BOUSTEAD HOLDINGS BERHAD ( BHB OR COMPANY )

Transcription

1 BOUSTEAD HOLDINGS BERHAD ( BHB OR COMPANY ) SUBSCRIPTION OF NEW ORDINARY SHARES OF RM1.00 EACH IN IRAT PROPERTIES SDN BHD ("IRAT") ( IRAT SHARES ) REPRESENTING 50% OF THE ISSUED AND PAID-UP ORDINARY SHARE CAPITAL IN IRAT FOR CASH Reference is made to the announcements dated 6 March 2015 ( First Announcement ) and 10 March 2015 in relation to the Proposed ( Announcements ). Unless otherwise stated, words and expressions used in this announcement shall have the same meaning as those attributed to them in the Announcements. We refer to the First Announcement where the Board announced the Company s proposal to undertake the Proposed and Proposed Additional. Accordingly, the Board wishes to announce the following: 1. Proposed and Proposed Additional BHB has on 14 April 2015 subscribed for 60,000,000 new Irat Shares for a cash consideration of RM million ( First ) and thus completed the Proposed. In addition to the First, the Company has on 14 April 2015 subscribed for an additional 33,333,333 new Irat Shares at the issue price of RM2.13 per Irat Share, for a cash consideration of RM71.00 million ( Second ). Please refer to Section 2 for the details of the Second. As at the date of this announcement, the First and Second have resulted in BHB owning in aggregate 93,333,333 Irat Shares representing 50.00% of the issued and paidup ordinary share capital in Irat. The total cash consideration for the First and Second amounts to RM million. The remaining 50.00% of the issued and paid-up ordinary share capital in Irat are held by the existing shareholders, namely LTAT and Irat Holdings Sdn Bhd. Subsequent to the First and Second, BHB and LTAT intend to have an eventual issued and paid-up share capital in Irat where both BHB and LTAT will be subscribing for such number of new Irat Shares with a view of having joint control in Irat. An announcement on such additional subscription will be made in due course. Pursuant to BHB and LTAT s intention of having a joint control in Irat, LTAT has on 14 April 2015 converted 43,000 RCPS in Irat into 2,018,779 new Irat Shares. On 14 April 2015, LTAT also subscribed for 31,314,554 new Irat Shares at the issue price of RM2.13 per Irat Share, for a cash consideration of RM66.70 million ( LTAT ). As at the date of this announcement, the SPA entered into between Irat and ATES Vendors have become unconditional and the parties have agreed to complete the proposed acquisition of ATES on 14 April 2015 ( ATES Acquisition ). Accordingly, payment to ATES Vendors was made on 14 April The proposed acquisition of Beta Tegap ( Proposed Beta Tegap Acquisition ) is pending the fulfilment of the conditions precedent in the SPA entered into between Irat and Beta Tegap Vendors. 1

2 2. Details of the Second The table below sets out the following: shareholdings in Irat before and after the First, conversion of 43,000 RCPS, LTAT and Second ; and total number of new Irat Shares subscribed for by BHB. (iii) Before the First After the First After and the conversion of 43,000 RCPS After, the LTAT and the Second No. of Irat No. of Irat No. of Irat No. of Irat Name Shares held % Shares held % Shares held % Shares held % LTAT 59,000, ,000, ,018, ,333, Irat Holdings Sdn Bhd 1,000, ,000, ,000, ,000, BHB ,000,000 (1 ) ,000, ,333,333 (2 ) Total 60,000, ,000, ,018, ,666, Note: (1) Consideration for the First is RM million for 60,000,000 new Irat Shares at an issue price of RM2.13 per Irat Share. (2) Consideration for the Second is RM71.00 million for 33,333,333 new Irat Shares at an issue price of RM2.13 per Irat Share. (a) Basis of arriving and justification for the consideration of the Second The consideration for the Second was arrived at on a willing-buyer willingseller basis after taking into consideration the following: (iii) the historical financial performance of Irat Group. Information on the Irat Group is set out in the First Announcement; the unaudited consolidated NA of Irat as at 31 December 2014 of RM million or the NA of RM2.13 per Irat Share; and the future prospects of Irat Group as set out in Section 2(f) of this announcement. (b) Mode of settlement and source of funding The First was funded by borrowings while the Second was funded from the proceeds via issuance of Perpetual Sukuk and borrowings. Set out below is the breakdown for the source of funding for the First and Second : (1) Perpetual Sukuk Borrowings Total (RM million) % (RM million) % (RM million) First Second Total

