DUTY FREE INTERNATIONAL LIMITED (Company Registration No E) (Incorporated in the Republic of Singapore) (the Company )

Transcription

1 DUTY FREE INTERNATIONAL LIMITED (Company Registration No E) (Incorporated in the Republic of Singapore) (the Company ) (A) (B) (C) THE INTERNAL REORGANISATION EXERCISE (AS DEFINED BELOW); THE DISPOSAL OF CERTAIN EQUITY INTERESTS IN THE GROUP S BORDER TOWN AND AIRPORT BUSINESSES AND DOWN TOWN BUSINESSES; AND THE ISSUANCE OF CONVERTIBLE REDEEMABLE PREFERENCE SHARES BY CERTAIN SUBSIDIARIES OF THE GROUP. 1. INTRODUCTION The Company (together with its subsidiaries, the Group ) wishes to announce the following: (a) (b) (c) the Group intends to undergo an internal reorganisation exercise to restructure its indirect subsidiary, Orchard Boulevard Sdn Bhd ( OBSB ) into a direct subsidiary of the Company, and to streamline the shareholdings of the various companies within the Group for more efficient administration; the Group also intends to dispose of about 30% equity interest in its border town and airport businesses (the Border Town-Airport Business Disposal ) and approximately 70% equity interest in its down town businesses (the Down Town Business Disposal ) through a disposal of the Border Town-Airport Sale Shares (as defined in paragraph 3.4.1(a) below) and the Down Town Sale Shares (as defined in paragraph 3.4.2(a) below) to an unrelated third party, Rebana Kristal Sdn Bhd (the Purchaser ) (the Disposals ); and contemporaneous with the Disposals, the current intermediate holding company of the down town, border town and airport businesses, DFZ Capital Berhad ( DFZ, a wholly-owned subsidiary of the Company) had on 22 November 2013, subscribed for 10,000 convertible redeemable preference shares ( CRPS ) each in the down town, border town and airport companies, namely Seruntun Maju Sdn Bhd ( SMSB ), Emas Kerajang Sdn Bhd ( EKSB ), DFZ Emporium Sdn Bhd ( DFZE ), Wealthouse Sdn Bhd ( WSB ) and DFZ (M) Sdn Bhd ( DFZM ) (the CRPS Issue ). 2. THE INTERNAL REORGANISATION EXERCISE 2.1 The Group intends to undergo an internal reorganisation exercise (the Internal Reorganisation Exercise ) whereby: (a) the Company will acquire 100% of the share capital of Orchard Boulevard Sdn Bhd ( OBSB, a wholly-owned subsidiary of DFZ) from DFZ, for a consideration of RM1.00 (the OBSB Reorganisation ), which is expected to be settled via intercompany setoffs; 1

