IDEAL UNITED BINTANG BERHAD ( IDEALUBB OR THE COMPANY ) PROPOSED INTERNAL REORGANISATION 1. INTRODUCTION On behalf of the Board of Directors of IDEALUBB ( Board ), M&A Securities Sdn Bhd wishes to announce that IDEALUBB and its subsidiaries ( the Group or IDEALUBB Group ) proposes to undertake an internal reorganisation by way of a members scheme of arrangement under Section 176 of the Companies Act, 1965 ( Act ) ( Proposed Internal Reorganisation ) comprising the following proposals: Proposed exchange of: (a) all existing ordinary shares of RM1.00 each in IDEALUBB ( IDEALUBB Shares ) with new ordinary shares of RM1.00 each in a new investment holding company, Ideal United Bintang International Berhad ( Newco ) ( Newco Shares ) on a onefor-one basis; and (b) all outstanding warrants 2016/2021 ( IDEALUBB Warrants ) with new warrants to be issued by Newco ( Newco Warrants ) on a one-for-one basis; as at an entitlement date to be determined and announced by the Board ( Entitlement Date ) ( Proposed Securities Exchange ); Proposed transfer of IDEALUBB s listing status to Newco, followed by the admission of Newco to and withdrawal of IDEALUBB from the Official List of Bursa Malaysia Securities Berhad ( Bursa Securities ), and the listing of and quotation for the new Newco Shares and Newco Warrants on the Main Market of Bursa Securities ( Proposed Transfer of Listing ); and (iii) Proposed transfer of IDEALUBB s entire shareholdings in its subsidiaries to Newco. Following the Proposed Securities Exchange, all of IDEALUBB s shareholdings in United Bintang Machinery Sdn Bhd ( UBM ), Platinum Manifest Sdn Bhd ( PMSB ) and I- Platinum Sdn Bhd ( I-Platinum ) will be transferred to Newco. The transfer will be done in the form of a distribution of assets in specie, by way of a reduction in IDEALUBB s capital under Section 64 of the Act. ( Proposed Transfer of Subsidiaries ); The Company has today entered into a conditional scheme agreement with Newco ( Scheme Agreement ) for the Proposed Internal Reorganisation. The following sections set out further details of each of the above components of the Proposed Internal Reorganisation. 2. DETAILS OF THE PROPOSED INTERNAL REORGANISATION 2.1 Proposed Securities Exchange Information on Newco Newco was incorporated in Malaysia under the Act as a private limited company under the name of Ideal United Bintang International Sdn Bhd on 10 January 2017 to facilitate the implementation of the Proposed Internal Reorganisation. Newco was subsequently converted into a public company on 16 January 2017 and assumed its present name. As at the 17 January 2017, being the latest practicable date prior to the date of this announcement ( LPD ), Newco has an authorised share capital of RM400,000.00 comprising 400,000 Newco Shares, of which 2 Newco Shares have been issued and are fully paid-up. Newco is currently dormant but is principally intended for investment holding activities.
The directors of Newco as at the LPD are Ms Chew Siew Cheng and Ms Lim Choo Tan. They hold 1 Newco Share each. During the implementation of the Proposed Securities Exchange, Newco s Board of Directors will mirror IDEALUBB s Board, and the current directors of Newco shall resign. Under the Proposed Securities Exchange, as at the Entitlement Date: all shareholders of IDEALUBB ( Entitled Shareholders ) will exchange their IDEALUBB Shares with new Newco Shares on a one-for-one basis; and all IDEALUBB Warrant holders ( Entitled Warrantholders ) will exchange their IDEALUBB Warrants with new Newco Warrants on a one-for-one basis. The Newco Shares to be issued for the Proposed Securities Exchange will be priced according to the following method: based on the five (5)-day volume weighted average market price ( 5D-VWAMP ) of IDEALUBB Shares on the market day prior to the announcement of the Entitlement Date; or the par value of Newco Shares of RM1.00; whichever is higher. The Newco Warrants to be issued for the Proposed Securities Exchange will be priced based on the 5D-VWAMP of IDEALUBB Warrants on the market day prior to the announcement of the Entitlement Date. As at the LPD, the Company has an issued and fully paid-up share capital of RM110,468,400 comprising 110,468,400 ordinary shares of RM1.00 each and 55,234,200 outstanding IDEALUBB Warrants. For illustrative purposes, based on IDEALUBB s share capital as at the LPD, 110,468,400 Newco Shares and 55,234,200 Newco Warrants will be issued under the Proposed Securities Exchange. Pursuant to the Proposed Securities Exchange, Entitled Shareholders will transfer all their shareholdings to Newco, and in exchange, will receive Newco Shares in a number equivalent to their respective shareholdings in IDEALUBB as at the Entitlement Date. Following this exchange, IDEALUBB shall become a wholly-owned subsidiary of Newco. The new Newco Shares to be issued pursuant to the Proposed Securities Exchange will rank equally in all respects with each other and with the two (2) existing issued and paid-up Newco Shares. The two (2) existing Newco Shares will continue to be held by the existing shareholders of Newco, namely Ms Chew Siew Cheng and Ms Lim Choo Tan. The Newco Warrants to be issued pursuant Proposed Securities Exchange will rank equally in all respects with each other. 