In addition to the Proposed Disposal, the Company is also proposing to undertake the following proposals:-

Transcription

1 1. INTRODUCTION On behalf of the Board of Directors of Kumpulan Europlus Berhad ( KEB or Company ) ( Board ), RHB Investment Bank Berhad ( RHB Investment Bank ) and Newfields Advisors Sdn Bhd ( Newfields ) wish to announce that KEB Builders Sdn Bhd ( KEBSB or Vendor ), a whollyowned subsidiary of KEB Plantations Holdings Sdn Bhd, which in turn is a wholly-owned subsidiary of the Company had on 12 August 2013, entered into a conditional share sale agreement ( SSA ) with IJM Properties Sdn Bhd ( IJMP or Purchaser ) for the proposed disposal of its 10% equity interest held in Radiant Pillar Sdn Bhd ( RPSB ) to IJMP, for a total cash consideration of RM52.5 million, upon the terms and subject to the conditions as set out in the SSA ( Proposed Disposal ). In addition to the Proposed Disposal, the Company is also proposing to undertake the following proposals:- (a) (b) (c) a renounceable rights issue of 429,743,823 new ordinary shares of RM1.00 each in KEB ( Rights Shares ) together with 214,871,911 free detachable warrants ( Warrant(s) ), on the basis of three (3) Rights Shares for every four (4) existing ordinary shares of RM1.00 each in KEB ( KEB Shares or Shares ) held and one (1) free Warrant for every two (2) Rights Shares subscribed for on an entitlement date to be determined later ( Entitlement Date ) ( Proposed Rights Issue with Warrants ); an increase in the authorised share capital of the Company from RM1,000,000,000 comprising 1,000,000,000 KEB Shares to RM3,000,000,000 comprising 3,000,000,000 KEB Shares ( Proposed IASC ); and amendments to the Memorandum and Articles of Association ( M&A ) of the Company ( Proposed Amendments ). (The Proposed Disposal, Proposed Rights Issue with Warrants, Proposed IASC and Proposed Amendments are collectively referred to as Proposals ). 2. DETAILS OF THE PROPOSED DISPOSAL The Proposed Disposal will entail the disposal by KEBSB of 100,000 ordinary shares of RM1.00 each in RPSB ( Sale Shares ), representing 10% of the issued and paid-up share capital of RPSB, to IJMP for a total cash consideration of RM52.5 million ( Disposal Consideration ). Further information on RPSB and IJMP are set out in Appendix I and Section 3 of this Announcement respectively. 2.1 Basis and justification of arriving at the Disposal Consideration The Disposal Consideration was arrived at on a willing-seller willing-buyer basis after taking into consideration the adjusted unaudited consolidated net assets ( NA ) of RPSB as follows:- (i) the unaudited consolidated NA of RPSB for the financial period ended ( FPE ) 30 June 2013 of RM737,089; (ii) (iii) the revaluation surplus for the real property owned by RPSB ( Property ) amounting to approximately RM665.9 million based on the indicative open market value of the Property of RM1.3 billion; and the deferred tax liabilities arising from the revaluation surplus for the Property amounting to approximately RM166.5 million as agreed between KEBSB and IJMP. Based on the foregoing, the effective adjusted unaudited consolidated NA of RPSB represented by the 10% equity interest to be disposed by KEBSB to IJMP pursuant to the Proposed Disposal amounts to approximately RM50.0 million ( Effective NA ). The Disposal Consideration represents a premium of approximately 5% over the Effective NA. 1

2 The market value of the Property was appraised by an independent valuer appointed by the Company, namely PA International Property Consultants (KL) Sdn Bhd ( PA International Property or Valuer ) vide its certificate of valuation dated 30 July 2013 ( Certificate of Valuation ) using the cost and residual methods of valuation. The final valuation report will be issued in due course. 2.2 Mode of settlement The Disposal Consideration will be satisfied entirely in cash. 2.3 Liabilities to be assumed by IJMP IJMP will not be assuming any liability arising from the Proposed Disposal. 2.4 Original cost of investment in RPSB by KEBSB The original cost of investment in RPSB by KEBSB in respect of the ten percent (10%) equity interest to be disposed amounts to approximately RM100,000 which was incurred on 16 December Expected gain arising from the Proposed Disposal The Proposed Disposal is expected to result in a net gain on disposal of approximately RM51.5 million based on the carrying value of KEB s investment in RPSB for the financial year ended ( FYE ) 31 January 2013 and after taking into consideration the estimated expenses in relation to the Proposed Disposal amounting to approximately RM1.0 million. 2.6 Salient terms of the SSA Agreement to sell (a) (b) (c) In consideration of the payment by the Purchaser, upon the execution of the SSA, of a sum equivalent to 10% of the Disposal Consideration ( Deposit ) to the Vendor s solicitors, Nazri Aziz & Wong ( Vendor s Solicitors ), acting as stakeholder for both the Purchaser and the Vendor (individually, Party and collectively, Parties ), the Vendor agrees to sell and the Purchaser agrees to purchase the Sale Shares free from all charges or liens or any other encumbrances thereto and with all rights now or hereinafter attaching thereto including but without limitation, all bonuses, rights, dividends and distributions declared paid or made in respect thereof after the date for completion of the sale and purchase of the Sale Shares for the Disposal Consideration and upon the terms and conditions contained in the SSA. Pending the release of the Deposit in accordance with Section below, the Deposit must be held in an interest bearing account with interest for the benefit of the Party entitled to the Deposit. The Vendor will within three (3) days from the execution of the SSA, deposit with the Vendor s Solicitors, acting as stakeholder for both Parties, (i) the share certificates and (ii) the duly signed but undated and otherwise valid and registrable share transfers in prescribed form in favour of the Purchaser and/or its nominee(s) as the Purchaser may elect, in respect of the Sale Shares, pending completion of the sale of the Sale Shares. The Purchaser s nominee(s) must be a wholly owned subsidiary of the Purchaser or its holding company. The Vendor s Solicitor may not deal with the Deposit or the instruments delivered in accordance with this Section other than in accordance with the express provisions of the SSA or by written agreement of both Parties. 2

