GUNUNG CAPITAL BERHAD [Company No P] [Incorporated in Malaysia]

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. GUNUNG CAPITAL BERHAD [Company No P] [Incorporated in Malaysia] CIRCULAR TO SHAREHOLDERS IN RELATION TO PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The Resolution in respect of the above proposal will be tabled at the Fourteenth (14 th ) Annual General Meeting of Gunung Capital Berhad to be held at Diamond Room, SSL Traders Hotel, No. 43, Jalan Medan Perwira Satu, Medan Perwira, Kamunting, Perak Darul Ridzuan on Friday, 19 June 2009 at a.m. or any adjournment thereof. The completed Form of Proxy should be lodged at the Registered Office of the Company at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, Kamunting, Perak Darul Ridzuan not less than forty-eight (48) hours before the time and date indicated below should you be unable to attend the meeting. The lodgement of the completed Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Last day and time for lodging the Form of Proxy : Wednesday, 17 June 2009 at a.m. Date and time of Annual General Meeting : Friday, 19 June 2009 at a.m. This Circular is dated 28 May 2009

2 DEFINITIONS Except where the context otherwise requires, the following definitions apply throughout this Circular:- Act : Companies Act, 1965, as amended from time to time AGM : Annual General Meeting Board : Board of Directors of GCB BMSB : Bursa Malaysia Securities Berhad ( W) GCB or Company : Gunung Capital Berhad ( P) GCB Group or Group : GCB and its subsidiary companies GRSB : Gunung Resources Sdn Bhd (71881-T), a wholly-owned subsidiary of GCB LPB : Latexx Partners Berhad (86100-V) LMSB : Latexx Manufacturing Sdn Bhd ( U), a wholly-owned subsidiary of LPB MMSB : Medtexx Manufacturing Sdn Bhd (50880-A), a wholly-owned subsidiary of LPB Listing Requirements : The Listing Requirements of BMSB Major Shareholder(s) : A person who has an interest or interests in one or more voting shares in a Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares is :- (a) equal to or more than 10% of the aggregate of the nominal amounts of all the voting shares in the Company; or (b) equal to or more than 5% of the aggregate of the nominal amounts of all the voting shares in the Company where such person is the largest shareholder of the Company For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Companies Act A major shareholder includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a major shareholder of the Company as defined above or any other company which is its subsidiary or holding company. Proposal : Proposed Renewal of Shareholders Mandate Proposed Renewal of Shareholders Mandate : Proposed renewal of shareholders mandate for RRPT to be entered into by GRSB during the period from conclusion of the forthcoming AGM until the conclusion of the next AGM RRPT : Recurrent related party transactions of a revenue or trading nature of GRSB which is in the ordinary course of business of GRSB Related Party : A director, major shareholder or person connected with such director or major shareholder Related Party Transactions" : Transactions entered into by GRSB which involves the interest, direct or indirect, of a Related Party RM and sen : Ringgit Malaysia and sen respectively i

3 CONTENTS LETTER TO THE SHAREHOLDERS CONTAINING:- PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSAL 1 3. RATIONALE AND BENEFITS OF THE PROPOSAL 4 4. FINANCIAL EFFECTS OF THE PROPOSAL 4 5. CONDITIONS OF THE PROPOSAL 4 6. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS 4 7. DIRECTORS RECOMMENDATION 5 8. AGM 5 9. FURTHER INFORMATION 5 APPENDIX I FURTHER INFORMATION ii

4 GUNUNG CAPITAL BERHAD [Company No P] [Incorporated in Malaysia] Board of Directors:- Low Bok Tek (Chairman, Non-Independent Non-Executive Director) Tang Yuet Mun (Executive Director) Peter Wong Hoy Kim (Senior Independent Non-Executive Director) Datuk Ahmad Shalimin bin Ahmad Shaffie (Independent Non-Executive Director) Malik Parvez Ahmad bin Nazir Ahmad (Independent Non-Executive Director) Registered Office:- Lot 5911, Jalan Perusahaan Satu Kamunting Industrial Estate Kamunting, Taiping Perak Darul Ridzuan 28 May 2009 To : The Shareholders of Gunung Capital Berhad Dear Sir/Madam, PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1.0 INTRODUCTION At the 13 th AGM of the Company held on 6 June 2008, the Company obtained a mandate from its shareholders for GRSB to enter into RRPT with Related Party which are necessary for its day-to-day operations and are in the ordinary course of business based on commercial terms that are not more favourable to the Related Party than those generally available to the public. The existing shareholders mandate is subject to annual renewal and unless approval for its renewal is obtained from the shareholders at the forthcoming AGM of the Company, it shall lapse at the conclusion of the said AGM, which is scheduled to be held on Friday, 19 June In this connection thereto, the Board had on 13 May 2009 announced to the BMSB that the Company wishes to seek a renewal of the shareholders mandate to enter into RRPT with Related Party in accordance with Paragraph 10.09, Part E of Chapter 10 of the Listing Requirements. The purpose of this Circular is to provide you with details of the Proposal and to seek your approval for the ordinary resolution pertaining to the Proposal to be tabled at the forthcoming AGM to be convened at Diamond Room, SSL Traders Hotel, No. 43, Jalan Medan Perwira Satu, Medan Perwira, Kamunting, Perak Darul Ridzuan on Friday, 19 June 2009 at a.m. The shareholders of GCB are advised to read carefully the contents of this Circular before voting on the ordinary resolution pertaining to the Proposal. 2.0 DETAILS OF THE PROPOSAL 2.1 Proposed Renewal of Shareholders Mandate Pursuant to Paragraph 10.09, Part E of Chapter 10 of the Listing Requirements, a listed issuer may seek a shareholders mandate in respect of the RRPT, which are necessary for its day-to-day operations subject to the following:- 1