3 Note: (1) The Perpetual Sukuk is part of the Junior Islamic Medium Term Note Programme of up to RM1.2 billion in nominal value. The salient features of the Perpetual Sukuk are, amongst others, as follows: (a) The Perpetual Sukuk is issued under the Islamic principle of Musharakah, while the principle of Commodity Musawamah will be employed to effect the deferral of the periodic distributions, if any; (b) Being perpetual in tenure, BHB has a call option to redeem the Perpetual Sukuk at the end of the 5th year from issuance and on each periodic distribution date thereafter; (c) The expected periodic distribution from issuance up to year 5 is about 6.1% to 6.25% per annum, payable 6 months from the issue date of the relevant tranche and every six months thereafter; and (d) Payment obligations on the Perpetual Sukuk will, at all times, rank ahead of other equity instruments for the time being outstanding, but junior to the claims of present and future creditors of BHB (other than obligations ranking pari passu with the Perpetual Sukuk). (c) Liabilities to be assumed pursuant to the Second There are currently no liabilities, including contingent liabilities and guarantees to be assumed by BHB pursuant to the Second. (d) Rationale for the Second The Second is in line with the intention of BHB and LTAT to subscribe for such number of new Irat Shares with a view of having joint control in Irat. (e) Risk factors in relation to the Second The Second exposes BHB to the same risks in relation to the Proposed and the risks faced by Irat Group. As at the date of this announcement, the ATES Acquisition has been completed whilst the Proposed Beta Tegap Acquisition is pending the fulfilment of the conditions precedent in the SPA entered into between Irat and Beta Tegap Vendors. Please refer to the risk factors set out in Section 5 of the First Announcement. (f) Outlook and prospects The Irat Group is principally involved in property investment through the letting out of office space and a hotel. Accordingly, the Irat Group is dependent on the prospects of the general Malaysian economy, property sector as well as the hospitality and tourism sector. The Irat Group is also involved in the operation of the AES project following the completion of the ATES Acquisition. In addition to the outlook as set out in Section 6.1 of the First Announcement, set out below is an update on the outlook of the Malaysian economy as extracted from Bank Negara Malaysia s Annual Report 2014 and the AES. Outlook of the Malaysian economy The Malaysian economy is projected to register a steady growth of 4.5% to 5.5% in 2015 (2014: 6.0%), supported mainly by a sustained expansion in domestic demand amid strong domestic fundamentals and a resilient export sector. Domestic demand is expected to register a sustained growth of 6.0% in 2015 (2014: 6.0%), anchored by private sector expenditure. Private sector spending is expected to remain resilient amid an improvement in public expenditure growth. On the supply side, all economic sectors are expected to expand. The services and manufacturing sectors will remain the key drivers of overall growth. 3

