who wishes to subscribe for his/her entitlement is approximately RM420. The actual outlay required by the Entitled Shareholders to fully subscribe for their entitlements will depend on the entitlement basis and the issue price for the RCPS-i B to be determined by the Board. The actual number of RCPS-i B to be issued pursuant to the Proposed Rights Issue of RCPS-i B will be determined based on the total number of in issue as at the Entitlement Date and the entitlement basis for the Proposed Rights Issue of RCPS-i B. The Proposed Rights Issue of RCPS-i B is renounceable in full or in part. Accordingly, the Entitled Shareholders can subscribe for and/or renounce their entitlements to the RCPS-i B in full or in part. The RCPS-i B which are not taken up or validly taken up will be made available for excess application by the other Entitled Shareholders and/or their renouncee(s). It is the intention of the Board to allocate the excess RCPS-i B in a fair and equitable manner on a basis to be determined by the Board. 8

9 2.3.2 Salient terms of the RCPS-i B The indicative salient terms of the RCPS-i B are as follows: Issuer : Tenure : Perpetual Issue Date : Date of issue of the RCPS-i B Dividend : The RCPS-i B shall carry the right to receive preferential dividends, out of the distributable profits of the Company earned from the first day of the calendar month following the Issue Date ("Profits"), when declared and approved by the Board, at the expected preferential dividend rate of 5.93% per annum. From the period commencing on and including the 5 th anniversary of the Issue Date until the Redemption Date (as defined below), an additional stepped-up preferential dividend rate of 1.0% per annum above the expected rate mentioned above, shall be payable on the RCPS-i B on an annual basis, provided that the aggregate of the expected preferential dividend rate (including the stepped-up preferential dividends, if applicable) on any Preferential Dividend Entitlement Date (as defined below) ("Expected Preferential Dividend Rate") shall not exceed a total rate of 20%. Subject to the availability of Profits, the preferential dividends shall be distributable semi-annually (save in respect of the first distribution), with the RCPS-i B holders being entitled to the first distribution on such date being the next preferential dividend entitlement date of the existing Islamic redeemable convertible preference shares of the Company ( RCPS-i A ) (in accordance with its terms) following the Issue Date, and subsequently, at successive intervals of every six (6) months thereafter (each of the aforementioned dates shall be referred to as "Preferential Dividend Entitlement Date"). The maximum amount of preferential dividends that can be declared and paid on each Preferential Dividend Entitlement Date ("Expected Preferential Dividend Amount"), shall be capped at such Expected Preferential Dividend Rate unless otherwise decided by the Board. On any Preferential Dividend Entitlement Date: in the event that the Profits are lower than the Expected Preferential Dividend Amount and the Company does not declare the preferential dividends up to the Expected Preferential Dividend Amount (in whole or in part): 9

10 (a) the Company may, at its discretion, declare and pay any amount of preferential dividends up to an amount equal to the Profits as at such Preferential Dividend Entitlement Date. (The amount of Profits declared as preferential dividends by the Company on a particular Preferential Dividend Entitlement Date, if any, shall be referred to as "Declared Sum"); and (b) the amount equivalent to the difference between: (A) the Profits as at such Preferential Dividend Entitlement Date; and (B) Declared Sum, shall be cumulative ("Deferred Dividends 1"), so long as the RCPS-i B remains unredeemed. In this instance, the amount equivalent to the difference between: (A) the Expected Preferential Dividend Amount; and (B) the Profits as at such Preferential Dividend Entitlement Date, shall not be cumulative; and in the event that the Profits are more than the Expected Preferential Dividend Amount and the Company does not declare the preferential dividends up to the Expected Preferential Dividend Amount (in whole or in part): (a) the amount equivalent to the difference between: (A) the Expected Preferential Dividend Amount; and (B) the Declared Sum, shall be cumulative ("Deferred Dividends 2"), so long as the RCPS-i B remains unredeemed. Deferred Dividends 1 and Deferred Dividends 2 (as the case may be) ("Deferred Dividends") may be declared and/or paid, at the discretion of the Company, on any subsequent Preferential Dividend Entitlement Date, provided that the Cumulative Condition (as defined below) is fulfilled on such Preferential Dividend Entitlement Date. "Cumulative Condition" of the RCPS-i B means on any Preferential Dividend Entitlement Date, the Company: (iii) has sufficient Profits that is at least equivalent to the aggregate of the Declared Sum and any Deferred Dividends accumulated as at and on such Preferential Dividend Entitlement Date; has maintained books and records that evidence the Company having Profits that is at least equivalent to the aggregate of the Declared Sum and any Deferred Dividends accumulated as at and on such Preferential Dividend Entitlement Date; and makes an announcement on the Main Market of Bursa Securities that such amount of Deferred Dividends on such Preferential Dividend Entitlement Date shall be cumulative. 10

