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Proposed Disposal of Properties To Sazean Holdings Sdn Bhd For A Sale Consideration Of RM70,000,000.00

BackJan 07, 2009
Proposed Disposal of Properties to Sazean Holdings Sdn Bhd for a sale consideration of RM70,000,000.00.
 
Announcement Details :

1. INTRODUCTION

The Board of Directors of Malaysia Building Society Berhad (Company No. 9417-K) ("MBSB") wishes to announce that its wholly owned subsidiary, Gadini Sdn Bhd (146068-D) ("Gadini") has entered into a Sale and Purchase Agreement dated 7 January 2009 ("SPA") with Sazean Holdings Sdn Bhd (Company No. 628740-M) ("Purchaser") for the proposed disposal of the following properties for a sale consideration of RM70,000,000.00 ("Proposed Disposal").

(i) H.S. (D) 193439, P.T.B No. 19196
(ii) H.S. (D) 193440, P.T.B No. 19197
(iii) H.S. (D) 193441, P.T.B No. 19198
(iv) H.S. (D) 193442, P.T.B No. 19199

in the Town and District of Johor Bahru and in the State of Johor.



2. THE PROPOSED DISPOSAL

2.1 The Properties


Gadini is the registered owner of the following properties measuring approximately 92,181 square metres in areas:-
(i) H.S. (D) 193439, P.T.B No. 19196
(ii) H.S. (D) 193440, P.T.B No. 19197
(iii) H.S. (D) 193441, P.T.B No. 19198
(iv) H.S. (D) 193442, P.T.B No. 19199

in the Town and District of Johor Bahru and in the State of Johor.
(hereinafter referred to as "the Properties")

The Properties are located on the western side of Jalan Yahya Awal and eastern side of Jalan Tarom. The Properties have a leasehold tenure expiring on 8 March 2091. Currently, the Properties are vacated, and free from any encumbrances.

Messrs Arkam & Co, a firm of professional valuers, had on 24 December 2008, ascribed an open market value of RM64.860 million to the Properties.
2.2 Sale Consideration
The sale consideration of RM70,000,000.00 ("Sale Price") for the Proposed Disposal was arrived at on a willing buyer willing seller basis.

The net book value of the Properties at Group level as at 31 December 2007 was RM61.0 million.
2.3 Salient Terms of the SPA
The SPA's salient terms, inter-alia, are as follows:

(i) The Properties shall be purchased free from all encumbrances and subject to the conditions of title expressed or implied and the existing "on and as is where basis" condition of the Properties and subject to the terms and conditions and stipulations as contained in the SPA.

(ii) The payment terms are as follows:

(a) A payment of RM500,000.00 equivalent to 0.71% of the Purchase Price was paid upon execution of the SPA as deposit and part payment of the Sale Price (the "Initial Deposit");

(b) A payment of RM1,500,000 equivalent to 2.15% of the Purchase Price shall be paid to Gadini within 6 months from the Execution of Agreement ("Balance Deposit"); and

(c) The balance of the Sale Price RM68,000,000.00 being 97.14% of the Sale Price shall be paid to the Company within twenty four (24) months from the Execution of the SPA.
(iii) Estimated time frame for completion
The estimated time frame for the completion of the SPA is 24 months from the date of execution of SPA.
(iv) Default by the Purchaser
(a) In the event that the Purchaser fails for any reason whatsoever to pay the Balance Purchase Price or to complete the purchase of the said Properties in accordance with the provisions herein contained save and except due to the default of the Gadini, Gadini shall be entitled to terminate this Agreement by giving notice of termination to the Purchaser and upon such termination:-
(i) Gadini shall be entitled to forfeit the Deposit of Ringgit Malaysia Two Million (RM2,000,000-00) only as agreed liquidated damages;
(ii) the Purchaser shall re-deliver to Gadini or the Solicitors the Memorandum of Transfer and all other relevant documents herein and re-deliver vacant possession of the said Properties to Gadini if the same shall have been delivered.
(v) Default by Gadini
(a) In the event Gadini should fail for any reason whatsoever to complete the sale of the said Properties pursuant to this Agreement (save and except due to default of the Purchaser) the Purchaser shall be entitled to specific performance of the sale and purchase hereunder of the said Properties and to all reliefs flowing therefrom. Alternatively, the Purchaser shall be entitled to terminate this Agreement by giving notice in writing on Gadini wherein Gadini shall as soon as practicable after such termination refund the Deposit free of interest.
(b) Upon the refund of the Deposit by Gadini, the Purchaser shall re-deliver the Memorandum of Transfer and all other relevant documents mentioned herein, the Purchaser shall re-deliver vacant possession of the said Properties to Gadini if the same shall have been delivered, whereupon the sale and purchase of the said Properties hereunder shall be deemed to be mutually rescinded.
2.4 Brief Details On The Purchaser