4 In line with the continued expansion in domestic-oriented activity, investment growth in the services sector is projected to be driven by the inflow of new projects and the continued implementation of existing investment, particularly in the tourism-related, transportation and business-related sub-sectors. The residential property segment will continue to expand, albeit at a slower pace, and will be mainly concentrated in the mass-market and affordable housing segments. The construction sector is expected to continue to record high growth, albeit at a more moderate pace. Although activity in the residential sub-sector is expected to increase at a more moderate pace, growth in the non-residential sub-sector is projected to be sustained while new and existing multi-year civil engineering projects will continue to provide additional support to the sector. The services sector expanded by 6.3% in 2014 (2013: 5.9%) and remained the largest contributor to growth (3.5 percentage points of overall gross domestic product growth). Growth in the sector was underpinned largely by sub-sectors catering to domestic demand. In particular, the wholesale and retail trade subsector recorded a higher growth in tandem with the continued strength in household spending. On the external front, the current account of the balance of payments is projected to remain in a surplus position of about RM21.4 billion or 2-3% of gross national income. Even though gross exports are expected to record slower growth amid lower commodity prices, the improvement in economic activity in several advanced economies and sustained growth of regional economies will lend support to manufactured exports. At the same time, a stronger travel account in conjunction with `Malaysia - Year of Festivals 2015 tourism promotion is expected to provide a lift to the services account. (Source: Annual Report 2014, Bank Negara Malaysia) Outlook of AES Presently, more than 23 million registered vehicles are traversing numerous roads nationwide, some of which are not in the best of conditions. According to the World Health Organisation s Road Safety Report 2013, Malaysia revealed an alarming rate of road deaths per 100,000 population in South East Asia, apart from Thailand. While the regional average was 17.91, Malaysia recorded 25 and Thailand at The number of deaths resulted by road casualties is anticipated to rise further as more vehicles are expected to be registered in coming years. Echoing this, the Malaysian Institute of Road Safety Research ( Miros ) in its latest research titled Predicting Malaysian Road Fatalities for Year 2020 foresaw that Malaysia s road fatalities in Malaysia would be between 8,760 and 10,716 come In view of this, the AES is a mechanism to not only reduce traffic offence rates, but, a proactive effort to mitigate, if not reduce the number of lives lost in road fatalities. Similarly, the hefty monetary fine is a tool to reinforce discipline among road users. It is worth noting that in some countries, one s license is also temporarily revoked due to the failure of adhering to preset rules and regulations. 4

5 Technically, a self-regulated system connotes surveillance spanning over 24 hours, 7 days a week. This would not only contribute significantly towards the reduction of road related accidents, but also allow for a relative decrease in the occurrence of crimes. The benefits of implementing AES would be visible only in time to come as changing the pattern of behaviour and habits is not instantaneous. The Malaysian Consumers Movement ( MCM ) is of the opinion that indeed, it is timely for the rollout of AES across the 14 states in Malaysia. More so, to ensure its successful implementation, MCM proposes that the existing highway speed limit be revised to 120 km/hour, where feasible. A familiarisation period is necessary so that road users are able to adopt and adapt with the requirements of the new enforcement system prior to its roll-out. Certainly, it goes over and beyond merely installing and operationalising AES. There is a critical need for diligent actions where offenders are fined and if necessary, even prosecuted by the relevant authorities. It is equally vital for regulatory authorities to take active precautionary efforts to address the people s potential concerns. Total collection from summons must be disclosed transparently, and later channeled towards awareness campaigns on road safety. (Source: Timely for rollout of AES across Malaysia, according to Darshan Singh Dhillon, the president of MCM dated 10 February 2015, New Straits Times Online, Road users need to start taking responsibility for their own safety while driving as more than 80% of traffic accidents are caused by human error according to statistics by Miros. Furthermore, the death of 65,850 people in road accidents between 2004 and 2013 had resulted in as much as RM78 billion being lost in economic contributions with an average of RM1.2 million each. According to Road Safety Department director general Datuk Tam Weng Wah, while some may blame for lack of proper law enforcement, the hundreds of thousands of traffic summonses issued each year begs to differ. According to Datuk Tam, this is an emerging trend and it is extremely dangerous, especially among the younger generations; they sms, whatsapp, or even take selfies while driving, this must be avoided at all cost. He said road users are fully aware of the potentially fatal consequences of their actions and it is their mental attitude of 'if it happens then it is meant to be', or it will only happen to others and not themselves, or they are over-confident of being a good driver or rider. He said such train of thought will only make road users take their own safety for granted and lose sight of the long-term consequences of their actions. Datuk Tam said the year 2020 is drawing close with Malaysia's aspirations to become a developed country but Malaysians still retain a third world mentality when it comes to road safety. He said education on road safety should begin from home and examples must be set by parents. He also added that even those in private sector can establish the safety culture among their staffs as a company's asset are their employees. 5