5 (a) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; (b) the shareholders mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year where:- (i) the consideration, value of the assets, capital outlay or costs of the aggregated transactions is equal to or exceeds RM1 million or (ii) any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%; whichever is lower; (c) issuance of a circular to shareholders for the shareholders mandate; and (d) in the general meeting to obtain shareholders mandate, the interested director, interested major shareholder or interested person connected with a director or major shareholder; and where it involves the interest of an interested person connected with a director or major shareholder, such director or major shareholder, must not vote on the resolution approving the transactions. An interested director or interested major shareholder must ensure that persons connected with him abstain from voting on the resolution approving the transactions. 2.2 Principal activities of GCB Group The principal business activity of GCB is that of an investment holding whilst its subsidiary companies are principally involved in trading of latex concentrate and synthetic nitrile latex and property investment. It is anticipated that GRSB would, in the ordinary course of business, enter into RRPT which are necessary for the day-to-day operations with the Related Party which are disclosed in Section 2.4 of this Circular. It is likely that such transactions will occur with some degree of frequency and could arise at any time. The Board is seeking the shareholders mandate which would allow GRSB to enter into the RRPT as specified in Section 2.4 of this Circular with Related Party, provided such transactions are necessary for its day-to-day operations, in the ordinary course of its business and are carried out on normal commercial terms and are on terms not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders. The Proposed Renewal of Shareholders Mandate will, if approved by the shareholders at the forthcoming AGM, apply in respect of the RRPT to be entered into as set out in Section 2.4 of this Circular and shall take effect from and including 19 June 2009, being the date of the forthcoming AGM, and shall continue to be in force until: (a) the conclusion of the next AGM of the Company to be held in 2010, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; (b) the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 143 (1) of the Act but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act; or (c) revoked or varied by resolution passed by the shareholders in a general meeting, whichever is the earlier. Disclosure has been made in the Annual Report 2008 of the Company of the breakdown of the aggregate value of recurrent transactions conducted pursuant to the existing shareholders mandate during the financial year ended 31 December Classes of Related Party The Proposed Renewal of Shareholders Mandate will apply to the following classes of Related Party and their relationships are described below:- 2

6 Related Party Subsidiaries of LPB LMSB MMSB Principal Activity Manufacturing of natural and synthetic rubber gloves Relationship of the Related Party with GCB Low Bok Tek ( LBT ), a Director and a Major shareholder of GCB and GRSB. He has a deemed interest of 27% in GCB held through BT Capital Sdn Bhd ( BTC ) LBT, a Director and a Major Shareholder of LPB, LMSB and MMSB. He has a direct interest of 4.96% in LPB and a deemed interest of 25.38% in LPB held through BTC BTC, a party connected to LBT which is also a Major Shareholder of LPB and a Major Shareholder of GCB 2.4 Nature of RRPT and estimated value The RRPT with Related Party for which the shareholders approval will be sought in the forthcoming AGM are as follows: Company in the Group involved Related party Nature of transactions Estimated value of transactions from 19 June 2009 to AGM in 2010 (RM 000) GRSB LMSB MMSB Sales of latex concentrate by GRSB to LMSB and MMSB 70,000 The estimated value of the above transaction was based on forecast prepared for the period under consideration. However, the actual value of transaction may vary from the estimated value disclosed above. 2.5 The Review procedures for RRPT The Board has implemented the following measures to monitor the RRPT and ensure that the RRPT are undertaken on an arm s length basis and on normal commercial terms, which are not more favourable to the Related Party than those extended to third parties or public and are not prejudicial to the minority shareholders:- (a) (b) (c) (d) The prices, terms and conditions of the RRPT are based on market rates and availability of amount/resources and under similar commercial terms for transactions with third parties, business practices and policies. Records are maintained by the Company to capture all RRPT which are entered pursuant to the Proposed Renewal of Shareholders Mandate. The annual internal audit plan shall incorporate a review of the RRPT entered into pursuant to the Proposed Renewal of RRPT Mandate as renewed to ensure that they are transacted on terms and conditions which are not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders in the light of the circumstances concerned. The Board and the Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor RRPT have been complied with and the review shall be done at every quarter together with the review of quarterly results. If a member of the Board or Audit Committee has an interest in the transaction to be reviewed, he shall abstain from all deliberation and voting in respect of the transaction. 3