The Purchaser, Sazean Holdings Sdn Bhd (628740-M) was incorporated in Malaysia under the Companies Act, 1965. Its registered address is Waterfront Business Park, Block D, No. 3 Jalan Tasik, Mines Resort City, 43300 Selangor Darul Ehsan.

The principal activities of the Purchaser are property development, agriculture, human resource consulting, engineering & construction and hotel & resorts.


3. RATIONALE FOR THE DISPOSAL
The Proposed Disposal is in line with the Group's objective to dispose of non generating income assets, foreclosed properties and properties acquired previously through Sale and Purchase Agreements.

4. ORIGINAL DATE OF INVESTMENT AND COST OF INVESTMENT OF THE PROPERTIES.
The Group original date of investment is 18 September 1997 and the Group cost of investment of the Properties is RM88.689 million.

5. CONDITIONS PRECEDENT

The Proposed Disposal is subject to the following conditions:
(i) the Foreign Investment Committee's approval; and

(ii) approvals from the Appropriate Authorities.


6. UTILISATION OF PROCEEDS

The proceeds of RM70,000,000.00 from the Proposed Disposal would be utilised towards working capital and/or repayment of borrowings, the breakdown of which has not been decided upon by the Board.

7. METHOD OF VALUATION

The method of valuation of the Properties is by way of comparison method.


8. NET BOOK VALUE

The Group net book value of the Properties is based on audited accounts for the financial year ended 31 December 2007.


9. LIABILITIES

The Purchaser is not liable to assume any liability on the Properties.


10. SHAREHOLDERS' APPROVAL

The Proposed Disposal is not subject to any shareholders approval.


11. EFFECTS OF THE PROPOSED DISPOSAL

11.1 Share capital and substantial shareholders' shareholdings structure
The Proposed Disposal will not have any effect on the share capital and substantial shareholders' shareholdings structure as there is no issuance of shares or other securities.

11.2 Earnings
Assuming that the Proposed Disposal would be completed in 2011, it would result in a gain of RM9.0 million to the Group earnings for the financial year ending 31 December 2011. The Proposed Disposal is not expected to have any effect to the Group earnings for the year ending 31 December 2009.
Based on the existing 700,171,527 ordinary shares of RM1.00 each in issue, the improvement arising from the Proposed Disposal to the Group earnings per share would be 1.29 sen for the financial year ending 31 December 2011.

11.3 Net Assets
The Proposed Disposal would not have any material effect on the net assets per share of the Company and of the Group.

11.4 Gearing
The Proposed Disposal would not have any material effect on the gearing of the Company and of the Group.


12. DIRECTORS AND/OR MAJOR SHAREHOLDERS' INTERESTS OR PERSONS CONNECTED
None of the directors or major shareholders of the Company or persons connected with them has any interest, direct or indirect in the SPA.


13. STATEMENT BY DIRECTORS
The Board of Directors of the Company is of the opinion that the aforesaid Proposed Disposal is fair and reasonable and is in the best interests of the Company and of the Group.
14. STATEMENT IN RESPECT OF SECURITIES COMMISSION'S POLICIES AND GUIDELINES AND OFFER OF SECURITIES
The Proposed Disposal has not departed from the Securities Commission's Policies and Guidelines and Offer of Securities.
15. DOCUMENTS FOR INSPECTION
The SPA and the valuation report together with the update valuation letter can be inspected at the Company's registered office at 11th Floor, Wisma MBSB, 48 Jalan Dungun, Damansara Heights, 50470 Kuala Lumpur at normal business hours on Mondays to Fridays (except public holidays) within 14 days from the date of this announcement.

16. This announcement is dated 7 January 2009.