TALIWORKS CORPORATION BERHAD ( TCB OR THE COMPANY )

Transcription

1 TALIWORKS CORPORATION BERHAD ( TCB OR THE COMPANY ) PROPOSED JOINT VENTURE VIA A DISPOSAL OF 50% EQUITY INTEREST IN PINGGIRAN MUHIBBAH SDN. BHD. ( PMSB ), A WHOLLY-OWNED SUBSIDIARY OF TCB, TO PINGGIRAN VENTURES SDN. BHD. ( PVSB ), A WHOLLY-OWNED SUBSIDIARY OF THE EMPLOYEES PROVIDENT FUND BOARD ( EPF ) 1. INTRODUCTION On behalf of the Board of Directors of TCB ( Board ), CIMB Investment Bank Berhad and Hong Leong Investment Bank Berhad wish to announce that the Company had on 30 November 2015 entered into a joint venture arrangement via a share sale and purchase agreement ( SPA ) with PVSB, a wholly-owned subsidiary of EPF, and EPF to dispose of its 50% equity interest in PMSB comprising 5,000 ordinary shares of RM1.00 each ( PMSB Shares ) and 36,424,569 redeemable preference shares of par value of RM0.01 each and premium of RM0.99 each ( PMSB RPS ) (collectively, the Sale Shares ), to PVSB for a total cash consideration of RM66.75 million ( Disposal Consideration ) ( Proposed Joint Venture ). The Company had also on the same date entered into a shareholders agreement with PVSB, EPF and PMSB ( PMSB Shareholders Agreement ) to govern their rights, duties, liabilities and obligations to each other as shareholders of PMSB upon completion of the SPA. 2. DETAILS OF THE PROPOSED JOINT VENTURE The Proposed Joint Venture entails the disposal by TCB to PVSB of 5,000 PMSB Shares and 36,424,569 PMSB RPS, representing 50% equity interest in PMSB for the Disposal Consideration upon the terms and subject to the conditions of the SPA as set out in Section 2.7 of this announcement. Upon completion of the SPA and subject to the terms of the PMSB Shareholders Agreement, PMSB would cease to be a wholly-owned subsidiary of TCB and become a 50% joint venture company of TCB in accordance with the Malaysian Financial Reporting Standard 11 Joint Arrangements ( MFRS 11 ). 2.1 Information on PMSB PMSB was incorporated under the Companies Act 1965 ( Act ) as a private limited company on 7 March The authorised share capital of PMSB is RM1,000,000 divided into 100,000 PMSB Shares and 90,000,000 PMSB RPS, of which 10,000 PMSB Shares and 72,849,138 PMSB RPS have been issued and fully paid-up. PMSB is an investment holding company with its sole principal investment in Grand Sepadu (NK) Sdn. Bhd. ( GSNK ), a joint venture company of PMSB under the MFRS 11. PMSB currently holds 150 ordinary shares of RM1.00 each in GSNK ( GSNK Shares ), representing 75% of the total GSNK Shares in issue and 76,300,000 irredeemable preference shares of RM1.00 each in GSNK ( GSNK IPS ), representing 100% of the GSNK IPS in issue. Based on the audited financial statements for the financial year ended ( FYE ) 31 December 2014 of PMSB, the profit after tax and net assets ( NA ) of PMSB is approximately RM0.2 million and RM0.2 million, respectively. 1