7 (e) Disclosure will be made in the Company s Annual Report of the actual aggregate value of RRPT conducted pursuant to the Proposed Renewal of Shareholders Mandate during the financial year, based on the following information, and for so long as the shareholders mandate is in force: (i) the type of RRPT made; and (ii) the names of the related parties involved in each type of the RRPT made and their relationship with the Company. 2.6 Audit Committee s Statement The Audit Committee of the Company has reviewed the terms of the Proposed Renewal Shareholders Mandate and is satisfied that the review procedures for RRPT are appropriate to ensure that these RRPT will be carried out at arm s length, on normal commercial terms and on terms which are not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders. The Audit Committee shall have the discretion to request for additional information pertaining to the RRPT from independent sources or advisers. 3.0 RATIONALE AND BENEFITS OF THE PROPOSAL The RRPT to be entered into by GRSB are all in the ordinary course of business. The Renewal Shareholders Mandate will allow GRSB to continue to carry out RRPT which is necessary for GRSB s day-to-day operations. The RRPT are undertaken on an arm s length basis and on normal commercial terms not more favourable to the related party than those generally available to the public and which are not prejudicial to the interests of the shareholders. The RRPT between the Related Party is likely to occur from time to time and it may be impractical to seek shareholders approval on a case to case basis before entering into such RRPT. The Proposed Renewal of RRPT Mandate and the renewal thereof on an annual basis would avoid the necessity to conduct separate general meetings from time to time to seek shareholders approval as and when the RRPT arise. This will substantially reduce administrative time, inconvenience and expenses associated with the convening of such general meetings and will allow the Company to conserve its resources and channelled it towards attaining other corporate objectives. 4.0 FINANCIAL EFFECTS OF THE PROPOSAL The Proposal is not expected to have any effect on the issued and paid-up share capital, net assets and earnings per share of GCB Group. 5.0 CONDITIONS OF THE PROPOSAL The Proposal is subject to the approval of the shareholders at the forthcoming AGM of the Company. 6.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS Save as disclosed below, none of the Directors and/or Major Shareholders of the Company and/or persons connected with them have any interest, direct or indirect, in the Proposed Renewal of Shareholders Mandate. The direct and indirect shareholdings of the interested Directors and Major Shareholders and persons connected to them in GCB as at 11 May 2009 are as follows:- Interested party No. of ordinary shares of RM1.00 each Direct % Indirect % Interested Director Low Bok Tek ,599,129* 27 Major Shareholder BT Capital Sdn Bhd ( BTC ) 13,599, Note:- * Deemed interest by virtue of his substantial shareholdings in BTC pursuant to Section 6A of the Act 4

8 The interested Director, namely Mr Low Bok Tek who has interest, direct or indirect, in the Proposed Renewal of Shareholders Mandate is deemed interested in the RRPT has abstained and will abstain from all board deliberations and voting on the Proposed Renewal Shareholders Mandate at the board meetings of GCB. In addition, BTC and Mr Low Bok Tek will also abstain from voting in respect of its direct and his indirect shareholdings respectively on the resolution approving the Proposed Renewal Shareholders Mandate at the forthcoming AGM. In addition, Mr Low Bok Tek and BTC further undertake that they shall ensure that the persons connected with them will abstain from voting in respect of their direct and indirect shareholdings on the resolution approving the Proposed Renewal of Shareholders Mandate at the forthcoming AGM to be convened. 7.0 DIRECTORS RECOMMENDATION 8.0 AGM Your Board (save for Low Bok Tek) having considered all aspects of the Proposed Renewal of Shareholders Mandate, are of the opinion that the Proposed Renewal of Shareholders Mandate is in the best interest of GCB Group and is not detrimental to the minority shareholders. Accordingly, the Directors, (save for Low Bok Tek) recommend that you vote in favour of the ordinary resolution pertaining to the Proposed Renewal of Shareholders Mandate at the forthcoming AGM of the Company. The AGM, the notice of which is enclosed in the Annual Report 2008, will be held at Diamond Room, SSL Traders Hotel, No. 43, Jalan Medan Perwira Satu, Medan Perwira, Kamunting, Perak Darul Ridzuan on Friday, 19 June 2009 at a.m. for the purpose of, considering and, if thought fit, pass the ordinary resolution to give effect to the Proposal. If you are unable to attend and vote in person at the forthcoming AGM, you are requested to complete the Form of Proxy enclosed with GCB s Annual Report in accordance with the instructions therein, and return it to the Registered Office of GCB at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, Kamunting, Perak Darul Ridzuan not later than 48 hours before the time set for the AGM or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting at the meeting should you subsequently wish to do so. 9.0 FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix I for further information. Yours faithfully, For and on behalf of the Board of Directors of GUNUNG CAPITAL BERHAD PETER WONG HOY KIM Senior Independent Non-Executive Director 5