2.2 Proposed Transfer of Listing Upon completion of the Proposed Securities Exchange, Newco will be the new holding company of IDEALUBB and its subsidiaries ( IDEALUBB Group ) and will assume the listing status of IDEALUBB. Accordingly, it is proposed that IDEALUBB be delisted from the Official List of Bursa Securities and Newco be admitted to the Official List of Bursa Securities in place of IDEALUBB, with the listing of and quotation for the entire enlarged issued and paid-up share capital of RM110,468,400 comprising 110,468,400 Newco Shares as well as 55,234,200 Newco Warrants on the Main Market of Bursa Securities.
2.3 Proposed Transfer of Subsidiaries Upon completion of the Proposed Securities Exchange, it is proposed that IDEALUBB transfers to Newco its shareholdings in UBM, PMSB and I-Platinum by way of a distribution in specie via a reduction in IDEALUBB s share capital under Section 64 of the Act. The amount of assets to be distributed is based on each subsidiaries respective carrying cost of investment, For illustrative purposes, based on IDEALUBB s audited statements of financial position as at 31 December 2015, the carrying value of the investment in UBM, PMSB and I-Platinum stood at RM5,633,484. After the completion of the Proposed Transfer of Subsidiaries, Newco will directly hold IDEALUBB s shareholdings in UBM, PMSB and I-Platinum. 2.4 Salient terms of the Scheme Agreement The salient terms of the Scheme Agreement are as follows:- (iii) (iv) (v) (vi) (vii) (viii) in consideration of the transfer by the Entitled Shareholders of all of the issued and fully paid-up shares in IDEALUBB held by them to Newco, Newco agrees to issue and allot 1 Newco Share in exchange for each IDEALUBB Share to the Entitled Shareholders and to assume the listing status in place of IDEALUBB in accordance with the terms and conditions of the Scheme Agreement; the new Newco Shares to be issued shall, upon allotment and issue, rank equally in all respects with each other and all the then existing Newco Shares; in consideration of the transfer by the Entitled Warrantholders of all of the outstanding IDEALUBB Warrants in IDEALUBB held by them to Newco, Newco agrees to issue and allot 1 Newco Warrant in exchange for each IDEALUBB Warrant to the Entitled Shareholders and to assume the listing status in place of IDEALUBB in accordance with the terms and conditions of the Scheme Agreement; the Proposed Internal Reorganisation will be implemented through the Scheme Agreement and the obligations of IDEALUBB and Newco under the Scheme Agreement shall be conditional upon all requisite approvals, consents and/or sanctions being obtained on or before 12 months from the date of the Scheme Agreement, including but not limited to the approvals of: Bursa Securities, the shareholders of IDEALUBB and the holders of IDEALUBB Warrants at an extraordinary general meeting ( EGM ) and court convened meeting ( CCM ), as well as the sanction of the High Court of Malaya; the Proposed Internal Reorganisation shall become effective on the date on which an office copy of the order of the High Court of Malaya sanctioning the Proposed Internal Reorganisation shall have been lodged with the Registrar of Companies or such earlier date as the High Court of Malaya may determine and as may be specified in the order ( Effective Date ), which shall be the same day as the Entitlement Date; Newco agrees to adopt a new memorandum and articles of association on substantially the same terms as the form of memorandum and articles of association attached to the Scheme Agreement prior to the Effective Date; Newco agrees to adopt in substantially the same form, the terms and conditions contained in the deed poll ( IDEALUBB Warrants Deed Poll ) constituting the IDEALUBB Warrants; and Upon completion of the Proposed Securities Exchange, IDEALUBB shall transfer its entire shareholdings in UBM, PMSB and I-Platinum in the form of a distribution of assets in specie, by way of a reduction in IDEALUBB s capital under Section 64 of the Act.
