YONG TAI BERHAD ("YTB" OR THE COMPANY") PROPOSED ACCELERATION OF THE CONVERSION PERIOD OF THE IRREDEEMABLE CONVERTIBLE PREFERENCE SHARES ("ICPS") OF YTB ("PROPOSED ACCELERATION OF ICPS") 1. INTRODUCTION On behalf of the Board of Directors of YTB ("Board"), UOB Kay Hian Securities (M) Sdn Bhd ("UOBKH") is pleased to announce that YTB proposes to undertake the proposed acceleration of the conversion period of the ICPS of YTB from 28 November 2019 to an earlier date to be determined and announced by the Board at a date subsequent to procuring the necessary approvals as set out in Section 5 of this announcement. Further details on the Proposed Acceleration of ICPS are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED ACCELERATION OF ICPS On 5 February 2016, YTB had announced that the Company will undertake a special issue of 200,000,000 ICPS to Impression Culture Asia Limited ("Impression Culture") at an issue price of RM0.80 per ICPS ("Special Issue of ICPS") together with a bonus issue of 16,034,494 ICPS to the ordinary shareholders of YTB on the basis on 1 bonus ICPS for every 10 existing ordinary shares in YTB ("YTB Share(s)") held by the shareholders of the Company ("Bonus Issue of ICPS"). In conjunction with the Special Issue of ICPS, the Company had also undertaken an issuance of 150,000,000 new YTB shares to Impression Culture at an issue price of RM0.80 per YTB Share amounting to RM120.00 million in gross proceeds and a private placement of 70,000,000 YTB Shares to third party investor(s) at an issue price of RM1.07 per YTB Share amounting to RM74.90 million in gross proceeds (collectively referred to as the "Corporate Exercise"). Total gross proceeds of RM354.90 million were raised from the Corporate Exercise. The Corporate Exercise was completed on 8 December 2016 and the gross proceeds raised from the Corporate Exercise were fully utilised by the Company and its subsidiary companies ("YTB Group" or the "Group") by the fourth quarter of 2017. The breakdown of the utilisation of proceeds raised from the Corporate Exercise is set out below:- RM'000 To fund the purchase consideration for Impression Land 33,300 To part finance the construction and production cost for the Impression Series Encore Melaka performance 116,700 To part finance existing projects and/ or future projects 100,000 Acquisition of new land banks and/ or property development related projects 78,900 Working capital requirements 22,000 For the construction of the Impression Series Encore Melaka theatre For the construction of the Group's existing and/ or new projects Expenses incurred for the Corporate Exercise and the Bonus Issue of ICPS 4,000 Total 354,900 1
As illustrated above, RM150.00 million of the total gross proceeds raised from the Corporate Exercise was utilised for the construction of the Impression Series Encore Melaka theatre. The initial purchase consideration for the Impression Land was RM37,026,000 based on an agreed value of RM50.00 per square foot and an indicative land area of 740,520.00 square feet. Subsequently, the Company had announced that the land area for the Impression Land was reduced from 740,520.00 square feet to 677,685.04 square feet, and the purchase consideration was revised to RM33,884,252 based on the agreed value of RM50.00 per square feet and in accordance with the terms and conditions of the sale and purchase agreement between the Company and the vendor of the Impression Land. The development of the Impression Land which comprises the construction of the theatre for the Impression Series Encore Melaka performance was expected to be for a period of 3 years and the commencement of the ticket sales after the construction of the theatre is expected to generate additional recurrent income stream to the Group. The remaining balance of the total gross proceeds of RM200.90 million was utilised to fund the Group's existing and/ or new projects and RM4.00 million was used to defray the expenses related to the Corporate Exercise. The ICPS was initially issued as part of the Corporate Exercise to raise the required funding for the development of the Impression Land and the ICPS was also an instrument that allowed the Company to raise funding while avoiding any dilution on the Company's earnings per share ("EPS") with a moratorium of 3 years for the conversion of ICPS which was expected to coincide with the completion of the theatre and the commencement of ticket sales. In view that the construction of the theatre had been completed on 30 June 2018 which is ahead of