3 2.6.2 Payment of the balance Disposal Consideration The difference between the Disposal Consideration and the Deposit ( Balance ) shall be paid by the Purchaser to the Vendor s Solicitors on a business day no later than 21 days after the date when all the approvals as set out in Section below have been obtained and notified to all Parties ( Unconditional Date ), or on such other date as the Vendor and the Purchaser may mutually agree in writing Conditions Precedent Notwithstanding anything to the contrary contained in the SSA, completion of the sale and purchase in the SSA is conditional upon the fulfilment of the following conditions within the period of six (6) months from the date of the SSA or such longer period as the Parties may agree in writing ( Conditional Period ):- (a) (b) (c) (d) (e) (f) the relevant approval of the sale and purchase by the shareholders in general meeting of KEB in accordance with Chapter of the Listing Requirements; the approval of the shareholders of the Vendor for the Proposed Disposal; the approval of the Boards of Directors of KEB and the Vendor for the Proposed Disposal; the approval of the shareholders of the Purchaser for the acquisition of the Sale Shares from the Vendor; the approval of the Boards of Directors of IJML and the Purchaser for the acquisition of the Sale Shares from the Vendor; and the written consent of RHB Investment Bank and RHB Bank Berhad ( Lenders ) to the sale of the Sale Shares pursuant to the Syndicated Bridging Loan Facility Agreement dated 24 September 2007 between RPSB and the Lenders Termination (a) (b) If any of the approvals or consent is not given by the expiration of the Conditional Period, either Party may thereupon by giving notice of its intention to terminate the SSA to the other Party, summarily terminate the SSA and the SSA shall be at an end and of no further effect and no Party shall have any further claim against the other pursuant to the terms of the SSA or arising therefrom save as provided in Section 2.6.4(b) below. On termination of the SSA pursuant to Section 2.6.4(a) above, the Deposit shall be refunded to the Purchaser, together with interest accrued, if any, within seven (7) days of a notice of termination issued by the Party electing to terminate the SSA Completion The Deposit shall be released by the Vendor s Solicitors to the Vendor upon the expiry of three (3) days from the Unconditional Date. Completion of the sale of the Sale Shares under the SSA shall take place on a business day no later than 21 days after the Unconditional Date ( Completion Period ) or on such other date as the Vendor and the Purchaser may mutually agree in writing ( Completion Date ), whereupon, amongst others:- (i) The Purchaser shall pay to the Vendor s Solicitors the Balance; 3

4 (ii) (iii) Subject always to the prior compliance and/or fulfilment of Section (i), the Vendor s Solicitors shall be authorised to release to the Purchaser s solicitors, Raslan Loong ( Purchaser s Solicitors ) (a) the share certificates and (b) the duly signed but undated and otherwise valid and registrable share transfers in prescribed form in favour of the Purchaser and/or its nominee(s), in respect of the Sale Shares; The Vendor s Solicitors are authorised by the Parties to forthwith release the Balance to the Vendor upon confirmation of receipt of (a) the share certificates and (b) the duly signed but undated and otherwise valid and registrable share transfers in prescribed form in respect of the Sale Shares, from the Purchaser s Solicitors Specific performance Either Party shall be entitled to the rights of specific performance against the other Party in default under the provisions of the SSA and it is mutually agreed that in the event of either Party exercising its right to specific performance of the SSA, monetary compensation shall not be regarded as sufficient for the other Party's default in the performance of the terms and conditions of the SSA. 3. INFORMATION ON IJMP IJMP (Company No M) was incorporated in Malaysia under the Act on 18 April 1983 in the name of Camino Sdn Bhd and changed to IJMP on 21 December IJMP is principally engaged in investment holding, property development and related activities. The subsidiaries of IJMP are principally engaged in investment holding, property development, property management and car parking services, project and construction management services, civil and building construction, renovation and interior fitout services. As at 31 July 2013, being the latest practicable date prior to the date of this Announcement ( LPD ), the authorised and issued and paid-up share capital of IJMP is RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each. As at LPD, IJMP is a wholly-owned subsidiary of IJM Land Berhad ( IJML ) which in turn is a 63.48%-owned subsidiary of IJM Corporation Berhad ( IJM ) and the directors of IJMP are Dato Teh Kean Ming, Dato Soam Heng Choon and Edward Chong Sin Kiat. 4. DETAILS OF THE PROPOSED RIGHTS ISSUE WITH WARRANTS The Proposed Rights Issue with Warrants entails a renounceable rights issue of 429,743,823 Rights Shares together with 214,871,911 free detachable Warrants on the basis of three (3) Rights Shares for every four (4) existing KEB Shares held and one (1) Warrant for every two (2) Rights Shares subscribed for as at the Entitlement Date. The number of Rights Shares and Warrants was arrived at based on the existing issued and paid-up share capital of KEB as at LPD of RM572,991,765 comprising 572,991,765 KEB Shares. The Rights Shares will be provisionally allotted to the entitled shareholders of KEB whose names appear in the Record of Depositors of the Company at the close of business on the Entitlement Date ( Entitled Shareholders ). Fractional entitlements for the Rights Shares and/or Warrants, if any, will be dealt with in such manner and on such terms and conditions as the Board in its absolute discretion deem fit or expedient or in the best interests of the Company. 4