11 The Deferred Dividends shall not be payable to the RCPSi B holders if the Company has not declared it as a preferential dividend. For clarity, the Deferred Dividends that are not declared will not be payable in the following circumstances: upon the winding-up, liquidation or dissolution of the Company. Accordingly, the RCPS-i B holders shall (in and for compliance with Shariah, and by the decision of the Board at the relevant time on their behalf) waive all Deferred Dividends that the Company has not declared; and upon the RCPS-i B holders converting the RCPS-i B to. Accordingly, the RCPS-i B holders shall (in and for compliance with Shariah) waive all Deferred Dividends that the Company has not declared. Where there is no Profit available for the declaration and payment of dividends, the Company shall have no obligation to declare or distribute any preferential dividends on the relevant Preferential Dividend Entitlement Date. Such preferential dividends shall not be cumulative. Each RCPS-i B holder will cease to receive any preferential dividends from and including the date the RCPS-i B is converted into new save for preferential dividends declared but unpaid up to the date of conversion notice. Subject to the rights to the preferential dividends and any additional preferential dividends declared and distributed as the Board deems fit, the RCPS-i B holders shall not be entitled to participate in the surplus profits of the Company (if any) remaining at such time after the payment of the preferential dividends and such additional preferential dividends (if any). Conversion Rights : The RCPS-i B shall be convertible, at the option of the RCPS-i B holder, at any time commencing from the Issue Date and up to such date no later than nine (9) market days prior to the relevant redemption date of the RCPS-i B, into such number of fully-paid new, without payment of any consideration and in accordance with the Conversion Ratio (as defined below). Conversion Ratio : The conversion ratio is to be determined and announced by the Board on the Price-Fixing Date. If the conversion results in a fractional entitlement to S P Setia, such fractional entitlement shall be disregarded and no refund or credit, whether in the form of RCPS-i B, cash or otherwise, shall be given in respect of the disregarded fractional entitlement. 11

12 The Conversion Ratio shall be subject to adjustments from time to time, at the determination of the Board, in the event of any alteration to the Company s share capital, whether by way of rights issue, capitalisation issue, consolidation of shares, subdivision of shares or reduction of capital howsoever being effected, in accordance with the provisions of the Constitution. The Company shall give notice in writing to the RCPS-i B holders of its intention to make such adjustments to the Conversion Ratio. Redemption : The Company may at any time on or after the 5 th anniversary of the Issue Date, at its discretion, redeem all (and not some only of) the outstanding RCPS-i B by giving not less than 30 days notice in writing to the RCPS-i B holders of its intention to do so, subject to compliance with the Act, including where such RCPS-i B is intended to be redeemed out of the capital of the Company, such notice of redemption shall be subject to all directors of the Company having made a solvency statement in relation to such redemption in accordance with the provisions of the Act. The redemption of the RCPS-i B shall take effect on the 30 th day from the date of the notice or such other later date as may be specified in the notice ("Redemption Date"). The notice shall state the Redemption Date and the book closure date to be used to determine the RCPS-i B holders who are entitled to receive the redemption payment. (iii) On the Redemption Date, the Company shall redeem all (and not some only of) the outstanding RCPS-i B (that do not form part of any RCPS-i B to be converted into new ) in cash at a redemption price, which shall be the aggregate of: the Issue Price of the RCPS-i B; any preferential dividends declared but unpaid as at the Redemption Date; and (iii) any Deferred Dividends as at the Redemption Date. Upon redemption of the RCPS-i B, the RCPS-i B holders shall (in and for compliance with Shariah) waive their rights to receive any Profit that has not been declared as preferential dividend by the Company and which do not form any part of the Deferred Dividends from the period beginning on the last dividend declaration date preceding the Redemption Date up to the Redemption Date. By subscribing to the RCPS-i B, the RCPS-i B holders agree (in and for compliance with Shariah) to this waiver with such waiver to be decided by the Board at the point of redemption on their behalf. Rights to receive notices, reports and attend meetings and voting rights : The RCPS-i B holders shall be entitled to the same rights as the Company s ordinary shareholders as regards to the receipt of notices (including that of general meetings), reports and audited financial statements, to attend meetings and to receive shareholders resolutions in writing, but shall not be entitled to vote or approve any shareholders resolutions or vote at any general meeting of the Company, save and except in respect of any resolution made: 12