6 Datuk Tam also urged road users to keep their emotions in check and drive with reason, as anger can often lead to people making poor decisions which results in accidents. (Source: Miros statistics say human error causes 80% of traffic accidents, dated 18 February 2015, the Sun daily, Taking into consideration the outlook as set out in Section 6.1 of the First Announcement as well as the outlook in Section 2(f) of this announcement, the prospects of the Irat Group are expected to be positive in the medium to longer term. (g) Effects of the Second Issued and paid up share capital and substantial shareholdings The Second does not have any effect on the issued and paid-up share capital and the substantial shareholders shareholdings in BHB as the Second does not involved any issuance of new BHB Share. Earning and EPS Following the ATES Acquisition, ATES became a wholly-owned subsidiary of Irat. Based on the audited consolidated financial statements of BHB for the FYE 31 December 2014 and on the assumption that the First, Second, ATES Acquisition and Proposed Beta Tegap Acquisition had been effected on that date, the proforma effects of the First, Second, ATES Acquisition and Proposed Beta Tegap Acquisition on the earnings and EPS of the BHB Group is as illustrated below: Audited FYE 31 December 2014 (iii) (iv) After (iii) and After and the After and the Proposed After the First Second the ATES Beta Tegap Acquisition Acquisition (RM' million) (RM' million) (RM' million) (RM' million) (RM' million) PATNCI Add: 50.00% - (1) 7.3 (1) 7.3 (2) (3.0) (2) (14.3) PATNCI/(LATN CI) contribution of the Irat Group Less: Finance - (3) (7.0) (4) (7.3) (4) (7.3) (4) (7.3) cost for the First and Second Less: Profit - - (4) (4.1) (4) (4.1) (4) (4.1) attributable to holders of Perpetual Sukuk due to issuance of new Perpetual Sukuk PATNCI No. of BHB 1, , , , ,034.2 Shares (millions) EPS (sen)

7 Note: (1) Based on the latest unaudited consolidated financial statements of Irat as at 31 December 2014 and after taking into account of the 50.00% PATNCI contribution of the Irat Group of RM14.57 million following the First and Second. (2) Based on the latest unaudited consolidated financial statements of the Target Companies for the FYE 30 June 2014 and after taking into account of the 50.00% LATNCI contribution of the Irat Group of RM6.0 million after the ATES Acquisition and RM28.6 million after the Proposed Beta Tegap Acquisition. Based on the unaudited financial statements of ATES and Beta Tegap for the FYE 30 June 2014, ATES and Beta Tegap recorded LAT of RM20.61 million and RM22.58 million respectively. On the assumption that the ATES Acquisition and the Proposed Beta Tegap Acquisition had been effected on 31 December 2014, the proforma effects of the Proposed Acquisitions on the earnings and EPS of the Irat Group is as illustrated below: Unaudited FYE 31 December 2014 After the ATES Acquisition After and the Proposed Acquisitions (RM' million) (RM' million) (RM' million) PATNCI Add: Total LAT - (20.6) (43.2) contribution of the Target Companies PATNCI/(LATNCI) 14.6 (6.0) (28.6) (3) The First was funded via borrowings of RM million and the interest rate is based on the interest rate of 5.5% per annum. (4) The Second was funded from the proceeds via issuance of Perpetual Sukuk of RM65.60 million with profit attributable to the holders of Perpetual Sukuk of 6.25% per annum and borrowings of RM5.40 million based on the interest rate of 5.5% per annum. Based on the proforma effects of the First on the earnings and EPS of BHB Group, the First increased the earnings of the BHB Group marginally. This is attributable to the 50% income contribution from the Irat Group following the First, where the Irat Group becomes a jointly controlled company of BHB. The Second decreased the earnings of the BHB Group marginally due to the additional finance cost to be incurred for the Second. The ATES Acquisition further decreased the earnings of the BHB Group as a result of the consolidation of the financial results of ATES. Based on the proforma effects of the Proposed Beta Tegap Acquisition on the earnings and EPS of Irat Group, the Proposed Beta Tegap Acquisition is expected to decrease the earnings of Irat Group further after consolidating the financial results of Beta Tegap. As such, the effect of the aforesaid losses are expected to impact the earnings of the BHB Group marginally for the FYE 31 December 2015 taking into consideration the 50.00% LATNCI contribution from the Irat Group after the Proposed Acquisitions. 7