5 The entitlement for the Rights Shares together with the Warrants is renounceable in full or in part. Accordingly, Entitled Shareholders can subscribe for and/or renounce their entitlements to the Rights Shares together with the Warrants in full or in part. However, the Rights Shares and the Warrants cannot be renounced separately. Should the Entitled Shareholders renounce all their entitlements to the Rights Shares under the Proposed Rights Issue with Warrants, they will not be entitled to the Warrants. However, if the Entitled Shareholders accept part of their entitlements to the Rights Shares under the Proposed Rights Issue with Warrants, they shall be entitled to the Warrants in proportion of their acceptance to their entitlements to the Rights Shares. The Warrants will be immediately detached from the Rights Shares upon issuance and will be separately traded on Bursa Malaysia Securities Berhad ( Bursa Securities ). The Rights Shares which are not taken up or not validly taken up shall be made available for excess applications by the other Entitled Shareholders and/or their renouncee(s). It is the intention of the Board to allocate the excess Rights Shares in a fair and equitable manner and on such basis as it may deem fit or expedient and in the best interest of the Company, to be determined by the Board and announced later by the Company. The indicative salient terms of the Warrants are set out in Appendix II of this Announcement. 4.1 Minimum subscription level and major shareholders undertakings The Proposed Rights Issue with Warrants is not undertaken on a minimum subscription level basis. The Company will endeavor to procure undertakings from its major shareholder(s) to subscribe in full and/or procure the subscription in full of their respective entitlements under the Proposed Rights Issue with Warrants ( Undertakings ). Such Undertakings are expected to be finalised prior to the tabling of the resolution pertaining to the Proposed Rights Issue with Warrants to the shareholders of the Company at an Extraordinary General Meeting ( EGM ) to be convened. Underwriting arrangement(s) will be made by the Company for the remaining Rights Shares with Warrants for which Undertakings cannot be procured, in due course. Such underwriting arrangement(s) are expected to be in place prior to the implementation of the Proposed Rights Issue with Warrants. 4.2 Basis of determining the issue price of the Rights Shares and exercise price for the Warrants The issue price for the Rights Shares and the exercise price of the Warrants will be determined and fixed by the Board at a later date ( Price Fixing Date ), based on a discount that is deemed appropriate after taking into consideration, inter-alia, the prevailing market conditions, historical share price of KEB and the theoretical ex-rights price ( TERP ) of KEB Shares based on the five (5)-day volume weighted average market price ( VWAP ) of KEB Shares immediately prior to the Price Fixing Date but shall in no event be lower than the par value of KEB Shares of RM1.00 each. For illustrative purposes only:- (i) (ii) the indicative issue price of the Rights Shares is assumed at RM1.08 per Rights Shares, representing a discount of approximately 8.5% to the TERP of KEB Shares of approximately RM1.18, based on the five (5)-day VWAP of KEB Shares up to LPD of RM1.25; and the exercise price of the Warrants is assumed at RM1.18 per Warrant which is equivalent to the TERP of KEB Shares, based on the five (5)-day VWAP of KEB Shares up to LPD of RM

6 4.3 Ranking of the Rights Shares and new KEB Shares to be issued pursuant to the exercise of Warrants The Rights Shares and the new KEB Shares to be issued pursuant to the exercise of the Warrants shall upon allotment and issue, rank pari passu in all respects with the then existing KEB Shares, save and except that they shall not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid to shareholders, the entitlement date of which is prior to the allotment date of the Rights Shares and new KEB Shares to be issued pursuant to the exercise of the Warrants respectively. 4.4 Listing of the Rights Shares, Warrants and new KEB Shares to be issued pursuant to the exercise of Warrants An application will be made for the admission of the Warrants to the Official List of Bursa Securities as well as for the listing of and quotation for the Rights Shares, Warrants and new KEB Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities. 5. DETAILS OF THE PROPOSED IASC As at LPD, the authorised share capital of the Company is RM1,000,000,000 comprising 1,000,000,000 KEB Shares, of which RM572,991,765 comprising 572,991,765 KEB Shares have been issued and credited as fully paid-up. Upon completion of the Proposed Rights Issue with Warrants and assuming that the Warrants are fully exercised, the issued and paid-up share capital of the Company will increase to RM1,217,607,499 comprising 1,217,607,499 KEB Shares. As such, the Company proposes to increase its authorised share capital to RM3,000,000,000 comprising 3,000,000,000 KEB Shares to facilitate the Proposed Rights Issue with Warrants. 6. DETAILS OF THE PROPOSED AMENDMENTS The Proposed Amendments entails amendments to the M&A of the Company in order to accommodate the implementation of the Proposed IASC. 7. UTILISATION OF PROCEEDS RAISED FROM THE PROPOSED DISPOSAL AND PROPOSED RIGHTS ISSUE WITH WARRANTS The total amount of proceeds to be raised pursuant to the Proposed Disposal and Proposed Rights Issue with Warrants (based on the indicative issue price of RM1.08 per Rights Share) and the intended manner of utilisation of the said proceeds are as follows:- Note Amount RM 000 Timeframe for utilisation * 1. Proposed Disposal - Injection as equity, convertibles and/or (a) 49,000 Within 12 months subordinated advances into an 80%-owned subsidiary of the Company, West Coast Expressway Sdn Bhd ( WCESB ) - Working capital and contingencies (b) 2,500 Within 12 months - Defray estimated expenses relating to the Proposed Disposal (c) 1,000 Within 6 months 52,500 6