13 (iii) (iv) (v) (vi) when the preferential dividends or any part thereof is in arrears and unpaid for more than six (6) months; on a proposal to reduce the Company s share capital; on a proposal for the disposal of substantially the whole of the Company s property, business and undertaking; on a proposal to wind up the Company; during the winding up of the Company; or on any proposal that affects the rights and privileges attached to the RCPS-i B, including the amendments to the Constitution. In any of the aforesaid circumstances, each RCPS-i B holder shall be entitled to vote at all general meetings of the members of its class, and on a poll at any such general meetings to one (1) vote for each RCPS-i B held. Listing status : The RCPS-i B and the new to be issued arising from the conversion of the RCPS-i B will be listed and quoted on the Main Market of Bursa Securities. Ranking of RCPS-i B : The RCPS-i B shall rank equally amongst themselves and with other preference shares issued by the Company (including the RCPS-i A) in all respects, and will rank ahead in point of priority to the holders of the and all other classes of shares (if any) in the Company, in respect of payment of dividends and payment out of assets of the Company upon any liquidation, dissolution, or winding up of the Company, provided always that the Board approves such payment of dividends and payment out of assets of the Company on this basis and further affirms the priority of payment to the holders of the RCPS-i B. Governing Law : Laws of Malaysia The RCPS-i B is subordinated to the Sukuk Musharakah issued by the Company on 13 December 2013 ("Sukuk Musharakah") in respect of payment of dividends Basis and justification for the issue price of RCPS-i B and the Conversion Ratio The issue price for the RCPS-i B will be determined by the Board on the Price- Fixing Date after taking into consideration amongst others, the following: the TERP of based on the five (5)-day VWAMP of S P Setia immediately preceding the Price-Fixing Date; and prospects of the enlarged group of companies ( Group ) after the completion of the Proposed I&P Acquisition. 13

14 The Conversion Ratio will be determined by the Board on the Price-Fixing Date, and shall be at a premium to the TERP of, since the RCPS-i B holders have the option to convert their RCPS-i B at any time prior to the Company exercising the redemption option Ranking of the new to be issued upon conversion of the RCPS-i B The new to be issued upon conversion of the RCPS-i B will, upon allotment and issuance, rank equally in all respects with the then existing, save and except that they will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the new to be issued upon conversion of the RCPS-i B Listing and quotation of the RCPS-i B and the new to be issued upon conversion of the RCPS-i B 2.4 Proposed Placement An application will be made to Bursa Securities for the admission of the RCPS-i B to the Official List of Bursa Securities as well as the listing and quotation of the RCPS-i B and the new to be issued upon conversion of the RCPS-i B on the Main Market of Bursa Securities. For the RCPS-i B to be listed, there must be at least 100 holders each holding not less than one (1) board lot of RCPS-i B Details of the Proposed Placement The Proposed Placement entails the issuance of the Placement to investors to be identified via book-building, to raise gross proceeds of up to RM1.2 billion Placement arrangement The Placement may be offered to local and foreign institutional investors falling within Schedule 6 or 7 of the Capital Markets and Services Act, The Placement will not be registered under the United States of America ( United States ) Securities Act of 1933 ( U.S. Securities Act ) or the laws of any state in the United States, and may not be offered or sold within the United States, absent registration or an exemption from the registration requirements of the U.S. Securities Act and applicable state law. There is no intention to register any portion of the offering of the Placement in the United States or to conduct a public offering of the Placement in the United States. Accordingly, any offer and sale of the Placement will be conducted solely outside the United States in reliance on Regulation S under the U.S. Securities Act. The precise terms and conditions such as the identity of the placees and number of the Placement to be allocated can only be determined upon completion of the book-building exercise for the Proposed Placement. 14