2 2.2 Information on GSNK GSNK was incorporated under the Act as a private limited company on 23 July The authorised share capital of GSNK is RM200,000,000 divided into 2,903,000 GSNK Shares, 1,200,000 redeemable preference shares of par value of RM0.01 each and premium of RM0.99 each, 85,000,000 redeemable preference shares of par value of RM0.001 each and premium of RM0.999 each and 197,000,000 GSNK IPS, of which 200 GSNK Shares and 76,300,000 GSNK IPS have been issued and fully paid-up. The principal activity of GSNK is to carry on business as a concessionaire to operate and maintain the New North Klang Straits Bypass Expressway ( NNKSB ). 2.3 Information on NNKSB NNKSB is a 17.5 kilometre two-lane dual carriageway highway which links North Port to Bukit Raja, Klang. The NNKSB is parallel to the old tolled North Klang Straits Bypass (which became a non-tolled road after NNKSB became operational) and is linked to Lebuh Raya Shah Alam, Federal Highway and the New Klang Valley Expressway. NNKSB commenced operations in Pursuant to a sale and purchase agreement entered into between GSNK and Lebuhraya Shapadu Sdn. Bhd. (in liquidation) ( LSSB ) on 30 June 2014 and a novation agreement entered into between the Government of Malaysia ( GOM ), LSSB and GSNK on 22 December 2014, GSNK has acquired the assets and concession rights in relation to the NNKSB including all rights, benefits, interest, duties and obligations of LSSB under the concession agreement dated 1 August 1995 ( CA ) and a first supplemental concession agreement dated 7 May 1999 ( FSSA ) to operate and maintain the NNKSB. Further to this, a second supplemental concession agreement ( SSCA ) was executed on 22 December 2014 between GSNK and the GOM to vary the terms of the CA and FSSA of which amongst others, the tenure of the concession was extended to Under the terms of the SSCA, the concession period is a term of 18 years commencing from 22 December The NNKSB concession is governed under the Federal Roads (Private Management) Act On 11 June 2015, GSNK had issued a Sukuk based on the Shariah principle of Murabahah (via a Tawarruq arrangement) ( Sukuk Murabahah ) of RM210 million in nominal value. RM200.0 million of the Sukuk Murabahah was utilised to facilitate the roll-over of the then existing bridging loan facility of up to RM200.0 million into the Sukuk Murabahah and the balance was utilised for working capital purposes. 2.4 Information on PVSB PVSB was incorporated under the Act as a private limited company on 17 July The authorised share capital of PVSB is RM400,000 divided into 100,000 ordinary shares of RM1.00 each and 300,000,000 redeemable preference shares of par value RM0.001 each and premium of RM0.999 each, of which 10,000 ordinary shares of RM1.00 each and 68,673,000 redeemable preference shares of par value RM0.001 each and premium of RM0.999 each have been issued and fully paid-up. PVSB is an investment holding company. 2.5 Information on EPF EPF is a social security organisation established under the Employees Provident Fund Act 1991 and presently having its head office at Bangunan KWSP, Jalan Raja Laut, Kuala Lumpur. 2

3 2.6 Basis and justification for the Disposal Consideration The Disposal Consideration, which is payable in cash at the completion of the SPA ( Closing ), was arrived on a willing-buyer willing-seller basis after taking into consideration, among others, the following: (i) (ii) the pro forma consolidated NA of PMSB as at 31 December 2014 (after taking into account the material subsequent events as set out in notes 1(a), 1(b), 1(c), 1(e) and 1(i) of Section 4.2 of this announcement) of RM76.4 million; and the future earnings potential of the toll road concession asset. 2.7 Salient terms of the SPA The salient terms of the SPA are as follows: Agreement to sell the Sale Shares TCB has agreed to sell, and PVSB has agreed to purchase, the Sale Shares. The Sale Shares shall be sold by TCB free from encumbrances and together with all rights and advantages attaching to them as at the Closing (including the right to receive all dividends or distributions declared, made or paid on or after Closing) Closing Closing shall take place on a business day specified by TCB to PVSB provided that TCB has given at least 10 business days prior notice to PVSB, and provided it falls within 30 business days from the date of execution of the SPA, or at such other location, time or date as may be agreed in writing between TCB and PVSB. On Closing, EPF shall procure PVSB to pay and PVSB shall pay the Disposal Consideration to TCB by electronic transfer of funds, free of any set-off, deduction, withholding or counterclaims, by crediting for same day value the bank account nominated by TCB. In the event that PVSB fails to pay the Disposal Consideration, EPF shall pay the Disposal Consideration to TCB by electronic transfer of funds, free of any set-off, deduction, withholding or counterclaims, by crediting for same day value the bank account nominated by TCB Termination The SPA may be terminated upon the occurrence of the following events: (i) (ii) by TCB, if all its closing obligations are fulfilled and PVSB or EPF does not pay the Disposal Consideration when due under the terms of the SPA; or by PVSB, if PVSB is ready willing and able to fulfil all its closing obligations and to pay the Disposal Consideration, and TCB does not fulfil all its closing obligations. 2.8 Salient terms of the PMSB Shareholders Agreement The salient terms of the PMSB Shareholders Agreement are as follows: Conditions precedent The PMSB Shareholders Agreement is conditional upon and shall come into effect on Closing. 3