7 Note Amount RM 000 Timeframe for utilisation * 2. Proposed Rights Issue with Warrants - Injection as equity, convertibles and/or (a) 378,000 Within 12 months subordinated advances into WCESB - Repayment of bank borrowings (d) 68,500 Within 12 months - Working capital and contingencies (b) 11,623 Within 12 months - Defray estimated expenses relating to the (e) 6,000 Within 6 months Proposed Rights Issue with Warrants 464, ,623 Notes:- * (a) (b) (c) (d) (e) From the date of completion of the Proposed Disposal and Proposed Rights Issue with Warrants respectively. On 2 January 2013, WCESB signed a concession agreement with the Government of Malaysia in relation to the West Coast Expressway Project ( WCE Project ). The WCE Project involves the development of on expressway from Banting in Selangor to Taiping in Perak with 233 kilometres of toll highway. The project cost is estimated to be in the region of RM6.0 billion and the construction period is expected to take five (5) years. The equity injection will be carried out on a pro-rata basis amongst the shareholders of WCESB and hence will not have any effect on the shareholdings structure of WCESB. Pending completion of the Proposed Rights Issue with Warrants, the Company may obtain a bridging loan to facilitate and expedite its equity injection into WCESB. In the event that the bridging loan is obtained, such amount of proceeds allocated for equity injection into WCESB shall be utilised to repay the bridging loan. Working capital and contingencies will be utilised to finance the day-to-day operations of the Group such as payment to trade creditors, salary and wages, other payables and other contingency expenses, if any. The expenses relating to the Proposed Disposal comprise, amongst others, the estimated professional fees and fees payable to the relevant authorities, expenses to convene the EGM, printing, despatch and advertising expenses as well as other miscellaneous charges. Any variation in the actual utilisation from the estimated amount will be adjusted to or from the amount allocated for working capital. RM68.5 million has been earmarked by the Company for the repayment of the KEB group of companies ( KEB Group or Group ) bank borrowings (including interest). As at 30 June 2013, the total bank borrowings of KEB Group stood at RM130.1 million. The expenses relating to the Proposed Rights Issue with Warrants comprise, amongst others, the estimated professional fees and fees payable to the relevant authorities, underwriting commission, expenses to convene the EGM, printing, despatch and advertising expenses as well as other miscellaneous charges. The actual gross proceeds to be raised from the Proposed Rights Issue with Warrants is dependent on the final issue price and the number of Rights Shares to be issued. Any variation in the actual proceeds raised from the Proposed Rights Issue with Warrants and the consequential changes to the actual utilisation of proceeds will be adjusted to or from the amount allocated for working capital. The proceeds from the Proposed Disposal and Proposed Rights Issue with Warrants will be placed in deposits with financial institutions and/or short-term money market instrument(s) in the event that the proceeds are not immediately utilised. The Warrants will not raise any immediate proceeds as they will be issued free to Entitled Shareholders who subscribe for their respective entitlements under the Proposed Rights Issue with Warrants. The proceeds arising from the exercise of the Warrants in the future, the quantum of which is dependent upon the actual number of Warrants exercised as well as the final exercise price, shall be utilised for the future funding requirements of the WCE Project. Based on the issuance of 214,871,911 Warrants and the exercise price of RM1.18 per new KEB Share, the Company is expected to raise approximately RM253.5 million from the full exercise of the Warrants. 7

8 8. RATIONALE FOR THE PROPOSALS 8.1 Proposed Disposal The Proposed Disposal will provide an opportunity for the KEB Group to realise and unlock the value of its investments in its associate company, namely RPSB, at a premium over the Effective NA of RPSB in the manner as set out in Section 2.1 of this Announcement. The Proposed Disposal will enable the KEB Group to realise a net gain on disposal of approximately RM51.5 million based on the carrying value of KEB s investment in RPSB for the FYE 31 January The Proposed Disposal enables KEB to re-mobilise capital and resources for expansion of the business operations of KEB into the WCE Project, which is expected to enable the KEB Group to generate a long term and stable stream of income moving forward. Upon completion of the Proposed Disposal, IJML will effectively own 60% of the issued and paid-up share capital of RPSB, thereby making it a subsidiary company. Henceforth, KEB Group is expected to benefit immensely from the management expertise and core competencies of IJMP and IJML in township development. The IJM Land branding is also expected to enhance the value of the Bandar Rimbayu Development. The Board is also of the view that the Proposed Disposal provides an alternative manner of fund raising for the WCE Project and at the same time allow KEB Group to continue participating in the future prospects of RPSB via its remaining 40% equity interest held in RPSB. 8.2 Proposed Rights Issue with Warrants The Proposed Rights Issue with Warrants will enable KEB to raise the requisite funds to partially finance the WCE Project which is expected to provide a steady source of earnings to the KEB Group moving forward. After due consideration of the various methods of fund-raising such as the issuance of private debt securities or bank borrowings as well as the capital structure of the Company, the Board is of the opinion that the Proposed Rights Issue with Warrants is the most appropriate means of raising funds for the following reasons:- (a) (b) (c) (d) the Proposed Rights Issue with Warrants will enable the Company to raise the requisite funds without incurring additional interest expense, as compared to bank borrowings, thereby minimising any potential cash outflow in respect of interest servicing; the Proposed Rights Issue with Warrants will involve the issuance of new KEB Shares without diluting shareholders percentage shareholdings provided that all Entitled Shareholders subscribe in full for their respective entitlements under the Proposed Rights Issue with Warrants; the Proposed Rights Issue with Warrants will provide the Entitled Shareholders with an opportunity to further participate in the prospects and future growth of the KEB Group by subscribing to the Rights Shares with Warrants; the Proposed Rights Issue with Warrants would also increase the KEB Group s shareholders funds and strengthen its balance sheet whilst the enlarged share base is expected to enhance the liquidity of KEB Shares on the Main Market of Bursa Securities; and 8