15 Pursuant to the book-building exercise, the Placement may be allocated to the major shareholders of and/or persons connected with them. If any major shareholder(s) of the Company or persons connected with them ( Interested Parties ) participate in the Proposed Placement, the Company will seek prior shareholders approval for the specific allotment of any of the Placement to the Interested Parties in accordance with Paragraph 6.05 of the Main Market Listing Requirements of Bursa Securities ( Listing Requirements ). The Proposed Placement will not be implemented in tranches Issue price of Placement The issue price of the Placement shall be determined by way of bookbuilding and shall be fixed based on the five (5)-day VWAMP of immediately preceding the price-fixing date with a discount to be determined and announced later. For illustrative purposes only, assuming a 5.5% discount to the TERP of of RM3.58 based on the five (5)-day VWAMP of up to and including 16 June 2017, being the ex-entitlement date for the 7 th DRP (as defined in Section 8 of this Announcement) ( DRP Ex-Date ), of RM3.67, the illustrative issue price for the Placement would be RM3.38 per Placement Share. Based on the intended gross proceeds to be raised from the Proposed Placement of RM1.2 billion and the illustrative issue price of RM3.38 per Placement Share, the maximum number of Placement that may be issued pursuant to the Proposed Placement would be up to 355,000,000, representing up to 12.4% and 11.1% of the existing share capital of the Company and enlarged issued share capital of the Company after the completion of the Proposed Rights Issue of, respectively Ranking of the Placement The Placement will, upon allotment and issuance, rank equally in all respects with the then existing, save and except that they will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the Placement Listing and quotation of the Placement An application will be made to Bursa Securities for the listing and quotation of the Placement on the Main Market of Bursa Securities 2.5 Proposed amendments to the Constitution The proposed amendments to the Constitution entail the following: amendments to facilitate the issuance of RCPS-i B pursuant to the Proposed Rights Issue of RCPS-i B ( Proposed Amendment I ); and amendments to comply with the requirements of the Act which came into force in stages commencing on 31 January 2017 ( Proposed Amendment II ), (collectively referred to as Proposed Amendments ) 15

16 3. SHAREHOLDERS UNDERTAKING AND UNDERWRITING ARRANGEMENT 3.1 Shareholders Undertaking The direct shareholdings of PNB and the funds under PNB s management ( Funds ) in S P Setia are as follows: (1) % (million) PNB Funds (2) 1, , Notes: (1) Comprise of ART-ASB, Amanah Saham Bumiputera 2, Amanah Saham Gemilang Amanah Saham Persaraan, Amanah Saham Gemilang - Amanah Saham Kesihatan, Amanah Saham Gemilang - Amanah Saham Pendidikan, Amanah Saham Nasional 3 Imbang, Amanah Saham Nasional 2, Amanah Saham Nasional, Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham Didik and Amanah Saham 1Malaysia (2) As at 14 June 2017 based on the undertaking letter PNB had on 19 June 2017 provided an irrevocable undertaking to subscribe in full its entitlement under the Proposed Rights Issue of and the Proposed Rights Issue of RCPS-i B respectively as at the Entitlement Date. AmanahRaya Trustees Berhad, as trustees for the Funds, had on 20 June 2017 also provided an irrevocable undertaking that the Funds shall: subscribe in full their respective entitlements under the Proposed Rights Issue of and the Proposed Rights Issue of RCPS-i B respectively as at the Entitlement Date; and in respect of the Proposed Rights Issue of RCPS-i B, apply for additional RCPS-i B not taken up or not validly taken up by the other Entitled Shareholders and/or their renouncee(s) up to a maximum of RM340,000,000 in value of RCPS-i B by way of excess application. (PNB and the Funds are collectively referred to as Undertaking Shareholders ) Based on the said undertakings, the Undertaking Shareholders will subscribe up to an aggregate of RM1.0 billion value of RCPS-i B ( RCPS-i B Undertaking ). The Undertaking Shareholders have confirmed that they have sufficient financial resources to perform their respective undertaking. 16