2 (b) following the OBSB Reorganisation (the Further Reorganisation ): (i) OBSB will acquire from EKSB (a wholly-owned subsidiary of DFZ), 25,000 shares in Front Top (M) Sdn Bhd ( Front Top, a wholly-owned subsidiary of EKSB) representing 100% of the share capital of Front Top, for a consideration of RM1.00, which is expected to be settled via intercompany set-offs; (ii) (iii) OBSB will acquire from DFZ, 300,000 shares in Tenggara Senandung Sdn Bhd ( Tenggara ), 2,050,000 shares in Binamold Sdn Bhd ( Binamold ) and 100,000 shares in DFZ Asia Sdn Bhd ( DFZ Asia ) representing 100% of the respective share capital of Tenggara, Binamold and DFZ Asia, each a whollyowned subsidiary of DFZ, for an aggregate consideration of RM4,494,995, which is expected to be settled via intercompany set-offs; OBSB will acquire from DFZ Trading Sdn Bhd ( DFZT, a wholly-owned subsidiary of DFZ), 5,000,000 shares in Cergasjaya Sdn Bhd ( Cergasjaya ), 100,000 shares in First Influx Sdn Bhd ( First Influx ), 100,000 shares in Media Zone Sdn Bhd ( Media Zone ) and 1,500,000 shares in DFZ Tours & Travel Sdn Bhd ( DFZ Tours & Travel ) representing 100% of the respective share capital of Cergasjaya, First Influx, Media Zone and DFZ Tours & Travel, each a wholly-owned subsidiary of DFZT, for an aggregate consideration of RM25,505,002, which is expected to be settled via intercompany set-offs; (iv) OBSB will acquire from DFZE (a wholly-owned subsidiary of DFZT), 99,000 shares in PT DFZ Indon ( PT Indon, a 99%-owned subsidiary of DFZE) representing 99% of the share capital of PT Indon, for a consideration of RM1.00, which is expected to be settled via intercompany set-offs; and (iv) DFZT will acquire from DFZ Tours & Travel, a wholly-owned subsidiary of DFZT, 1,000,000 shares in DFZ Utara Sdn Bhd (formerly known as Fleet Car Hire & Tours Sdn Bhd) ( DFZ Utara, a wholly-owned subsidiary of DFZ Tours & Travel) representing 100% of the share capital of DFZ Utara, for a consideration of RM1.00, which is expected to be settled via intercompany set-offs. 2.2 A graphical representation of the Internal Reorganisation Exercise is appended as Appendix A in this announcement. 2.3 There will be no cash outflow from the Group pursuant to the Internal Reorganisation Exercise save for incidental taxes or stamp duties payable on the transfers, if any. 2.4 The completion of the Internal Reorganisation Exercise is not conditional upon any approval being obtained except for the consent from certain lenders of the Group as well as the facility agent in connection with DFZ s commercial paper and/or medium term note programme of up to RM120 million. 2.5 The Internal Reorganisation Exercise is not conditional upon the Disposals, the CRPS Issue or upon any other corporate proposals undertaken or to be undertaken by the Group. 2

3 2.6 The rationale for the Internal Reorganisation Exercise is to streamline the shareholdings of the various companies within the Group for more efficient administration. There will be no change in the Company s ultimate 100% ownership of OBSB, Front Top, Tenggara, Binamold, Cergasjaya, First Influx, Media Zone, DFZ Tours & Travel, DFZ Asia, PT Indon and DFZ Utara. 3. THE DISPOSALS 3.1 Background The Group conducts its border town and airport businesses through SMSB, EKSB and DFZM, and its down town business through DFZE and WSB. As at the date of this announcement, the Company, through its respective subsidiaries, hold the entire equity interests in SMSB, EKSB, DFZM, DFZE and WSB. SMSB, EKSB, DFZM, DFZE and WSB are indirect and wholly-owned subsidiaries of the Company. The Group intends to dispose of about 30% equity interests in SMSB, EKSB and DFZM, and approximately 70% equity interests in DFZE and WSB. 3.2 Information on SMSB, EKSB, DFZE, WSB and DFZM SMSB EKSB DFZE SMSB, a company incorporated in Malaysia, is a wholly-owned subsidiary of DFZ. SMSB has an authorised share capital of RM5,200,000, of which 1,500,015 ordinary shares of RM1.00 each have been issued and fully paid up. SMSB is principally engaged in the retail of duty free and non-dutiable merchandise, and has its business operations predominately in Malaysia. Based on the latest audited financial statements of SMSB for the financial year ended 28 February 2013 ( FY2013 ), its net assets amounted to RM6,222,565 whilst its profit after taxation stood at RM1,235,907. EKSB, a company incorporated in Malaysia, is a wholly-owned subsidiary of DFZ. EKSB has an authorised share capital of RM5,200,000, of which 3,000,000 ordinary shares of RM1.00 each have been issued and fully paid up. EKSB is principally engaged in the retail of duty free and non-dutiable merchandise, and has its business operations predominately in Malaysia. Based on the latest audited financial statements of EKSB for FY2013, its net assets amounted to RM25,795,185 whilst its profit after taxation stood at RM15,356,368. DFZE, a company incorporated in Malaysia, is a wholly-owned subsidiary of DFZT. DFZE has an authorised, share capital of RM5,000,000 of which 1,000,000 ordinary shares of RM1.00 each have been issued and fully paid up. DFZE is principally engaged in the retail of duty free and non-dutiable merchandise, and has its business operations predominately in Malaysia. Based on the latest audited financial statements of DFZE for FY2013, its net liabilities amounted to RM2,720,939 whilst its profit after taxation stood at RM233,996. 3