9 (e) the Warrants attached to the Rights Shares are expected to provide the Entitled Shareholders with an incentive to subscribe for the Rights Shares. The Entitled Shareholders who subscribe for the Rights Shares may also benefit from the potential capital appreciation on the Warrants which will be traded separately from the KEB Shares on the Main Market of Bursa Securities. In addition, the Company would also be able to raise further proceeds as and when any of the Warrants are exercised. 8.3 Proposed IASC The Proposed IASC is required to accommodate the Company s enlarged issued and paid-up capital pursuant to the Proposed Rights Issue with Warrants and the subsequent exercise of the Warrants into new KEB Shares. 8.4 Proposed Amendments The Proposed Amendments is to accommodate the implementation of the Proposed Rights Issue with Warrants as the Company is required to amend the necessary clauses of the M&A to accommodate the Proposed IASC. 9. RISK FACTORS FOR THE PROPOSED DISPOSAL Save as disclosed below, the Board is not aware of any other risk factor arising from the Proposed Disposal which could materially or adversely affect the financial position of the Group:- 9.1 Non-completion of the Proposed Disposal There is a possibility that the SSA may not be completed due to failure in fulfilling the conditions precedent as set out in the SSA within the stipulated timeframe. In addition, the Proposed Disposal is conditional upon the approvals from the shareholders of KEB, as disclosed in Section 11 of this Announcement. Nevertheless, KEB will take reasonable steps to ensure that the conditions precedent is met within the stipulated timeframe and that every effort is made to obtain all the necessary approvals for the Proposed Disposal in order to complete the Proposed Disposal in a timely manner. 10. EFFECTS OF THE PROPOSALS The Proposed IASC and the Proposed Amendments will not have any effect on the issued and paid-up share capital, NA per Share and gearing, consolidated earnings and earnings per KEB Share ( EPS ) and shareholdings of the substantial shareholders of KEB. The proforma financial effects of the Proposed Disposal and the Proposed Rights Issue with Warrants are set out below: Share capital The Proposed Disposal will not have any effect on the issued and paid-up share capital of KEB as the Disposal Consideration will be satisfied entirely in cash. 9

10 The proforma effects of the Proposed Rights Issue with Warrants on the issued and paid-up share capital of KEB are set out below:- Number of Shares RM As at LPD 572,991, ,991,765 To be issued pursuant to the Proposed Rights Issue with Warrants 429,743, ,743,823 1,002,735,588 1,002,735,588 To be issued pursuant to the full exercise of the Warrants 214,871, ,871,911 Enlarged issued and paid-up share capital 1,217,607,499 1,217,607, NA per share and gearing The proforma effects of the Proposed Disposal and the Proposed Rights Issue with Warrants on the consolidated NA and gearing of KEB based on the latest audited consolidated statement of financial position of KEB as at 31 January 2013 are as follows:- (I) (II) (III) (IV) Audited as at 31 January 2013 After adjusting for events after 31 January 2013 up to LPD * After (I) and the Proposed Disposal After (II) and the Proposed Rights Issue with Warrants After (III) and assuming full exercise of the Warrants (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) Share capital 520, , ,992 1,002,736 1,217,608 Reserves - Share premium 36,965 42,335 42,335 42,335 (d),(e) 141,176 (g) - Foreign exchange (458) (458) (458) (458) (458) - Accumulated losses (456,482) (457,091) (405,591) (c) (437,376) (e) (437,376) - Warrants reserve ,164 (e) - NA/ Shareholders funds 101, , , , ,950 Number of Shares 520, , ,992 1,002,736 1,217,608 outstanding ( 000) NA per Share (RM) (a) Interest-bearing 133, , ,549 83,549 (f) 83,549 borrowings Gearing (times) (b) Notes:- * (a) (b) (c) (d) (e) (f) (g) After taking into account the share of additional losses in RPSB amounting to approximately RM0.61 million and KEB s private placement exercise involving the issuance of 52,000,000 KEB Shares at an issue price of RM1.11 per KEB Share, which was completed on 31 July Calculated based on NA over number of Shares outstanding. Calculated based on total interest-bearing borrowings over NA. After taking into consideration the gross gain on disposal of approximately RM52.5 million and after deducting estimated expenses amounting to approximately RM1.0 milion in relation to the Proposed Disposal. Based on the indicative issue price of RM1.08 per Rights Share and after deducting estimated expenses amounting to approximately RM6.0 million in relation to the Proposed Rights Issue with Warrants. Based on the indicative fair value of the Warrants as at LPD of RM0.28, which is partly debited from the share premium account whilst the balance is charged to accumulated losses. After repayment of bank borrowings amounting to approximately RM50.0 million (principal amount) via the proceeds raised from the Proposed Rights Issue with Warrants. Based on the indicative exercise price of RM1.18 per Warrant. 10

11 10.3 Substantial shareholders shareholdings The Proposed Disposal will not have any effect on the substantial shareholders shareholdings in KEB. For illustrative purposes only and the assumption that all the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue with Warrants, the proforma effects of the Proposed Rights Issue with Warrants on the shareholdings of the substantial shareholders of KEB are as follows:- (I) (II) As at LPD After the Proposed Rights Issue with Warrants After (I) and assuming that the Warrants are exercised in full < Direct > < Indirect > < Direct > < Indirect------> < Direct > < Indirect------> No. of Shares % No. of Shares % No. of Shares % No. of Shares % No. of Shares % No. of Shares % Tan Sri Dato (Dr) Ir 131,893, ,761,761 (1) ,813, ,833,081 (1) ,273, ,368,741 (1) 1.18 Chan Ah Chan Chong Yoon ( TSDCAC ) * Puan Sri Datin Thong ,655,307 (2) ,646,787 (2) ,642,527 (2) Nyok Choo ( PSDTNC ) * IJM 124,245, ,429, ,021, Notes:- * (1) (2) On 12 July 2013, TSDCAC and Sze Choon Holdings Sdn Bhd ( SCHSB ) have entered into a share sale agreement with MWE Holdings Berhad ( MWE ) for the disposal of their shares amounting to an aggregate of 115,400,000 KEB Shares, representing approximately 20.14% of the total issued and paid-up share capital of KEB for a total cash consideration of approximately RM million or RM1.35 per KEB Share. Upon completion of the disposal of their stake to MWE, TSDCAC and PSDTNC shall cease to be substantial shareholders of KEB. Deemed interested through his daughter, Chan Siu Wei ( CSW ) and by virtue of his interest in Pengurusan Projek Bersistem Sdn Bhd ( PPBSB ) and SCHSB pursuant to Section 134(12)(c) and Section 6A of the Companies Act, 1965 ( Act ). Deemed interested through her spouse, TSDCAC as well as her daughter, CSW and by virtue of her interest in PPBSB and SCHSB pursuant to Section 134(12)(c) and Section 6A of the Act. 11