the initial expected completion date and ticket sales had commenced on 1 July 2018, the Board intends to accelerate the conversion period of the ICPS to an earlier date. As at 20 July 2018, being the latest practicable date of this announcement ("LPD"), the Company has a total of 216,034,494 ICPS outstanding. Each ICPS is convertible into 1 new YTB share at any time on any market day from 28 November 2019, being the 3rd anniversary of the date of issue of the ICPS ("Conversion Date"), up to and including 27 November 2026, being the maturity date of the ICPS by delivering a conversion notice to the Company's share registrar. For shareholders' information, as at the LPD, there were a total of 2,150 ICPS holders and Impression Culture holds 7,500,000 ICPS, which represents approximately 3.47% of the total of 216,034,494 ICPS in issue. The substantial ICPS holders as at the LPD are set out below:- Substantial ICPS holders ICPS held % Full Winning Developments Limited 60,000,000 27.77 Datuk Wira Boo Kuang Loon 11,801,580 5.46 Note:- Computed based on the outstanding 216,034,494 ICPS in issue 2
The salient terms of the ICPS pursuant to the Constitution of the Company are set out below:- Article Subject matter Provisions 7.2 Issue price of the ICPS 7.4 Tenure and maturity date of the ICPS RM0.80 for each ICPS a. The tenure of the ICPS shall be valid for 10 years from and inclusive of the date of issue of the ICPS b. The ICPS shall be deemed matured on the market day immediately before the 10th anniversary of the date of issue of the ICPS 7.8 Conversion The ICPS shall be convertible into new fully paid-up ordinary shares based on the conversion price or ratio during the conversion period 7.8.1 Conversion rights and conversion period a. The ICPS holders shall have the right to convert the ICPS held by him or any part thereof into ordinary shares based on the conversion price or ratio at the option of the ICPS holder, at any time on any market day from the 3rd anniversary of the date of issue of the ICPS up to and including the maturity date by delivering a conversion notice to the company's share registrar b. All issued ICPS that remains outstanding on the market day immediately after the maturity date will be automatically converted into new ordinary shares at the conversion price or ratio 7.8.2 Conversion price or ratio 7.8.3 Adjustment to conversion price or ratio Each ICPS shall be convertible into 1 new ordinary share at the conversion price of RM0.80 per ICPS. No additional cash payment is required for such conversion The conversion price or ratio may from time to time be adjusted as and when deemed necessary and expedient by the Board at their sole discretion, on or before the maturity date, in all or any of the following circumstances, subject to the provisions of the provisions provided for under the Company's Constitution:- a. an alteration of the par value of the ordinary shares by reason of consolidation or subdivision; b. a bonus issue of fully paid-up ordinary shares by the Company; c. a capital distribution or repayment to shareholders whether by way of reduction of capital or otherwise (but excluding any cancellation of capital which is lost or unrepresented by assets); d. a rights issue of ordinary shares by the Company; 3
Article Subject matter Provisions e. capitalisation of the reserves of the Company; or f. any other circumstances which in the opinion of the directors of the Company be deemed necessary 7.8.5 Ranking of new ordinary shares arising from conversion All new ordinary shares to be issued upon the conversion of the ICPS shall upon allotment and issuance, rank pari passu in all respects with the then existing ordinary shares, save and except that the new ordinary shares shall not be entitled to any dividend, right, allotments and/ or other distribution, the entitlement date of which is prior to the date of allotment of such new ordinary shares 7.9 Transferability The ICPS shall be freely transferable in accordance with the provisions of Central Depositories Act and the Rules of Bursa Malaysia Depository Sdn Bhd 7.14 Modification of rights of ICPS holders Any variation, modification, or abrogation of the rights and privileges attached to the ICPS in any way whether directly or indirectly shall require the sanction of a special resolution passed at a separate class meeting of the ICPS holders holdings or representing not less than 75% of the outstanding ICPS As set out above, the Board intends to undertake the Proposed Acceleration of ICPS to bring forward