4 3.2.4 WSB DFZM WSB, a company incorporated in Malaysia, is a wholly-owned subsidiary of DFZT. It has an authorised share capital of RM1,000,000, of which 500,000 ordinary shares of RM1.00 each have been issued and fully paid up. WSB is principally engaged in the retail of duty free and non-dutiable merchandise, and has its business operations predominately in Malaysia. Based on the latest audited financial statements of WSB for FY2013, its net assets amounted to RM469,832 whilst its profit after taxation stood at RM4,161,344. DFZM, a company incorporated in Malaysia, is a wholly-owned subsidiary of DFZT. DFZM has an authorised share capital of RM5,000,000, of which 2,750,000 ordinary shares of RM1.00 each have been issued and fully paid up. DFZM is principally engaged in the retail of duty free and non-dutiable merchandise, and has its business operations predominately in Malaysia. Based on the latest audited financial statements of DFZM for FY2013, its net assets amounted to RM15,695,226 whilst its profit after taxation stood at RM10,081, Information on the Purchaser The Purchaser, an investment holding company, was incorporated in Malaysia under the Companies Act 1965 on 24 October It has an authorised share capital of RM1,000,000 comprising 1,000,000 shares of RM1.00 each, of which 500,000 ordinary shares of RM1.00 each have been issued and fully paid up. The Purchaser s ultimate shareholders are Datuk Haji Mohd Radzuan bin Abdullah and Md Noor bin Abd Rahim, who hold 76% and 24% respectively of the issued shares in the Purchaser. The Directors of the Purchaser are Datuk Haji Mohd Radzuan bin Abdullah, Tuan Haji Abdul Aziz bin Abdul Manan and Md Noor bin Abd Rahim. To the best of the Company s knowledge, each of the ultimate shareholders and directors of the Purchasers are not related to the Company, the Group, and/or the directors and controlling shareholders of the Company and their respective associates. 3.4 Principal Terms of the Disposals Border Town-Airport Business Disposal The key terms and conditions of the Border Town-Airport Business Disposal include the following: (a) Border Town-Airport Sale Shares DFZ has agreed to sell and the Purchaser has agreed to purchase 453,005 shares in SMSB ( SMSB Shares ) (representing 30.20% of the share capital in SMSB), and 903,000 shares in EKSB ( EKSB Shares ) (representing 30.10% of the share capital in EKSB) subject to the terms and conditions of a sale and purchase agreement between DFZ and the Purchaser (the DFZ SSA ) entered on 22 November

5 DFZT has agreed to sell and the Purchaser has agreed to purchase 828,000 shares in DFZM ( DFZM Shares ), representing 30.11% of the share capital in DFZM subject to the terms and conditions of a sale and purchase agreement between DFZT and the Purchaser (the DFZT SSA ) entered on 22 November The SMSB Shares, the EKSB Shares and the DFZM Shares shall collectively be known as the Border Town-Airport Sale Shares. (b) Completion The completion of the Border Town-Airport Business Disposal is not conditional upon any approval being obtained except for the consent from certain lenders of the Group as well as the facility agent in connection with DFZ s commercial paper and/or medium term note programme of up to RM120 million. (c) Consideration The aggregate consideration for the Border Town-Airport Sale Shares payable by the Purchaser to DFZ and DFZT is RM3,670,000 (the Border Town-Airport Consideration ), the payment of which may be deferred in accordance with the terms of the DFZ SSA and the DFZT SSA. The Border Town-Airport Consideration was arrived at on a willing buyer willing seller basis, taking into account a discounted cash flow valuation analysis undertaken on and the respective potential earnings of SMSB, EKSB and DFZM. The Border Town-Airport Consideration is justified after taking into consideration of, amongst others, the rationale for the Disposals and the respective potential earnings of SMSB, EKSB and DFZM Down Town Business Disposal The key terms and conditions of the disposal of the Down Town Business Disposal include the following: (a) Down Town Sale Shares DFZT has agreed to sell and the Purchaser has agreed to purchase 707,000 shares in DFZE ( DFZE Shares ) (representing 70.70% of the share capital in DFZE), and 357,000 shares in WSB ( WSB Shares ) (representing 71.40% of the share capital in WSB) subject to the terms and conditions of the DFZT SSA entered on 22 November The DFZE Shares and WSB Shares shall collectively be known as the Down Town Sale Shares, and the Border Town-Airport Sale Shares and the Down Town Sale Shares shall collectively be known as the Sale Shares. 5