9 FURTHER INFORMATION APPENDIX I 1. DIRECTORS' RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Directors of GCB and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquiries and to the best of their knowledge and belief, there are no other material facts the omission of which would make any statement herein misleading. 2. MATERIAL CONTRACTS GCB and its subsidiaries have not entered into any material contracts, not being contracts entered into in the ordinary course of business, within the two (2) years immediately preceding the date of this Circular. 3. MATERIAL LITIGATION Save as disclosed below, neither GCB nor its subsidiary companies are engaged in any material litigation claims or arbitration, either as plaintiff or defendant, as at the date of this Circular and the Directors of GCB are not aware of any proceedings pending or threatened against the Company and its subsidiary companies or of any fact likely to give rise to any proceedings which may materially and adversely affect the financial position or business of the Group. (i) Gunung Resources Sdn Bhd ( GRSB ), a wholly owned subsidiary of the Company, served with a Summons and Statement of Claim on 19 September 2006 by Seal Polymer Industries Berhad ( Plaintiff ) claim against GRSB for allegedly failing to refund the sum of deposits of RM928,000 paid by Plaintiff to GRSB together with interest of 8% pursuant to the Sales & Purchase Agreements dated 17 August 2004 that has been lapsed. The case has been adjourned to 28 June 2007 for hearing of the Plaintiff s application for summary judgment. On 25 October 2007, the High Court in Taiping allowed the Plaintiff's application for summary judgment for the refund of 10% deposit paid by Plaintiff to the Defendant together with interest/damages/costs pursuant to the Sales and Purchase Agreement dated 17 August The Company's solicitors had filed an appeal to the Court of Appeal against the decision and also filed an application for stay of execution of the summary judgment as these appears be many triable issues. GRSB had on 16 November 2007 received a notice pursuant to Section 218 of the Companies Act, 1965 ("the Notice") from Plaintiff's solicitors. The Company's solicitors had obtained an interim stay of execution of the Court Order dated 25 October 2007 given against GRSB as ordered by the Judge in Taiping High Court on 6 December 2007 until the hearing of the stay of execution application which was fixed on 21 January On 21 January 2008, the Company's solicitors have obtained a stay of all proceedings or execution by the Plaintiff against GRSB on the summary judgment dated 25 October 2007 until the decision of GRSB's appeal at the Court of Appeal. The Notice served by the Plaintiff on GRSB is therefore stayed until the decision of GRSB's appeal at the Court of Appeal. GRSB has instructed its solicitors to apply to court to strike out the Notice for abuse of process as it is highly improper, irregular, void of merits and oppressive in nature and seek damages and losses suffered by GRSB from the Plaintiff in relation to the issuance of the notice. On 23 June 2008, the Plaintiff has applied to the High Court Judge for the Order for stay of execution granted on 21 January 2008 to be set aside. The High Court has fixed for GRSB s application for stay of execution of the summary judgment on 13 August The Court adjourned the case to 22 October 2008 and fixed for decision on 18 November On 11 December 2008, GRSB s application for stay of execution against the Court Order dated 25 October 2007 was dismissed with costs by the High Court Judge. As the appeal in the Court of Appeal is still pending, GRSB has instructed their solicitors to apply to the Court of Appeal for stay of execution of the Order dated 25 October 2007 by way of Notice of Motion. 6

10 On 21 January The Court of Appeal has ordered that any winding-up proceedings by the Plaintiff pursuant to the Taiping High Court Order dated 25 October 2007 will be stayed with immediate effect and until the disposal of the Appeal before the Court of Appeal. The Honourable Court of Appeal has also ordered that a sum of RM928, is to be deposited into a joint account with the Respondents Solicitors until the outcome of the Appeal before the Court of Appeal. The said sum is to be deposited within 30 days from the date of the Order. 4. DOCUMENTS FOR INSPECTION Copies of the following documents will be made available for inspection during the normal business hours (except public holidays) at the Registered Office of GCB at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, Kamunting, Perak Darul Ridzuan, from the date of this Circular up to and including the date of the AGM: (i) Memorandum and Articles of Association of GCB; (ii) Audited accounts of GCB for the past two (2) financial years ended 31 December 2007 and 31 December 2008, and the latest unaudited results for the first quarter ended 31 March 2009; and (iii) The relevant cause paper including the writ of summon in respect of material litigation referred to in paragraph 3 above. 7