12 10.4 Earnings and EPS The Proposed Disposal will result in a net gain on disposal amounting to approximately RM51.5 million which will translate into an improvement in EPS by approximately RM0.09 per KEB Share upon completion of the Proposed Disposal. The Proposed Rights Issue with Warrants is not expected to have any material effect on the earnings of KEB Group for the FYE 31 January 2014 save for the dilution in EPS as a result of the increase in the number of KEB Shares in issue pursuant to the Proposed Rights Issue with Warrants as it is expected to be completed in the 4 th quarter of The consolidated EPS of KEB is expected to be further diluted arising from the number of new KEB Shares to be issued pursuant to the exercise of Warrants. However, as part of the proceeds to be raised from the Proposed Rights Issue with Warrants will be utilised to repay the KEB Group s bank borrowings, this will result in an annual interest savings of approximately RM6.03 million to KEB, based on the Group s average cost of borrowings of 8.8% per annum. In addition to the above, as part of the proceeds to be raised from the Proposed Rights Issue with Warrants will also be utilised for injection as equity, convertibles and/or subordinated advances into WCESB, which in turn will be utilised to partially fund the WCE Project, the Proposed Rights Issue with Warrants is expected to contribute positively to the future earnings of the KEB Group after completion of the WCE Project. Nevertheless, the potential impact of the dilution on the future earnings and EPS of the KEB Group will also depend on the level of return generated by the utilisation of proceeds arising from the Proposed Disposal and Proposed Rights Issue with Warrants Convertible securities As at LPD, KEB does not have any convertible security. 11. APPROVALS REQUIRED FOR THE PROPOSALS The Proposals are subject to the following approvals being obtained:- (a) the approval of Bursa Securities for:- (i) (ii) the admission of the Warrants to the Official List of Bursa Securities; and the listing of and quotation for the Rights Shares and Warrants to be issued pursuant to the Proposed Rights Issue with Warrants as well as the new Shares to be issued arising from the exercise of the Warrants on the Main Market of Bursa Securities; (b) (c) (d) the approval of the shareholders of KEB at an EGM to be convened in respect of the Proposals; the approval or consent of the financiers/creditors of KEBSB and/or RPSB; and the approval of any other relevant authority, if required. The Proposed Disposal is not conditional upon the Proposed Rights Issue with Warrants, Proposed IASC and Proposed Amendments and vice versa. The Proposed Rights Issue with Warrants, Proposed IASC and Proposed Amendments are interconditional upon each other. Save for the above, the Proposals are not conditional upon any other corporate proposal of the Company. 12

13 12. PERCENTAGE RATIO FOR THE PROPOSED DISPOSAL The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Listing Requirements is 51.97%, computed based on the latest audited consolidated financial statements of the Company for the FYE 31 January INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO THEM Save as disclosed below, none of the directors, major shareholders and/or persons connected to them have any interest, direct or indirect, in the Proposals, save for their entitlements as shareholders of the Company pursuant to the Proposed Rights Issue with Warrants which are also available to other shareholders of the Company. IJMP, being the Purchaser, is a subsidiary of IJM, which in turn is a major shareholder of the Company. Hence, IJM is deemed interested in the Proposed Disposal ( Interested Major Shareholder ). Accordingly, IJM will abstain from voting in respect of its direct and/or indirect interest in KEB on the resolution pertaining to the Proposed Disposal at the EGM to be convened. IJM has undertaken that it will ensure that all persons connected with it will abstain from voting in respect of their direct and/or indirect interest in KEB, if any, on the resolution pertaining to the Proposed Disposal at the said EGM. The direct and indirect interest of the Interested Major Shareholder in KEB as at LPD are as follows:- Interested Major Shareholder < Direct > < Indirect > No. of shares % No. of shares % IJM 124,245, AMOUNT TRANSACTED WITH THE INTERESTED DIRECTOR AND INTERESTED MAJOR SHAREHOLDER FOR THE PRECEDING 12 MONTHS As at LPD, the Company has not entered into any transaction (not being a transaction within the ordinary course of business) with the Interested Major Shareholder for the preceding 12 months. 15. DIRECTORS STATEMENT The Board is of the opinion that the Proposals are in the best interest of KEB Group and the terms of the Proposed Disposal is fair, reasonable and on normal commercial terms and hence will not be detrimental to the interest of the non-interested shareholders. The view of the Board was arrived at after having considered, inter-alia, the terms and conditions of the SSA, the rationale for the Proposals, the proforma effects of the Proposals as well as after discussion with the advisers appointed by the Company. Further information on the appointment of the independent adviser in respect of the Proposed Disposal is set out in Section 17 of this Announcement. 16. STATEMENT BY THE AUDIT COMMITTEE The Audit Committee is of the opinion that the Proposed Disposal is in the best interest of the KEB Group and the terms of the Proposed Disposal are fair, reasonable and on normal commercial terms and hence will not be detrimental to the interest of the non-interested shareholders. 13