the Conversion Date of the ICPS to an earlier date. The Proposed Acceleration of ICPS will be effected by way of an amendment to the Constitution of YTB, the form and content of which is set out as follows:- Constitution Existing Provision Proposed Amended Provision Article 7.8.1 Conversion rights and conversion period a. "The ICPS holders shall have the right to convert the ICPS held by him or any part thereof into ordinary shares based on the conversion price or ratio stipulated under Article 7.8.2 at the option of the ICPS holder, at any time on any market day from the third anniversary of the date of issue of the ICPS up to an including the maturity date, by delivering a conversion notice in accordance with Article 7.8.4 to the company's share registrar" a. "The ICPS holders shall have the right to convert the ICPS held by him or any part thereof into ordinary shares based on the conversion price or ratio stipulated under Article 7.8.2 at the option of the ICPS holder, at any time on any market day from [date] up to an including the maturity date, by delivering a conversion notice in accordance with Article 7.8.4 to the company's share registrar" All other terms of the ICPS shall remain unchanged. 4
The Company will seek the approval from the ordinary shareholders of YTB and the ICPS holders at an extraordinary general meeting ("EGM") and a separate ICPS holders general meeting ("ICPS Holders Meeting"), respectively as:- i. the issuance of ICPS was previously approved by the ordinary shareholders of YTB and the Proposed Acceleration of ICPS requires an amendment to the Constitution of YTB; and ii. in compliance with Article 7.14 of the Constitution which requires the approval of not less than 75% in of the outstanding ICPS holders for any variation, modification, or abrogation of the rights and privileges attached to the ICPS. No gross proceeds will be raised from the conversion of ICPS into new YTB shares. 3. RATIONALE FOR THE PROPOSED ACCELERATION OF ICPS As set out in Section 2 of this announcement, the Special Issue of ICPS was undertaken as part of the Corporate Exercise to allow the Company to raise funds in an expeditious manner from the capital markets for the purpose of acquiring and developing the Impression Land as set out in Section 2 of this announcement. The initial moratorium of 3 years for conversion of the ICPS was to mitigate any immediate dilution effect on the Company's EPS upon issuance of the ICPS and it was expected to coincide with the commencement of operations of the Impression Series Encore Melaka theatre, which was originally targeted to take place in the fourth quarter of 2019. The Impression Series Encore Melaka theatre has been completed more than a year ahead of schedule and commenced operations on 1 July 2018, and with the sale of tickets for the Impression Series Encore Melaka performance already ongoing, the theatre is already income generating and is expected to provide recurring income to the Group going forward. As such, it is the intention of the Board to undertake the Proposed Acceleration of ICPS to allow the ICPS holders to convert their existing ICPS into ordinary shares of the Company, in view that the initial moratorium of 3 years was originally intended to coincide with the scheduled launch date of the Impression Series Encore Melaka theatre. The Proposed Acceleration of ICPS, if approved by shareholders and ICPS holders will take effect on such date (earlier than the 3rd anniversary of the date of issue of the ICPS, being the date for commencement of conversion based on the existing Constitution of YTB) to be determined and announced later by the Board. 4. EFFECTS OF THE PROPOSED ACCELERATION OF ICPS As at the LPD, the Company's issued share capital was RM275,030,675 comprising 484,701,350 YTB Shares. In addition, as at the LPD, YTB has a total of 33,544,900 outstanding warrants 2015/ 2020 in the Company ("Warrants A"). The Warrants A are constituted by the deed poll dated 19 May 2015 ("Deed Poll A") and each Warrant A carries the entitlement to subscribe for 1 new YTB share during the 5 year exercise period up to 24 June 2020 at an exercise price of RM0.50 per Warrant A. The pro forma effects of the Proposed Acceleration of ICPS, assuming full conversion of the ICPS, are illustrated based on the following scenarios:- Minimum Scenario : Assuming none of the outstanding Warrants A are exercised prior to the completion of the Proposed Acceleration of ICPS and assuming full conversion of the ICPS after the Proposed Acceleration of ICPS 5