17 3.2 Underwriting arrangement The Proposed Rights Issue of will be undertaken on a full subscription basis. Accordingly, it is the intention of the Board to procure underwriting arrangement(s) in respect of the remaining Rights for which no undertaking has been obtained. The Proposed Rights Issue of RCPS-i B will be undertaken on a minimum subscription level basis based on the RCPS-i B Undertaking. The Board does not intend to procure any underwriting arrangement for the remaining RCPS-i B for which no undertaking has been obtained. 4. USE OF PROCEEDS 4.1 Proposed Rights Issue of and Proposed Rights Issue of RCPS-i B The exact amount of proceeds to be raised from the Proposed Rights Issue of and Proposed Rights Issue of RCPS-i B cannot be determined at this juncture as the amount would depend on issue price of the Rights and RCPS-i B as well as the number of Rights and RCPS-i B to be issued. For illustrative purposes only, the Proposed Rights Issue of and Proposed Rights Issue of RCPS-i B are expected to raise gross proceeds of up to RM2.396 billion to be used in the following manner: Description of utilisation Minimum Scenario Maximum Scenario (RM million) (RM million) Part-finance the Proposed I&P Acquisition 2,000 2,000 New and on-going property development projects and general working capital requirements of the enlarged Group (1) Defray estimated expenses relating to the Proposals (save for the Proposed Placement) (2) Total gross proceeds 2,013 2,396 Notes: (1) The proceeds are allocated to fund the property development costs of new and on-going projects of the enlarged Group after the completion of the Proposed I&P Acquisition. Currently, the Group and the I&P Group, in aggregate, has 45 ongoing property development projects. The working capital requirements refer to, among others, day-to-day operating and administrative expenses, and other operating expenses such as sales and marketing, advertising and promotional expenditure, and professional fees in relation to the property development business. (2) Comprise of professional fees, underwriting commission, fees payable to relevant authorities, printing and despatch costs, and other incidental expenses relating to the Proposals (save for the Proposed Placement). For the avoidance of doubt, proceeds raised from the Proposed Rights Issue of RCPS-i B will be used in Shariah-compliant manner. 17

18 There will be no proceeds raised upon conversion of the RCPS-i B into new as the conversion will be satisfied by surrendering such number of RCPS-i B based on the Conversion Ratio. 4.2 Proposed Placement The exact amount of proceeds to be raised from the Proposed Placement cannot be determined at this juncture as the amount would depend on the issue price and actual number of Placement to be issued. For illustrative purposes only, based on the illustrative issue price of RM3.38 per Placement Share and million Placement, the Proposed Placement is expected to raise gross proceeds of approximately RM1.2 billion to be used in the following manner: Description of utilisation New and on-going property development projects and general working capital requirements of the Group (1) (RM million) 1,190 Defray estimated expenses relating to the Proposed Placement (2) 10 Total gross proceeds 1,200 Notes: (1) The proceeds are allocated to fund the property development costs of new and on-going projects of the Group. (2) Comprise of professional fees, placement fees, fees payable to relevant authorities and other incidental expenses relating to the Proposed Placement. For the avoidance of doubt, in the event the actual gross proceeds to be raised from the Proposed Equity Fund Raising is higher or lower than the estimated gross proceeds set out above, such variance shall be adjusted to/from the gross proceeds allocated for property development projects and/or working capital. Pending the use of proceeds for the purposes as set out above, the proceeds will be placed in profit/interest-bearing deposits with financial institutions and/or short-term money market instruments. Further, proceeds from the Proposed Rights Issue of RCPS-i B will be placed in deposits with Islamic financial institutions or Islamic short-term money market instruments to comply with Shariah. The profit/interest (as the case may be) derived from such deposits will be used for working capital purposes. 18