14 The view of the Audit Committee was arrived at after having considered, inter-alia, the terms and conditions of the SSA, the rationale for the Proposed Disposal, the proforma effects of the Proposed Disposal as well as after discussions with the advisers appointed by the Company. Further information on the appointment of the independent adviser in respect of the Proposed Disposal is set out in Section 17 of this Announcement. 17. ADVISERS RHB Investment Bank and Newfields have been appointed as Principal Adviser and Financial Adviser to KEB for the Proposals respectively. PA International Property has been appointed to conduct valuations on the Property. In view that the Proposed Disposal is deemed a related party transaction under Paragraph of the Listing Requirements, Hong Leong Investment Bank Berhad has been appointed to act as the Independent Adviser to provide the non-interested directors and non-interested shareholders of KEB with an independent evaluation of the Proposed Disposal. The views of the Independent Adviser will be sought in due course and their independent advice letter will be circulated to the shareholders of the Company. 18. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed in the 4 th quarter of APPLICATION TO THE AUTHORITIES Barring unforeseen circumstances, the applications to the relevant authorities in relation to the Proposals will be made within two (2) months from the date of this Announcement. 20. DOCUMENTS FOR INSPECTION The SSA and Certificate of Valuation will be made available for inspection at KEB s registered office at Suite 2.12, Level 2, Menara Maxisegar, Jalan Pandan Indah 4/2, Kuala Lumpur, during normal working hours for a period of three (3) months from the date of this Announcement. This announcement is dated 12 August

15 APPENDIX I INFORMATION ON RPSB 1. Background information RPSB (Company no W) was incorporated in Malaysia under the Act on 21 December 1999 as a private limited company. RPSB, an investment holding company, is a 50:50 joint venture company of KEB and IJML, through their wholly-owned subsidiaries. Bandar Rimbayu Sdn Bhd, the whollyowned subsidiary of RPSB is primarily engaged in property development. As at LPD, the authorised and issued and paid-up share capital of RPSB is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each. As at LPD, the directors of RPSB are Chua Kim Lan, Lourdes Puspham Dass, Dato Teh Kean Ming and Cyrus Eruch Daruwalla. 2. Substantial shareholders and substantial shareholders shareholdings As at LPD, the substantial shareholders of RPSB and their respective shareholdings in RPSB are as follows:- < Direct > < Indirect > No. of shares in RPSB % No. of shares in RPSB % IJMP 500, KEBSB * 400, KEB Management Sdn Bhd * 100, KEB Plantations Holdings Sdn ,000 (1) 40.0 Bhd * KEB ,000 (2) 50.0 IJML ,000 (3) 50.0 IJM - - 1,000,000 (4) Notes:- * (1) (2) (3) (4) Wholly-owned subsidiaries of the Company. Deemed interested by virtue of its interest in KEBSB pursuant to section 6A of the Act. Deemed interested by virtue of its interest in KEB Plantations Holdings Sdn Bhd and KEB Management Sdn Bhd pursuant to Section 6A of the Act. Deemed interested by virtue of its interest in IJMP pursuant to Section 6A of the Act. Deemed interested by virtue of its interests in IJML and KEB pursuant to Section 6A of the Act. 3. Summary of financial information The audited consolidated financial information of RPSB for the past three (3) FYE 31 January 2011 to 2013 and its latest unaudited financial information for the FPE 30 June 2013 are as set out below:- < Audited > FYE 31 January 2011 FYE 31 January 2012 FYE 31 January 2013 Unaudited FPE 30 June 2013 RM 000 RM 000 RM 000 RM 000 Revenue ,005 (2) (Loss)/ Profit before taxation (976) (1,121) (8,167) (1) 5,257 (2) (Loss)/ Profit after taxation (1,212) (1,117) (6,163) 3,938 (Loss)/ Profit after taxation and non-controlling interest (1,212) (1,117) (6,163) 3,938 Share capital ( 000) 1,000 1,000 1,000 1,000 Shareholders funds/na 4,080 2,962 (3,201) 737 Notes:- (1) (2) The increase of the RPSB group of companies loss after taxation for FYE 31 January 2013 was mainly due to expenditure on sales and marketing activities and staff costs relating to the Bandar Rimbayu Development. For FPE 30 June 2013, the RPSB group of companies recorded revenue and profit before taxation amounting to approximately RM59.01 million and RM5.3 million respectively, as a result of the launch of Phase 1 of the Bandar Rimbayu Development, namely, The Bandar Rimbayu in March

