TADMAX RESOURCES BERHAD (Company No. 8184-W) TADMAX RESOURCES BERHAD ("TADMAX") PROPOSED ACQUISITION OF THE REMAINING 45% EQUITY INTERESTS IN WAWASAN METRO BINA SDN BHD ( PROPOSED ACQUISITION ) 1. INTRODUCTION 1.1 The Board of Directors of Tadmax wishes to announce that the Company had on 22 July 2016 entered into an unconditional Share Sale Agreement ( SSA ) to acquire the remaining 45% equity interests in Wawasan Metro Bina Sdn Bhd ( WMB ) from three (3) corporate entities, namely Inas Angkasa Sdn Bhd ( IASB ), Impiria Jaya Sdn Bhd ( IJSB ) and Global Showcase Sdn Bhd ( GSSB ), each owning 15% each in WMB for a total purchase consideration of RM42,000,000 ( Proposed Acquisition ). 2. PROPOSAL ACQUISITION 2.1 Details of the Proposed Acquisition On 22 July 2016, Tadmax had entered into a SSA with IASB, IJSB and GSSB (collectively referred to as the Vendors ), to acquire the remaining 450,000 ordinary shares in WMB ( WMB Shares ) ( Sale Shares ), representing the remaining 45% equity interests in WMB not already owned by Tadmax, for a cash consideration of RM42,000,000 ( Purchase Consideration ). Pursuant to the terms of the SSA, the Sale Shares will be acquired free from all encumbrances, liens, charges and other encumbrances and with all rights accruing to those Sale Shares. Presently, WMB is a 55% owned subsidiary of Tadmax with the balance held by IASB, IJSB and GSSB. Upon completion of the Proposed Acquisition, WMB will become a wholly-owned subsidiary of Tadmax. 2.1 Information on WMB WMB (Company No. 1065160-U) was incorporated in Malaysia on 7 October 2013 as a private company limited by shares with its registered office at No. 2D, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan. The authorized share capital of WMB is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each, of which 1,000,000 ordinary shares have been issued and fully paid-up. WMB s principal activities are that of property development. 1
The existing Directors, shareholders and their respective shareholdings in WMB prior to the Proposed Acquisition are as follows:- Board of Directors/Shareholders Shareholdings Direct Indirect Percentage Dato Abdul Ghani bin Yunus # 0 150,000 15.0% Datuk Gan Seong Liam ^ 0 150,000 15.0% Aldillan bin Anuar ^^ 0 550,000 55.0% Almiran bin Anuar ^^ 0 550,000 55.0% Pow Tuck Weng 0 0 0% Tadmax Resources Berhad 550,000 0 55.0% Inas Angkasa Sdn Bhd 150,000 0 15.0% Impiria Jaya Sdn Bhd 150,000 0 15.0% Global Showcase Sdn Bhd 150,000 0 15.0% # - By virtue of his interests vide Inas Angkasa Sdn Bhd ^ - By virtue of his interests vide Global Showcase Sdn Bhd ^^ - By virtue of their interests vide Tadmax Resources Berhad Tadmax s 55% equity interests in WMB was effected on 17 March 2016, through the subscription of 550,000 ordinary shares in WMB for a total subscription price of RM550,000. Based on the latest Audited Accounts of WMB for the year ended 31 December 2015, the total Shareholders Equity was RM432,904. As at 30 June 2016, the Management Accounts of WMB reported total Shareholders Equity at RM529,506. 2.2 Basis of Arriving at the Purchase Consideration The Purchase Consideration of RM42,000,000 for the Proposed Acquisition was arrived at on a willing-buyer-willing-seller basis after commercial negotiation carried out on an arm s length basis with the Vendors and taking into consideration the following :-. i) Tadmax to have complete control of WMB operations as well as its future strategic directions. This is in line with Tadmax s aim to further strengthen its foothold in the property development and construction activities; ii) The future prospects of WMB which will contribute significantly to the future earnings of WMB and enhance its shareholders value in the future. iii) The coming on-stream of the property development activities to be undertaken by WMB. Tadmax is presently reviewing the development plans for submission and finalizing the same with the relevant authorities. 2
2.3 Salient Terms of the SSA The other salient features of the SSA are as follows:- Payment terms Conditions precedent Completion RM3,000,000 ( Deposit ) on execution of the SSA and the Balance Purchase Consideration of RM39,000,000 be payable in instalments the sum of RM6,500,000 only per month, the first of which shall commence on or before the 30 th of the 6 th month following the date of this Agreement, and each subsequent instalment shall be on or before every 30 th day of the succeeding month. : None : Completion shall take place on the date of execution of the SSA. Delivery completion documents of : To be delivered by the Vendors to the stakeholders and be released to Tadmax upon execution of the SSA and the payment of Deposit. Tadmax shall be entitled to transfer to its name all the Sale Shares, entitled to change the Board of Directors and bank signatories. Balance Purchase Consideration Specific Performance /Breach : Any balance purchase consideration owing by Tadmax to the Vendors shall be deemed a debt owing. : The Vendors or Tadmax shall be at liberty to take such action in law as may be necessary to compel the other party who is in default of its obligations under the SSA (the Defaulting Party) by way of specific performance to complete the transactions contemplated in the SSA (in which respect the alternative remedy of monetary compensation shall not be regarded as compensation or sufficient compensation for any default of the Defaulting Party in the performance of the terms and condition herein) or to claim damages for the breach of the party in default. Notwithstanding anything contained in the SSA, in the event Tadmax fails or defaults in the payment of the Balance Purchase Consideration as and when the same falls due under the SSA or defaults in any one payment for any reason whatsoever, then the Purchaser shall be liable to pay the remainder unpaid Balance Purchase Consideration immediately to the Vendors as the debt due and owing immediately. 3