6 (b) Completion The completion of the Down Town Business Disposal is not conditional upon any approval being obtained except for the consent from certain lenders of the Group as well as the facility agent in connection with DFZ s commercial paper and/or medium term note programme of up to RM120 million. (c) Consideration The aggregate consideration for the Down Town Sale Shares payable by the Purchaser to DFZ and DFZT is RM1,330,000 (the Down Town Consideration ), the payment of which may be deferred in accordance with the terms of the DFZ SSA and the DFZT SSA. The Down Town Consideration was arrived at on a willing buyer willing seller basis, taking into account a discounted cash flow valuation analysis undertaken on and the respective potential earnings of DFZE and WSB. The Down Town Consideration is justified after taking into consideration of, amongst others, the rationale for the Disposals, latest audited net liabilities of DFZE as at 28 February 2013 of RM2,720,939 or RM2.72 per share and potential earnings of DFZE and WSB A graphical representation of Border Town-Airport Business Disposal and the Down Town Business Disposal after their completion is appended as Appendix B in this announcement The Disposals are conditional upon the Internal Reorganisation Exercise but not vice versa. The Disposals are not conditional upon the CRPS Issue or upon any other corporate proposal undertaken or undertaken by the Group The salient terms of the DFZT SSA and DFZ SSA which were signed on 22 November 2013 are as follows: (a) 10% of the Border Town-Airport Consideration and Down Town Consideration ( Considerations ) will be settled in cash on completion of the Disposals (b) The balance Considerations will be deferred and will be secured against the future dividend payments of Border Town-Airport Sale Shares and the Down Town Sale Shares Pursuant to the respective shareholders agreements entered into between DFZ, the Purchaser and each of the down town, border town and airport companies, inter alia, DFZ will be responsible for the management, business direction and strategies of each of the down town, border town and airport companies. 6

7 3.5 The Sale Shares Book Value and Net Asset Value, and Use of Proceeds Based on the latest unaudited consolidated accounts of the Group for the half year ended 31 August 2013, the book value and the net asset value ( NAV ) of the Sale Shares was approximately RM2,573,000, after taking into account the CRPS to be issued by each of the down town, border town and airport companies to DFZ (as described in paragraph 4(d)), pursuant to which DFZ, as the CRPS holder, will have preferential rights and priority over holders of all other classes of shares in respect of 90% of the net assets of the respective companies. The excess of the Border Town-Airport Consideration and Down Town Consideration over the NAV of the Sale Shares, as at 31 August 2013, was approximately RM2,427,000. The Group intends to use the proceeds from the Disposals for general working capital purposes which is intended to be utilised within 12 months from the date of completion of the Disposals Net Profits The net profits attributable to the Sale Shares was approximately RM433,000 for the period from 1 March 2013 to 31 August 2013, after taking into account the effect of the CRPS Issue Gain on Disposal Based on the latest unaudited financial results as at 31 August 2013, and after taking into account the effect of the CRPS Issue, the Company does not expect to recognise any gain or loss from the Disposals Liabilities to be assumed 3.6 Rationale The Purchaser will not be assuming any liabilities, including contingent liabilities and guarantees, pursuant to the Disposals. The border town, airport and down town businesses of the Group operate in a highly regulated and licensed regime, and the participation of the Purchaser via the Disposals is intended to assist and facilitate the Group in its current operations and establishment of new businesses in line with regulatory conditions. The Disposals also enhances direct bumiputra participation in the businesses. 7