16 APPENDIX I INFORMATION ON RPSB (Cont d) 4. Information on the Property Registered owner(s) RPSB Identification / Postal Address PT H.S.(D) 33593; PT H.S.(D) 33597; PT H.S.(D) 33598; PT H.S.(D) 33599; PT H.S.(D) 33600; PT H.S.(D) 33601; PT H.S.(D) 33602; PT H.S.(D) 33603; PT H.S.(D) 33604; PT H.S.(D) 33605; PT H.S.(D) 33606; PT H.S.(D) 33607; PT H.S.(D) 33608; PT H.S.(D) 33609; PT H.S.(D) 33610; PT H.S.(D) 33611; PT H.S.(D) 33612; PT H.S.(D) 33613; PT H.S.(D) 33614; PT H.S.(D) 33615; PT H.S.(D) 33616; PT H.S.(D) 33617; PT H.S.(D) 33618; and PT H.S.(D) and 1,010 subdivided lots (Phase 1 & Phase 2) Within Mukim of Tanjung Dua belas, District of Kuala Langat, State of Selangor. Land area (acres) 1, (Gross); 1, (Combined Title Land Area) Tenure (years) Leasehold interest for 99 years expiring on 17 th December 2111, 18 th December 2111, 23 rd December 2111 & 24 th January 2112 Existing/ Proposed use Building in respect of all titles Encumbrance Nil ^ Original cost of investment/ Date RM409,000,000/ 13 August 2010 Audited net book value * RM572,822,042 Valuation/ Date RM1,300,000,000/ 30 June 2013 Valuer PA International Property Method(s) of valuation Cost and residual Development potential (if applicable) Proposed for mixed residential and commercial development together with other facilities, amenities, public infrastructure and reserves. Expected commencement/ completion date 2013 to 2025 Expected gross development value RM12 billion Expected gross development cost n.a. Expected profits to be derived n.a. Stage of completion (%) n.a. Source of funds for development Bank borrowings and internally generated funds Relevant approvals obtained/ date obtained Planning approvals granted by Majlis Daerah Kuala Langat on 22 nd February 2012 and 12 th June 2013 along with its approved layout plans dated 13 th February 2012, 15 th February 2012 and 12 th June Notes:- * ^ n.a Based on the latest audited financial statements of the Company. Pending registration of legal charges in favour of a financial institution for loan facilities as of the date of this Announcement. Not available as at the date of this announcement as the company has yet to finalise the development plans for the entire township development. Therefore, it is too preliminary to ascertain the total development cost and the expected profit to be derived from the Development at this juncture. The stage of completion is also not available due to the absence of the total development cost. 16

17 APPENDIX II INDICATIVE SALIENT TERMS OF THE WARRANTS Terms Details Number of Warrants : 214,871,911 Warrants to be issued in conjunction with the Proposed Rights Issue with Warrants to the Entitled Shareholders of KEB on the basis of one (1) Warrant for every two (2) Right Shares successfully subscribed. Form and denomination : The Warrants will be issued in registered form and will be detached from the Rights Shares upon issuance and separately traded on Bursa Securities. Exercise Price : The exercise price of the Warrants will be determined at a later date by the Board after taking into consideration the TERP of the KEB Shares at a price fixing date to be determined by the Board, subject to the exercise price not being less than the par value of KEB Shares. Exercise Period : The Warrants may be exercised any time over a period of two (2) years including and commencing from the issue date of the Warrants. Any Warrants not exercised during the Exercise Period will thereafter lapse and become void. Exercise Rights : Each Warrant entitles the registered holder to subscribe for one (1) new KEB Share at the Exercise Price during the Exercise Period and shall be subject to adjustments in accordance with the deed poll to be executed by KEB ( Deed Poll ). Mode of exercise : The registered holder of Warrant is required to lodge an exercise form with the Company s registrar, duly completed, signed and stamped together with payment of the Exercise Price by way of bankers draft or cashier s order drawn on a bank operating in Malaysia or money order or postal order issued by a post office in Malaysia. Mode of transfer : The Warrants are transferable by an instrument of transfer in the usual or common form or such other form as the Directors of KEB and Bursa Securities may approve. Deed Poll : The Warrants will be constituted by a Deed Poll to be executed by KEB. Board Lot : For the purpose of trading on the Bursa Securities, a board lot of Warrants shall comprise 100 Warrants carrying the right to subscribe for 100 new KEB Shares at any time during the Exercise Period, or such denomination as determined by Bursa Securities. Rights of Warrant holder(s) Ranking of new Shares to be issued arising from the exercise of Warrants Adjustment in the Exercise Price and/or number of Warrants : Warrant holder(s) are not entitled to vote in any general meeting of KEB or to participate in any distribution and/or offer of further securities in the Company unless and until the Warrant holder becomes a shareholder of the Company by exercising his/her Warrants. : The new Shares to be issued pursuant to the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the then existing KEB Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is before the date of allotment of the said new Shares. : The Exercise Price and/or number of unexercised Warrants may be adjusted by the Directors of the Company, in consultation with its professional advisers, in the event of alteration to the share capital of the Company, capital distribution or issue of shares or any other events in accordance with the provisions of the Deed Poll. 17

18 INDICATIVE SALIENT TERMS OF THE WARRANTS (Cont d) APPENDIX II Terms Rights in the event of winding-up, liquidation, compromise and/or arrangement Details : Where a resolution has been passed for a members'voluntary winding up of the Company or where there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with one or more companies, then every Warrant holder shall be entitled upon and subject to the provisions of the Deed Poll at any time within six (6) weeks after the passing of such resolution for a members'voluntary winding-up of the Company or within six (6) weeks after the granting of the court order approving the winding up, compromise or arrangement, by the irrevocable surrender of his/ her Warrants to the Company, elect to be treated as if he/ she had immediately prior to the commencement of such winding-up, compromise or arrangement exercised the exercise rights represented by his/ her Warrants to the extent specified in the relevant exercise forms and be entitled to receive out of the assets of the Company which would be available in liquidation as if he/ she had on such date been the holder of the new Shares to which he/ she would have been entitled to pursuant to such exercise. Modification : Any modification or amendment of the covenants or provisions contained in this Deed Poll proposed or agreed to by the Company must be sanctioned by special resolution of the Warrant holders, effected by a deed, executed by the Company and expressed to be supplemental and comply with the requirements of the Deed Poll. The Company may, from time to time, without the consent or sanction of the Warrant Holders, modify or amend the Deed Poll, if such modification or amendment made does not in the opinion of the Company materially prejudice the interests of the Warrant Holders or is made to correct manifest or typographical errors or to comply with prevailing laws or regulations of Malaysia or are relating purely to administrative matters. Listing : An application will be made for the admission of the Warrants to the Official List of Bursa Securities and for the listing of and quotation for the Warrants and new KEB Shares to be issued pursuant to the exercise of Warrants on the Main Market of Bursa Securities. Governing Law : Laws and regulations of Malaysia The rest of this page has been intentionally left blank 18