3. INFORMATION ON THE VENDORS The details of the Vendors are summarized in the below table :- Inas Angkasa Sdn Bhd Impiria Jaya Sdn Bhd Global Showcase Sdn Bhd Incorporation date 12 November 2012 21 October 2013 20 October 2015 Authorised capital RM100,000.00 RM400,000.00 RM400,000.00 Paid up Capital RM2.00 RM2.00 RM1,000.00 Principal activity Investment holding Investment holding Investment holding Directors Dato Abdul Ghani bin Fazli Amri bin Datuk Gan Seong Liam Yunus Faishal Datuk Syed Azmi bin Syed Othman Firdaus bin Faishal Gan Kuok Chyuan Shareholders Dato Abdul Ghani bin Fazli Amri bin Datuk Gan Seong Liam Yunus 50% Datuk Syed Azmi bin Syed Othman 50% Faishal - 50% Firdaus bin Faishal - 50% 49.9% Gan Kuok Chyuan 49.9% Gan Kuok Ching 0.1% Gan Kuok Wei 0.1% 4. RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition will enable Tadmax to have complete control of WMB operations as well as its future strategic directions. This is in line with Tadmax s aim to further strengthen its foothold in the property development and construction activities. The Proposed Acquisition also presents an opportunity for the Tadmax Group to consolidate WMB earnings in full as its wholly-owned subsidiary company. This in turn, is expected to improve the future earning of Tadmax Group. 5. RISKS IN RELATION TO THE PROPOSED ACQUISITION Tadmax does not envisage any Completion Risk as the SSA is completed on the date of execution of the SSA. However, the Proposed Acquisition is subject to Business Risk which the Group will be subject to upon the commencement of property development works. These include but not limited to risk of changes in general economic and business conditions, unfavourable changes in local government policies, risk of weather conditions, changes in cost of labour and constraints in labour supply. The Board is of the view that the above Business Risk is inherent in such an industry but will nevertheless mitigate it within its risk management framework. 4
6. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION 6.1 Share Capital and substantial shareholders shareholdings The Proposed Acquisition will not have any effect on the share capital and shareholdings of the substantial shareholders of Tadmax. 6.2 Net Assets and Earnings The Proposed Acquisition will not have any effect on the net assets and earnings of Tadmax Group for the current financial year ending 31 December 2016 but is expected to contribute positively to the Group s future earnings upon the commencement of property development activities. 6.3 Gearing The Proposed Acquisition will increase the Group s borrowings by the financing to be obtained to part finance the purchase consideration. On the assumption, a 70% financing is secured, the gearing of the Group will be increased by approximately RM29 million. Based on the audited gearing of the Group as at 31 December 2015 of RM3.1 million (including hire purchase), the above new borrowing of RM29 million will increase the gearing ratio of Tadmax Group from 0.01 times to 0.12 times. 7. LIABILITIES TO BE ASSUMED Save for the obligations and liabilities in and arising from, under or pursuant to or in connection with the SSA, there are no other liabilities including contingent liabilities and guarantee to be assumed by Tadmax arising from the Proposed Acquisition. 8. FUNDING FOR THE PROPOSED ACQUISITION The Proposed Acquisition will be funded by a combination of bank borrowings and internally generated funds in the ratio of between 70:30 to 75:25. 9. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the transaction pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 16.10% after aggregating the subscription of shares in WMB on 17 March 2016 at a total subscription price of RM550,000. 10. APPROVAL REQUIRED The Proposed Acquisition is not subject to any approval from shareholders and/or other government authorities. 5
11. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST None of the directors and/or major shareholders of Tadmax and/or persons connected to the directors and/or major shareholders of Tadmax have any interest, direct or indirect, in the Proposed Acquisition. 12. STATEMENT BY THE DIRECTORS The Board of Tadmax, having considered all aspects of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is fair and reasonable and on normal commercial terms and is in the best interest of Tadmax. 13. ESTIMATED TIME FRAME FOR COMPLETION The Completion of the Proposed Acquisition is expected to take place on the date of execution of the SSA. 14. DOCUMENTS AVAILABLE FOR INSPECTION The SSA is available for inspection at Tadmax s registered office at No. 2D, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement. Yours faithfully, For and on behalf of the Board of TADMAX RESOURCES BERHAD DATUK SERI ANUAR BIN ADAM Petaling Jaya Managing Director 22 July 2016 6