4. RATIONALE FOR THE PROPOSED INTERNAL REORGANISATION IDEALUBB, being the current listed vehicle, is also an operating company. It is principally engaged in investment holding and trading of heavy machinery. However, the Board expects further uncertainties in heavy machineries demand which would challenge this segment of the Group in future. As such, the Group had ventured into the property development business to diversify and bring in a new income stream to enhance the Group s shareholders value. The Proposed Internal Reorganisation will facilitate the establishment of a corporate structure where:- (iii) It allows Newco, an investment holding company to directly own 100% of the issued and paid-up share capital of IDEALUBB, and assume the listing status in place of IDEALUBB; the existing shareholders of IDEALUBB will be migrated to be shareholders of Newco; and IDEALUBB ceases its function as the listed vehicle within the IDEALUBB Group but continues as an operational company in the enlarged Newco Group carrying out its existing businesses. The shareholding structure and corporate structure of the IDEALUBB Group before and after the Proposed Internal Reorganisation is depicted in Section 4.1 below. The Board is of the view that the Proposed Internal Reorganisation enables Newco and its subsidiaries ( Newco Group ) to achieve ease and flexibility in the expansion to new business segments or streamlining of business segments as and when opportunities arise. The creation of a separate listed entity allows Newco to acquire or expand to new businesses or explore investment opportunities which can be held separately from IDEALUBB s operational activities. It also allows the Newco Group to streamline its business segments as and when the need arises. In addition, the Proposed Internal Reorganisation will be able to separate Newco (as the listed entity) from its operating entities and safeguard Newco from direct operating risks such as claims and litigation in connection with the Newco Group s operations and business activities. 5. EFFECTS OF THE PROPOSED INTERNAL REORGANISATION 5.1 Group structure Upon completion of the Proposed Internal Reorganisation, IDEALUBB will become a whollyowned subsidiary of Newco. Newco will be the new holding company of the Newco Group, directly hold IDEALUBB, UBM, PMSB, and I-Platinum and will assume the listing status of IDEALUBB.
The shareholding structure and corporate structure of the IDEALUBB Group as at the LPD and upon completion of the Proposed Internal Reorganisation are as follows:- As at the LPD Upon completion of the Proposed Internal Reorganisation: Save for the change in corporate structure as depicted in the chart above, there will be no other change to the corporate or business structure under the Newco Group as the Newco Group will continue to own and operate existing trading of machinery and property development businesses currently being carried out by the IDEALUBB Group.
5.2 Issued and paid-up share capital The pro forma effects of the Proposed Internal Reorganisation on the issued and paid-up share capital of IDEALUBB and Newco are as follows: No. of RM IDEALUBB Shares Issued and paid-up share capital of IDEALUBB 110,468,400 110,468,400 To be cancelled pursuant to the Proposed Transfer of - (5,633,484) Subsidiaries Enlarged issued and paid-up share capital 110,468,400 104,834,916 No. of Newco RM Shares Issued and paid-up share capital of Newco 2 2 To be issued pursuant to the Proposed Securities Exchange 110,468,400 110,468,400 Enlarged issued and paid-up share capital 110,468,402 110,468,402 5.3 Earnings and Earnings per Share ( EPS ) The Proposed Internal Reorganisation will not have any effect on the consolidated earnings of IDEALUBB as Newco will consolidate the earnings of the existing IDEALUBB Group. In addition, the Proposed Internal Reorganisation will not have any effect on the EPS of IDEALUBB as there is no change in the number of outstanding IDEALUBB securities, given that the Proposed Securities Exchange will be implemented on the basis of 1 new Newco Share for every existing IDEALUBB Share held and 1 Newco Warrant exchanged for every existing IDEALUBB Warrant held. [ The rest of this page is intentionally left blank ]