19 5. RATIONALE AND BENEFITS OF THE PROPOSALS 5.1 Proposed I&P Acquisition Since the I&P Group has 4,276 acres of landbank located in Klang Valley and Johor Bahru, the Proposed I&P Acquisition will complement and enlarge s existing landbank as the I&P Landbank are strategically located close to the vicinity of s existing projects in Klang Valley and Johor. The Proposed I&P Acquisition will also enable the S P Setia Group to leverage on the development potential of the I&P Landbank to boost its future growth in these key regions. This provides the Group with synergistic benefits as it will be able to embark on the development of the I&P Landbank by capitalising on the success of its developments in these regions which can be expected to contribute positively to the future financial performance of the enlarged Group. The S P Setia Group will also be better positioned to reach out to a broader range of customers in locations where the I&P Group has a strong footing. Besides the strategic location of the I&P Landbank, the Company considers I&P as a good fit because of its strong balance sheet and minimal borrowings of only RM1.0 million as at 30 April In this regard, upon the completion of the Proposed I&P Acquisition and the Proposed Equity Fund Raising, the net gearing of the enlarged Group will remain low and this will provide financial flexibility for the Group to fund its future property development projects and significant debt capacity for the enlarged Group to execute opportunistic acquisitions of landbank when the time arises. Further, the Proposed I&P Acquisition will enable the Group to increase its operational efficiencies by tapping into the workforce of the I&P Group. As at the LPD, the I&P Group has 300 staff with experience in the property development market. The Proposed I&P Acquisition is in line with the Group s land-banking strategy and it will allow to fast track its expansion plans with the increase in its landbank from 5,141 acres to 9,417 acres. Such expansion will further strengthen the Company s position as one of the key property development players in Malaysia. 5.2 Proposed Equity Fund Raising The Proposed Equity Fund Raising is undertaken to raise proceeds to be used in the manner as set out in Section 4 of this Announcement. After due consideration of the various methods of fund raising and other types of instruments as well as capital structure of the Company, the Board is of the opinion that the issuance of the and RCPS-i B via rights issue and placement are the most appropriate means of raising funds due to the following reasons: (iii) further strengthen the capital base of to reflect the enlarged operations following the Proposed I&P Acquisition; provide the Entitled Shareholders with an opportunity to further increase their equity participation in the Company on a pro-rata basis via the subscription of the Rights at a discount to the prevailing market price of, without diluting their respective equity interest, provided that such Entitled Shareholders fully subscribe for their respective entitlements for the Rights ; the issuance of the RCPS-i B would minimise the immediate dilution effect on the earnings per Share ( EPS ) as the RCPS-i B is expected to be converted over a period of time; 19

20 (iv) (v) the RCPS-i B offers an attractive annual Expected Preferential Dividend Rate of 5.93% as well as an opportunity for the Entitled Shareholders to further increase their equity participation in the Company via the convertibility feature of the RCPSi B; and the Proposed Placement will allow the Company to potentially attract more local and international institutional investors to invest in the Company, thereby enlarging its shareholders base and improving the liquidity of. 5.3 Proposed Amendments The Proposed Amendments will allow the Company to facilitate the implementation of the Proposed Rights Issue of RCPS-i B as well as to comply with the requirements of the Act which came into force in stages commencing on 31 January PROSPECTS OF THE I&P GROUP The I&P Group is a township developer with landbank of approximately 4,276 acres as at the LPD. The I&P Landbank is suitable for township development and are strategically located within the growth areas in the central part of Klang Valley and Johor Bahru. These landbanks include ongoing developments in Bandar Kinrara, Temasya Glenmarie, Alam Impian, Bandar Baru Seri Petaling, Alam Sari, Kota Bayuemas, Seri Beringin, Alam Damai and Alam Sutera in Klang Valley as well as Taman Perling, Taman Rinting, Taman Pelangi, Taman Pelangi Indah and Taman Industri Jaya in Johor Bahru. The Proposed I&P Acquisition is in line with the strategic intent of to expand its landbank where upon successful completion of the Proposed I&P Acquisition, the Group will significantly increase its prime landbank in Klang Valley and Johor Bahru. The Board is optimistic of the prospects of the I&P Group as the future development of its landbank is expected to be earnings accretive to the enlarged Group. 7. RISK FACTORS 7.1 Performance of the property market The performance of the I&P Group is subject to certain risks inherent to the property sector which the Group is also exposed to such as deterioration in prevailing market conditions, oversupply of properties, changes in demand for types of residential and commercial properties, labour and material supply shortages, and fluctuations in prices of building materials and costs of labour. Nevertheless, the Group continues to keep abreast of the latest developments in the market and will leverage on its track record as well as expertise and experience to manage these risks accordingly. 7.2 Political, regulatory and economic risks The property market is cyclical in nature and is co-related to the general economic conditions of Malaysia. Adverse developments in political, regulatory and economic conditions in Malaysia as well as political, regulatory and economic uncertainties including changes in labour laws, interest rates, fiscal and monetary policies, risks of expropriation of land by authorities and methods of taxation could materially affect the Malaysian property sector. 20