Maximum Scenario : Assuming all of the outstanding Warrants A are exercised prior to the completion of the Proposed Acceleration of ICPS and assuming full conversion of the ICPS after the Proposed Acceleration of ICPS The pro forma effects of the Proposed Acceleration of ICPS on the issued share capital, net assets ("NA") per share and gearing level, substantial shareholders' shareholdings, earnings and EPS of YTB Group are set out as follows:- 4.1 Issued share capital Minimum Scenario Maximum Scenario Shares RM Shares RM Issued share capital as at the LPD 484,701,350 275,030,675 484,701,350 275,030,675 Assuming full exercise of the Warrants A Reversal of warrant reserve upon full exercise of the Warrants A - - 33,544,900 16,772,450 - - - 6,131,940 484,701,350 275,030,675 518,246,250 297,935,065 Assuming full conversion of ICPS after the Proposed Acceleration of ICPS 216,034,494 172,827,595 216,034,494 172,827,595 Enlarged issued share capital 700,735,844 447,858,270 734,280,744 470,762,660 Note:- Computed based on the exercise price of RM0.50 per Warrants A 4.2 NA per share and gearing Based on the latest audited consolidated statements of financial position of the Group as at 30 June 2017, the pro forma effects of the Proposed Acceleration of ICPS on the NA per share and gearing of the Group are set out as follows:- Minimum Scenario I II After I and assuming full conversion of the ICPS after Audited as at 30 June 2017 After adjusting for subsequent events the Proposed Acceleration of ICPS RM RM RM Share capital 217,842,675 275,030,675 447,858,270 *2 ICPS 172,827,595 172,827,595 - *2 Share premium 82,249,804 82,249,804 82,249,804 Warrant reserve 6,131,940 6,131,940 6,131,940 Retained earnings 5,861,217 5,861,217 5,661,217 *3 Total equity/ NA 484,913,231 542,101,231 541,901,231 shares outstanding 435,685,350 484,701,350 700,735,844 NA per share (RM) 1.11 1.12 0.77 Total borrowings - - - Gearing ratio (times) n.a. *4 n.a. *4 n.a. *4 6
Notes:- After adjusting for the exercise of 6,016,000 Warrants A at an exercise price of RM0.50 per Warrant A and the private placement of 43,000,000 YTB shares at an issue price of RM1.26 *2 After adjusting for the reversal of the amount outstanding in the ICPS account to the share capital assuming full conversion of the ICPS after the Proposed Acceleration of ICPS *3 After deducting estimated expenses of RM200,000 in relation to the Proposed Acceleration of ICPS *4 Not applicable Maximum Scenario I II III Audited as at 30 June 2017 After adjusting for subsequent events After I and assuming full exercise of the outstanding Warrants A After II and assuming full conversion of the ICPS after the Proposed Acceleration of ICPS RM RM RM RM Share capital 217,842,675 275,030,675 297,935,065 *2 470,762,660 *3 ICPS 172,827,595 172,827,595 172,827,595 - *3 Share premium 82,249,804 82,249,804 82,249,804 82,249,804 Warrant reserve 6,131,940 6,131,940 - *2 - Retained earnings 5,861,217 5,861,217 5,861,217 5,661,217 *4 Total equity/ NA 484,913,231 542,101,231 558,873,681 558,673,681 shares outstanding 435,685,350 484,701,350 518,246,250 734,280,744 NA per share (RM) 1.11 1.12 1.08 0.76 Total borrowings - - - - Gearing ratio (times) n.a. *5 n.a. *5 n.a. *5 n.a. *5 Notes:- After adjusting for the exercise of 6,016,000 Warrants A at an exercise price of RM0.50 per Warrant A and the private placement of 43,000,000 YTB shares at an issue price of RM1.26 *2 After adjusting for the exercise of the outstanding 33,544,900 Warrants A at an exercise price of RM0.50 per Warrant A and the reversal of the warrant reserve to the share capital account *3 After adjusting for the reversal of the amount outstanding in the ICPS account to the share capital account assuming full conversion of the ICPS after the Proposed Acceleration of ICPS *4 After deducting estimated expenses of RM200,000 in relation to the Proposed Acceleration of ICPS *5 Not applicable 7
4.3 Substantial shareholders' shareholding The pro forma effects of the Proposed Acceleration of ICPS on the substantial shareholders' shareholdings in the Company are set out below:- Minimum Scenario Substantial shareholders Full Winning Developments Limited Dato' Sri Lee Ee Hoe, JP Datuk Wira Boo Kuang Loon Assuming full conversion of the ICPS after Shareholdings as at the LPD the Proposed Acceleration of ICPS *2 <---------Direct--------> <--------Indirect--------> <---------Direct--------> <---------Indirect-------> 150,000,000 30.95 - - 210,000,000 29.97 - - 29,744,000 6.14 6,187,500 1.28 31,476,400 4.49 6,187,500 0.88 63,857,550 13.17 - - 75,659,130 10.80 - - Notes:- Deemed interest through his shareholding in Apple Vacations and Conventions Sdn Bhd by virtue of Section 8 of the Companies Act 2016 *2 The ICPS holdings of the substantial shareholders as at the LPD is set out below:- ICPS (direct) ICPS (indirect) Full Winning Developments Limited 60,000,000 - Dato' Sri Lee Ee Hoe, JP 1,732,400 - Datuk Wira Boo Kuang Loon 11,801,580 - THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 8