4 2.8.2 Shareholding proportions The PMSB Shares and PMSB RPS held by TCB and PVSB are to be maintained in the following proportion, subject to variations in accordance with the PMSB Shareholders Agreement: Shareholder Percentage of PMSB Shares and PMSB RPS held TCB 50% PVSB 50% Board of directors The board of directors of PMSB will consist of 2 directors nominated by TCB and 2 directors nominated by PVSB. 2.9 Date and original cost of investment The original cost and date of investment of TCB in PMSB are as follows: Date of allotment/ acquisition No. of shares in PMSB allotted/acquired Cumulative cost of investment RM Par value RM 20 June PMSB Shares August ,460 PMSB Shares , April ,538 PMSB Shares , April ,916,218 PMSB RPS ,860, November ,932,920 PMSB RPS ,792, Proposed utilisation of proceeds The gross proceeds of approximately RM66.75 million arising from the Proposed Joint Venture are intended to be utilised in the following manner: Details of utilisation Note RM 000 Future investments and working capital requirements Estimated expenses for the Proposed Joint Venture Total 66,750 Expected timeframe for utilisation of proceeds from completion of the Proposed Joint Venture (1) 65,250 Within 12 months (2) 1,500 Within 1 month Notes: (1) Part of the proceeds arising from the Proposed Joint Venture shall be earmarked for future investments, which are yet to be determined at this juncture and will depend on the opportunity as and when arises. Such future investments may include acquisitions of strategic investments and/or strategic collaborations, joint ventures or alliances. In the event shareholders approval is required pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ) for the strategic investments and/or strategic collaborations, joint ventures or alliances, such approval will be sought in accordance with the provisions of the Listing Requirements. In addition, part of the proceeds arising from the Proposed Joint Venture may also be utilised for the working capital requirements of TCB and its group of companies ( TCB Group ), which include the day to day operating expenses of the TCB Group. 4

5 The breakdown of utilisation of proceeds for future investments and working capital has not been determined at this juncture and will depend on the operational requirements of the TCB Group at the time of utilisation. (2) The estimated expenses of RM1.5 million relating to the Proposed Joint Venture comprise professional fees and other ancillary expenses. In the event the expenses incurred are higher/lower than budgeted, the deficit/surplus will be adjusted from/to the portion allocated for future investments and working capital requirements Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees to be assumed by PVSB and EPF pursuant to the Proposed Joint Venture. 3. RATIONALE FOR THE PROPOSED JOINT VENTURE The Proposed Joint Venture will allow TCB to unlock the value of its investment in PMSB and provide the TCB Group with greater financial strength and flexibility to pursue future potential acquisitions and/or investment opportunities. In addition, the Proposed Joint Venture will also further strengthen the strategic partnership between the TCB Group and EPF whereby TCB could leverage on the established partnership and understanding with EPF to jointly pursue other future investments opportunities with the objective to grow and expand its mature cash-generating concessionbased businesses. 4. EFFECTS OF THE PROPOSED JOINT VENTURE 4.1 Share capital and substantial shareholders shareholdings The Proposed Joint Venture will not have any effect on the issued and paid-up share capital and the substantial shareholders shareholdings of the Company as the Proposed Joint Venture does not involve any issuance of new ordinary shares of RM0.20 each in TCB ( TCB Shares ) by the Company. [The remainder of this page is intentionally left blank] 5

6 4.2 NA and gearing Based on the audited consolidated financial statements of the Company for the FYE 31 December 2014, the pro forma effects of the Proposed Joint Venture on the Company s consolidated NA, NA per share and gearing are as follows: Audited as at 31 December 2014 Material subsequent events (1) After the Proposed Joint Venture (RM 000) (RM 000) (RM 000) Share capital 218, , ,898 Share premium 74, , ,094 Share option reserve 1, Currency translation reserve 25,140 25,140 25,140 Available-for-sale reserve (2) (2) (12) Merger deficit (71,500) (71,500) (71,500) Retained earnings 604, , ,208 Total equity attributable to owners of the Company 851,761 1,097,764 1,154,828 Number of TCB Shares in issue ( 000) 1,091,229 (2) 1,209,489 1,209,489 NA per TCB Share (RM) 0.78 (2) Total borrowings (RM 000) 741, , ,113 Gearing ratio (times) Notes: (1) After adjusting for the following material subsequent events from 1 January 2015 to 27 November 2015, being the latest practicable date prior to the announcement: (a) settlement of amount owing to Mercu Majujaya Sdn. Bhd. by way of issuance of 26,916,218 PMSB RPS to Mercu Majujaya Sdn. Bhd., and cash consideration of RM37,101,873; (b) declaration by Cerah Sama Sdn. Bhd. ( CSSB ), an indirect subsidiary company of the Company, on 26 February 2015 of the first interim single-tier dividend of approximately RM per share on 595,000 ordinary shares in CSSB of RM1.00 each, amounting to RM157,143,000. Trinitywin Sdn. Bhd. ( Trinitywin ), an indirect subsidiary company of the Company and a 10% ordinary shareholder of CSSB, waived its right to the dividend amounting to RM9,143,000. The net dividend of RM148,000,000, which was paid on 24 March 2015, includes dividend paid to TEI Sdn. Bhd. ( TEI ), an indirect subsidiary of the Company, and Trinitywin, amounting to RM92,999,950, which has been eliminated on consolidation; (c) acquisition of 35% equity interest in CSSB as announced on 26 February 2015 and completed on 26 March 2015; (d) acquisition of 15.38% equity interest in PMSB as announced on 26 February 2015 and completed on 21 April 2015; (e) declaration by TEI on 18 March 2015 of the first interim single-tier dividend of RM1, per share on 10,000 ordinary shares in TEI of RM1.00 each, amounting to RM12,999,950, which was paid on 25 March Following the receipt of dividend from TEI, PMSB paid RM6,629,975 to the Company by setting-off an equivalent amount owing by PMSB to the Company; (f) exercise of 3,324,000 options at an issue price of RM1.90 pursuant to the Company s employee share option scheme; (g) private placement of 43,980,000 ordinary shares of RM0.50 each in TCB at an issue price of RM3.20 each, which was completed on 23 October 2015; (h) share split involving the subdivision of every 2 existing ordinary shares of RM0.50 each in TCB held by the entitled shareholders into 5 TCB Shares, which was completed on 11 November 2015; and (i) internal re-organisation of TCB Group structure which was announced and completed on 26 November 2015, collectively referred to as the Material Subsequent Events. (2) The NA per TCB Share has been adjusted for the share split as per note 1(h) above. 6