8 3.7 Relative Figures for the Disposals Based on the latest unaudited consolidated accounts of the Group for the half year ended 31 August 2013, the relative figures applicable to the Disposals computed on the bases set out in Rule 1006 of the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited (the SGX-ST ) (the Catalist Rules ), are as follows: Bases of calculation Size of relative figures (%) Rule 1006(a) Net asset value of the Sale Shares, compared with the Group s net asset value Rule 1006(b) Net profit attributable to the Sale Shares, compared with the Group s net profits 0.6 (1) 1.5 (2) Rule 1006(c) Aggregate value of the consideration received for the Sale Shares, compared with the Company s market capitalisation based on the total number of issued shares of the Company ( Shares ) excluding treasury shares 0.6 (3) Rule 1006(d) Number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue Not applicable Rule 1006(e) Aggregate volume or amount of proven and probable reserves to be disposed of, compared with the aggregate of the Group s proven and probable reserves Not applicable Notes: (1) Based on the unaudited net asset value of assets disposed of pursuant to the Disposals of approximately RM2,573,000 (after taking into account the entitlement of DFZ (being the CRPS holder) to the net assets of the affected companies) and the unaudited net asset value of the Group as at 31 August 2013 of approximately RM406,327,000. (2) Based on the unaudited profit before tax, minority interests and extraordinary items of the assets disposed pursuant to the Disposals of approximately RM433,000 (after taking into account the assumption that 90% of the profits of the affected companies are declared as dividend to DFZ, being the CRPS holder) and the unaudited profit before tax, minority interests and extraordinary items of the Group for the period from 1 March 2013 to 31 August 2013 of approximately RM29,315,000. (3) Based on the aggregate of the Border Town-Airport Consideration and the Down Town Consideration of approximately RM5,000,000, and the market capitalisation of the Company of approximately S$342,872,000 (equivalent to approximately RM880,565,000 at the exchange rate of S$1.00 to RM2.5682). The market capitalisation is determined by multiplying the volume-weighted average price of the Shares transacted on 21 November 2013 (being the last full market day for which the Shares were traded, prior to the date of this announcement) of S$0.310 per Share with the total number of 1,106,039,587 Shares (excluding treasury shares). (Source: Bloomberg LLP) 8

9 As the relative figures under Rule 1006 above do not exceed 5.0%, the Disposals do not constitute a discloseable transaction within the meaning of Chapter 10 of the Catalist Rules. However, this announcement is released pursuant to Rule 704(17)(d) of the Catalist Rules, with further information on the Disposals duly set out herein. 3.8 Financial Effects of the Disposals The financial effects of the Disposals on the Group, based on the latest audited consolidated financial statements of the Group for FY2013, are set out below for illustrative purposes only Net Tangible Assets and Gearing For illustrative purposes only, assuming the Disposals had been completed on 28 February 2013 and after taking into account the entitlement of DFZ (being the CRPS holder) to the net assets of the affected companies, the pro forma financial effects on the consolidated net tangible assets ( NTA ) per Share of the Group and gearing for FY2013 are as follows: Before the Disposals After the Disposals NTA (RM 000) 291, ,403 Number of Shares ( 000) 1,105,919 1,105,919 NTA per Share (RM) Gearing (times) Earnings The Disposals are expected to be completed within the 4 th quarter of the financial year ending 28 February 2014 ( FY2014 ). However, it will not have any material effect on the earnings and earnings per Share of the Group for FY2014. For illustrative purposes only, assuming that the Disposals had been completed on 1 March 2012 (being the commencement of FY2013) and after taking into account the assumption that 90% of the profits of the affected companies are declared as dividend to DFZ (being the CRPS holder), the pro forma financial effects on the earnings per Share of the Group for FY2013 are as follows: Before the Disposal After the Disposal Net profit attributable to shareholders after tax (RM 000) 63,715 62,612 Number of Shares ( 000) 1,105,919 1,105,919 Earnings per Share (RM)