Maximum Scenario Substantial shareholders Full Winning Developments Limited Dato' Sri Lee Ee Hoe, JP Datuk Wira Boo Kuang Loon Substantial shareholders Full Winning Developments Limited Dato' Sri Lee Ee Hoe, JP Datuk Wira Boo Kuang Loon I Shareholdings as at the LPD Assuming all the outstanding Warrants A are exercised *2 <---------Direct--------> <--------Indirect--------> <---------Direct--------> <---------Indirect-------> 150,000,000 30.95 - - 150,000,000 28.94 - - 29,744,000 6.14 6,187,500 1.28 29,744,000 5.74 6,187,500 1.19 63,857,550 13.17 - - 63,857,550 12.32 - - II After I and assuming full conversion of the ICPS after the Proposed Acceleration of ICPS *3 <---------Direct--------> <--------Indirect--------> 210,000,000 28.60 - - 31,476,400 4.29 6,187,500 0.84 75,659,130 10.30 - - Notes:- Deemed interest through his shareholding in Apple Vacations and Conventions Sdn Bhd by virtue of Section 8 of the Companies Act 2016 *2 The warrant holdings of the substantial shareholders' as at the LPD is set out below:- Warrants A (direct) Warrants A (indirect) Full Winning Developments Limited - - Dato' Sri Lee Ee Hoe, JP - - Datuk Wira Boo Kuang Loon - - *3 The ICPS holdings of the substantial shareholders as at the LPD is set out below:- ICPS (direct) ICPS (indirect) Full Winning Developments Limited 60,000,000 - Dato' Sri Lee Ee Hoe, JP 1,732,400 - Datuk Wira Boo Kuang Loon 11,801,580-9
4.4 Earnings and EPS The Proposed Acceleration of ICPS, which is expected to be completed by the fourth quarter of 2018, is not expected to have any material effect on the earnings of YTB Group for the financial year ending 30 June 2019. However, there will be a dilution in the EPS of the Group due to the increase in the number of YTB Shares in issue arising from the conversion of the ICPS, if any, for the financial year ending 30 June 2019. 4.5 Convertible securities Save for the outstanding Warrants A and the ICPS, the Company does not have any other existing convertible securities as at the LPD. No adjustments will be made to the outstanding Warrants A pursuant to the terms of the Deed Poll A in relation to the Proposed Acceleration of ICPS. Save for the proposed amendment to Article 7.8.1 of the Constitution of the Company in relation to the Proposed Acceleration of ICPS as mentioned in Section 2 above, all other terms of the ICPS shall remain unchanged. 5. APPROVALS REQUIRED The Proposed Acceleration of ICPS is subject to the following approvals being obtained:- i. The ordinary shareholders of YTB for the Proposed Acceleration of ICPS at an EGM to be convened; ii. iii. The ICPS holders of YTB for the Proposed Acceleration of ICPS at the ICPS Holders Meeting to be convened; and Any other relevant authority, if required. The Proposed Acceleration of ICPS is not conditional upon any other proposals undertaken or to be undertaken by the Company. The Proposed Acceleration of ICPS is however, conditional upon approval being obtained from both the ordinary shareholders and the ICPS holders of YTB. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM None of the Directors and/ or major shareholders of YTB and/ or persons connected to them have any interest, whether direct or indirect, in the Proposed Acceleration of ICPS save for their respective entitlements as ICPS holders of the Company which is also available to all other ICPS holders of the Company. 7. DIRECTORS' STATEMENT The Board, having considered all aspects of the Proposed Acceleration of ICPS, including the rationale for the Proposed Acceleration of ICPS, the effects of the Proposed Acceleration of ICPS, is of the opinion that the Proposed Acceleration of ICPS is in the best interest of the Company. 10
8. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all relevant approvals being obtained, the Proposed Acceleration of ICPS is expected to be completed by the fourth quarter of 2018. 9. ADVISER UOBKH has been appointed by the Company to act as the Adviser for the Proposed Acceleration of ICPS. This announcement is dated 1 August 2018. 11