7 4.3 Earnings and earnings per share ( EPS ) Upon completion of the Proposed Joint Venture, PMSB will no longer be a subsidiary of the TCB Group. In accordance with the Malaysian Financial Reporting Standards, the TCB Group would recognise a gain equivalent to the difference between (i) the sum of the Disposal Consideration and the fair value of TCB s remaining 50% equity interest in PMSB ( Fair Value of Remaining Investment ), and (ii) the carrying amount of PMSB recognised in TCB s consolidated accounts prior to completion of the Proposed Joint Venture ( PMSB Carrying Amount ). For illustrative purposes, the TCB Group is expected to realise a gain of approximately RM57.1 million arising from the Proposed Joint Venture, computed as follows: RM mil Disposal Consideration Add: Fair Value of Remaining Investment (1) Less: PMSB Carrying Amount (2) (76.43) Net gain to the TCB Group arising from the Proposed Joint Venture Notes: (1) Assuming based on the Disposal Consideration. (2) Based on the pro forma consolidated NA of TCB as at 31 December 2014 after taking into account the Material Subsequent Events. The net gain illustrated above represents an EPS of approximately 4.7 sen per TCB Share. However, the actual gain may differ depending on the PMSB Carrying Amount as at the Closing date of the Proposed Joint Venture and the final determination of the Fair Value of Remaining Investment. The Proposed Joint Venture is expected to reduce the future earnings of the TCB Group to the extent that 50% equity interest in PMSB has been disposed of to PVSB. However, the impact of the reduction in earnings may be mitigated by the benefits arising from the utilisation of proceeds in the manner as set out in Section 2.10 of this announcement. Upon completion of the Proposed Joint Venture, PMSB will be accounted for using the equity method in accordance with the Malaysian Financial Reporting Standard 128 Investments in Associates and Joint Ventures. 5. APPROVALS REQUIRED AND CONDITIONALITY The Proposed Joint Venture is not subject to the approval of the shareholders of the Company or any relevant authority. The Proposed Joint Venture is not conditional upon any other proposals undertaken or to be undertaken by the Company. 6. INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors, substantial shareholders and/or persons connected with them has any interest, direct or indirect, in the Proposed Joint Venture. 7

8 7. STATEMENT BY THE BOARD After having considered all aspects of the Proposed Joint Venture (including but not limited to the rationale for and the effects of the Proposed Joint Venture), the Board is of the opinion that the Proposed Joint Venture is in the best interest of the Company. 8. HIGHEST PERCENTAGE RATIO Based on the pro forma consolidated financial statements of the Company for the FYE 31 December 2014 reviewed by the external auditors of the Company, the highest percentage ratio applicable for the Proposed Joint Venture pursuant to paragraph 10.02(g) of the Listing Requirements is 6.1%. 9. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED JOINT VENTURE The Board expects the Proposed Joint Venture to be completed within 1 month from the date of this announcement. 10. DOCUMENTS FOR INSPECTION The SPA and the PMSB Shareholders Agreement are available for inspection by the registered shareholders of the Company at TCB s office at Level 20, Menara LGB, No. 1, Jalan Wan Kadir, Taman Tun Dr. Ismail, Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 30 November