21 The Company intends to review the business development and strategies of the I&P Group as it seeks to implement prudent business, financial and risk management strategies in response to changes in political, regulatory and economic conditions. Nevertheless, there can be no assurance that any change to these factors would not have any material adverse effect on the Group s future financial performance. 7.3 Business risk The I&P Group is subject to risks inherent in the property sector which the Group is also exposed to. Such risks include adverse changes in real estate market prices, changes in demand for types of residential and commercial properties, competition from other property developers, changes in economic, social and political condition, financing options which may not be on favourable terms to the Group, delay in the completion of property development projects against scheduled completion, performance of third-party sub-contractors, labour and material supply shortages, fluctuations in the prices of building materials and costs of labour charges and adverse changes in property tax assessments and other statutory charges. Any adverse change in these conditions may have an adverse material effect on the Group. Nonetheless, the Company will ensure that its enterprise risk management policies and procedures are cascaded and embedded in the I&P Group s key business processes to ensure that the key business risks are managed to an acceptable level. 7.4 Funding risk The Company is seeking additional borrowing to partly finance the Proposed I&P Acquisition. Its ability to secure such new borrowing and the cost of such financing are dependent on numerous factors, including general economic and capital market conditions, interest rates, credit availability from banks or other lenders, restrictions imposed by the Government of Malaysia and political, social and economic conditions in Malaysia. There can be no assurance that the necessary financing will be available in amounts or on terms acceptable to the Company. 7.5 Completion risk If any of the conditions precedent of the SPA as set out in Section 1 of the Appendix is not fulfilled or waived, the Proposed I&P Acquisition cannot be completed and the potential benefits arising from the Proposed I&P Acquisition will not materialise. The Company will use its best endeavour to secure all the necessary approvals to ensure that the relevant conditions precedent that it is responsible for are fulfilled in a timely manner. 21

22 8. EFFECTS OF THE PROPOSALS The Proposed Amendments will not have any effect on the share capital, NA per Share, substantial shareholders shareholdings in, gearing and EPS of the Group. For illustrative purposes only, the proforma effects of the Proposals have taken into consideration the following: as at the LPD, the Company has the following securities: (a) (b) (c) 2,854,855,414 in issue; 1,127,625,002 outstanding RCPS-i A; and 54,116,843 outstanding employees share option ( ESOS Options ) granted/to be granted pursuant to the Company s long term incentive plan ( LTIP ); (iii) (iv) (v) (vi) KL East Sdn Bhd, a wholly-owned subsidiary of, had on 14 April 2017 entered into a conditional sale and purchase agreement with Seriemas Development Sdn Berhad to acquire a piece of freehold land measuring approximately acres located in Bangi, Selangor Darul Ehsan for a cash consideration of RM447,579,000 ( Proposed Bangi Land Acquisition ). The Proposed Bangi Land Acquisition is assumed to be completed prior to the implementation of the Proposals; the Company had, on 23 May 2017, announced a dividend reinvestment plan ("DRP") that provides the shareholders of with an option to elect to reinvest their entire final dividend of 16 sen ( Final Dividend ) in new ("7 th DRP"). The issue price per new Share pursuant to the 7 th DRP has been fixed at RM3.30. The 7 th DRP is expected to be completed prior to the implementation of the Proposals; the illustrative issue price of the Rights of RM2.84 per Rights Share, representing a discount of approximately 20.6% to the TERP of of RM3.58, based on the five (5)-day VWAMP of up to and including the DRP Ex-Date of RM3.67. Accordingly, based on the illustrative issue price, the entitlement basis for the Proposed Rights Issue of would be one (1) Rights Share for every existing eight (8) held to raise gross proceeds of up to RM1.2 billion; the illustrative issue price of the RCPS-i B of RM0.89 per RCPS-i B and the entitlement basis for the Proposed Rights Issue of RCPS-i B of two (2) RCPS-i B for every five (5) existing held to raise gross proceeds of up to RM1.2 billion. Accordingly, the illustrative Conversion Ratio is two (2) new for every nine (9) RCPSi B held. The implied conversion price is RM4.01, representing a premium of approximately 12.0% to the TERP of of RM3.58, based on the five (5)-day VWAMP of up to and including the DRP Ex-Date of RM3.67; and the illustrative issuance of 355,000,000 Placement at RM3.38 per Placement Share, representing a discount of approximately 5.5% to the TERP of of RM3.58, based on the five (5)-day VWAMP of up to and including the DRP Ex-Date of RM