8 (iii) NA and gearings Based on the audited consolidated financial statements of BHB for the FYE 31 December 2014 and on the assumption that the First, Second, ATES Acquisition and Proposed Beta Tegap Acquisition had been effected on that date, the proforma effects of the First, Second, ATES Acquisition and Proposed Beta Tegap Acquisition on the NA and gearing of the BHB Group are as follows: As at 31 December 2014 (iii) (iv) After (iii) and After and After and the Proposed After the First the Second the ATES Beta Tegap Acquisition Acquisition (RM' million) (RM' million) (RM' million) (RM' million) (RM' million) Share capital Perpetual 1, ,140.7 (6) 1,206.7 (6) 1,206.7 (6) 1,206.7 Sukuk Share 1, , , , ,165.1 premium Revaluation & fair value reserve Statutory reserve Other reserve Retained profit 2,231.5 (1) 2,231.8 (2) 2,227.0 (3) 2,216.7 (4) 2,205.4 NA 5, , , , ,919.7 NCI 1, , , , ,693.5 Total equity 7, , , , ,613.2 No. of BHB 1, , , , ,034.2 Shares Borrowings 7,080.7 (5) 7,208.5 (6) 7,213.9 (6) 7,213.9 (6) 7,213.9 NA per BHB Share Gearing (7) Note: (1) Based on the latest unaudited consolidated financial statements of Irat as at 31 December 2014 and after taking into account of the 50.00% PATNCI contribution of the Irat Group of RM14.57 million following the First and the finance cost for the First. (2) Based on the latest unaudited consolidated financial statements of Irat as at 31 December 2014 and after taking into account of the 50.00% PATNCI contribution of the Irat Group of RM14.57 million following the Second and the finance cost for the Second as well as expenses for the issuance of new Perpetual Sukuk of RM0.40 million. (3) Based on the latest unaudited financial statements of ATES for the FYE 30 June 2014 and after taking into account 50.00% of the total LAT of ATES of RM20.61 million following the ATES Acquisition and expenses for the issuance of new Perpetual Sukuk of RM0.40 million. (4) Based on the latest unaudited financial statements of the Target Companies for the FYE 30 June 2014 and after taking into account 50.00% of the total LAT of the Target Companies of RM43.19 million following the Proposed Acquisitions and expenses for the issuance of new Perpetual Sukuk of RM0.40 million. (5) The First was funded via borrowings of RM million and the interest rate is based on the interest rate of 5.5% per annum. (6) The Second was funded from the proceeds via issuance of Perpetual Sukuk of RM65.60 million with profit attributable to the holders of Perpetual Sukuk of 6.25% per annum and borrowings of RM5.40 million based on the interest rate of 5.5% per annum. 8

9 (7) Gearing is calculated based on the borrowings divided by the total equity. The First, Second and ATES Acquisition did not result in any material change in the gearing ratio of the BHB Group. From the table above, the Proposed Beta Tegap Acquisition is also not expected to result in any material change in the gearing ratio of the BHB Group. (h) Approval required for the Second The Second is not subject to the approval of the shareholders of BHB or any other relevant authorities. Directors and major shareholders interests and persons connected to them Save for Interested Directors and Major Shareholders as disclosed in Section 9 the First Announcement, none of the Directors and/or major shareholders of BHB and/or persons connected to them, have any interest, direct or indirect, in the Second as at the date of this announcement. In this regard, the Interested Directors have abstained and will continue to abstain from all deliberations and voting on the resolution pertaining to the Second at the relevant board meetings. (j) Statement by the Directors The Board (save for the Interested Directors), after having considered all aspects of the Second, is of the opinion that the Second is in the best interest of the Company. (k) Audit committee s statement The audit committee of the Company, after having considered all aspects of the Second including but not limited to the rationale and effects of the Second and the prospects of the Irat Group as set out in Section 2(f) of this announcement, is of the opinion that the Second is in the best interest of the Company, fair, reasonable and on normal commercial terms, and is not detrimental to the interest of the non-interested shareholders of BHB. (l) Highest percentage ratio applicable Based on BHB s audited consolidated financial statements for the FYE 31 December 2014, the highest percentage ratio pursuant to paragraph 10.02(g) of the Main Market of the Listing Requirements of Bursa Malaysia resulting from the First and Second is 3.38%. (m) Transaction with the same related party for the preceding 12 months Save for the First, as at the date of this announcement, there is no other transaction entered into by BHB with Irat for the preceding 12 months. This announcement is dated 14 April