5.4 Net Assets ( NA ) and Gearing Upon completion of the Proposed Internal Reorganisation, the Newco Group s NA will not be significantly different from the IDEALUBB Group s NA prior to the implementation of the Proposed Internal Reorganisation. As the Group has no borrowings, its gearing will not be affected. The pro forma effects of the Proposed Internal Reorganisation on the NA and NA per share of the enlarged Newco Group are as set out below: Before the Proposed Internal Reorganisation After the Proposed Internal Reorganisation (1) Consolidated IDEALUBB Newco Consolidated IDEALUBB Newco Consolidated Newco RM RM RM RM RM Share capital 110,468,400 2 (2) 104,834,916 (4) 110,468,402 110,468,402 Capital reserve - - - (5) (42,511,424) - Accumulated losses (41,285,247) - (3) (41,785,247) - (41,785,247) Shareholders' funds / NA 69,183,153 2 63,049,669 67,956,978 68,683,155 Non-controlling interests 726,175 - - - 726,175 Total equity 69,909,328 2 63,049,669 67,956,978 69,409,330 No. of Shares 110,468,400 2 110,468,400 110,468,402 110,468,402 NA per ordinary share 0.63 1.00 0.62 0.62 0.62 Notes:- (1) Based on the audited consolidated financial statements of IDEALUBB as at 31 December 2015 (2) After the cancellation of capital of RM5,633,484 under the Proposed Transfer of Subsidiaries. (3) After deducting the estimated expenses of RM500,000 in relation to the Proposed Internal Reorganisation. (4) Assuming a minimum issue price of RM1.00 per Newco Share based on its par value, as the prevailing market price of IDEALUBB Shares is below RM1.00. (5) Being goodwill arising from the difference between the cost of the Proposed Securities Exchange of RM110,468,402 and the net assets of IDEALUBB of RM69,183,153, less the estimated expenses of RM500,000 as well as non-controlling interests of I-Platinum Sdn Bhd of RM726,177.
5.5 Substantial Shareholders Shareholdings The Entitled Shareholders will cease to be shareholders of IDEALUBB after the Proposed Internal Reorganisation and will hold Newco Shares instead in proportion to their respective shareholding in IDEALUBB on the Entitlement Date. 6. APPROVALS REQUIRED The Proposed Internal Reorganisation is subject to the following being obtained:- the approval of Bursa Securities for the following:- (a) Proposed Transfer of Listing; and (b) admission, listing of and quotation for the entire enlarged issued and paid-up share capital of Newco on the Official List of Bursa Securities; (iii) (iv) (v) the approval of the shareholders of IDEALUBB and IDEALUBB Warrant holders at an EGM and CCM to be convened; the order of the High Court of Malaya sanctioning the Proposed Internal Reorganisation; the consent approval of the financiers of IDEALUBB, if required; and the approval, consent and/or sanction of any other relevant authorities/parties, if required. 7. INTER-CONDITIONALITY The components of the Proposed Internal Reorganisation are inter-conditional but otherwise are not conditional upon any other corporate proposals of the Company. 8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM None of the Directors and major shareholders of IDEALUBB, and persons connected with them have any interest, direct or indirect, in the Proposed Internal Reorganisation other than their respective entitlements, if any, under the Proposed Securities Exchange as IDEALUBB s shareholders, which are also available to all the other shareholders of IDEALUBB on a prorata basis. 9. STATEMENT BY DIRECTORS After taking into consideration the rationale, terms, conditions and effects described in this announcement, the Board is of the opinion that the Proposed Internal Reorganisation is in the best interest of IDEALUBB. 10. ADVISER M&A Securities Sdn Bhd has been appointed as the Adviser to IDEALUBB for the Proposed Internal Reorgansition.
11. APPLICATION TO THE AUTHORITIES Barring unforeseen circumstances, the application to authorities is targeted to be submitted to Bursa Securities within 2 months from the date of this announcement. 12. ESTIMATED TIME FRAME FOR COMPLETION Barring unforeseen circumstances, the Proposed Internal Reorganisation is expected to be completed in the third quarter of 2017. 13. EGM AND CCM A notice for the EGM and CCM together with an Explanatory Statement/Circular explaining the details of the Proposed Internal Reorganisation will be despatched to the shareholders of IDEALUBB in due course. 14. DOCUMENTS FOR INSPECTION A copy of the Scheme Agreement is available for inspection at the registered office of the Company at Suite A, Level 9, Wawasan Open University, 54, Jalan Sultan Ahmad Shah, 10050 Georgetown, Penang during normal office hours from Mondays to Fridays (except for public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 18 January 2017.