10 3.8.3 Share capital and substantial shareholders shareholding The Disposals will not have any effect on the share capital of the Company and substantial shareholders shareholding in the Company as the Border Town-Airport Consideration and Down Town Consideration will be satisfied entirely in cash. 4. CRPS ISSUE SMSB, EKSB, DFZE, WSB and DFZM had on 22 November 2013, issued 10,000 CRPS each to DFZ at an issue price of RM1.00 per CRPS. The CRPS carries a premium of RM0.99 above the par value of RM0.01 per CRPS. The CRPS are redeemable at the option of the respective CRPS issuers. The key features of the CRPS are, inter alia, that: (a) (b) (c) (d) the CRPS are non-voting shares; the CRPS holder shall have the right to receive a non-cumulative preferential dividend over the ordinary shareholders; the CRPS is redeemable in cash of RM1.00 for every CRPS or by way of issuance of new ordinary shares of RM1.00 each in the issuer; and the CRPS holder will have the preferential rights and priority over holders of all other classes of preference shares and/or ordinary shares in the issuer in respect of the payment of a sum equivalent to the CRPS dividend but shall not be more than 90.00% of the net assets of each issuer in the event of liquidation or winding-up of the issuer. The CRPS Issue is not conditional upon any approval being obtained, except for amendments to the respective Memorandum and Articles of Association of each of SMSB, EKSB, DFZE, WSB and DFZM to allow for the issuance of the CRPS. Further, the CRPS Issue is not conditional upon the Internal Reorganisation Exercise, the Disposals or upon any other corporate proposal undertaken or to be undertaken by the Group. 5. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS None of the Directors or controlling shareholders of the Company has any interest, direct or indirect, in the Internal Reorganisation Exercise, the Disposals or the CRPS Issue, save through their respective shareholdings in the Company (if any). 6. SERVICE CONTRACTS There are no directors proposed to be appointed to the Board of the Company in connection with the Disposals. Accordingly, no service contract is proposed to be entered into between the Company and any such person. 7. TENTATIVE TIMETABLE FOR COMPLETION Barring unforeseen circumstances and subject to the receipt of all relevant approvals, the Board expects the Internal Reorganisation Exercise, the Disposals and the CRPS Issue to be completed within the 4 th quarter of FY

11 8. DOCUMENTS FOR INSPECTION A copy of the DFZ SSA and the DFZT SSA are available for inspection during normal business hours at the Company s registered office for a period of three (3) months from the date of this announcement. 9. CAUTION IN TRADING Shareholders are advised to exercise caution in trading their Shares as there is no certainty or assurance as at the date of this announcement that the Disposals will be completed. Shareholders are advised to read this announcement and any further announcements by the Company carefully. Shareholders should consult their stock brokers, bank managers, solicitors or other professional advisors if they have any doubt about the actions they should take. By Order of the Board Lee Sze Siang Executive Director 22 November 2013 This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor, Canaccord Genuity Singapore Pte. Ltd. (the Sponsor ) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the SGX-ST ). The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Ms Karen Soh, Managing Director, Corporate Finance, Canaccord Genuity Singapore Pte. Ltd. at 77 Robinson Road #21-02 Singapore , telephone (65)

12 APPENDIX A (Note: The charts below only show those companies of the Group that are subjects of the Internal Reorganisation Exercise. Unless specifically indicated, the lines denote that the companies are wholly-owned) Before the Internal Reorganisation Exercise Company DFZ Tenggara DFZT OBSB Binamold Cergasjaya EKSB First Influx Front Top Media Zone DFZ Asia DFZ Tours & Travel DFZ Utara DFZE 1% 99% PT Indon After the Internal Reorganisation Exercise Company DFZ OBSB EKSB Cergasjaya DFZT First Influx DFZ Utara Media Zone DFZE DFZ Tours & Travel DFZ Asia Tenggara 1% Binamold Front Top 99% PT Indon 12

13 APPENDIX B (Note: The charts below only show those companies of the Group that are subjects of the Disposals. Unless specifically indicated, the lines denote that the companies are wholly-owned) After the Internal Reorganisation Exercise and before the Border Town-Airport Business Disposal and the Down Town Business Disposal After the Internal Reorganisation Exercise, the Border Town-Airport Business Disposal and the Down Town Business Disposal 13