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Proposed Disposal of Properties To Malaysian Resources Corporation Bhd For A Sale Consideration Of RM26.0 Million

BackJul 21, 2008
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, MBSB Development Sdn Bhd (Company No. 242608-P) ("MDSB") has entered into a Sale and Purchase Agreement dated 21st July 2008 ("SPA") with Malaysian Resources Corporation Bhd (Company No. 7994-D) ("Purchaser") for the proposed disposal of the following properties for a purchase consideration of RM26,000,000.00 ("Proposed Disposal"):-

(i) PT No. 100 H.S. (D) 6236 ("Property 1")
(ii) PT No. 102 H.S. (D) 6237 ("Property 2")
(iii) Lot No. 365 Geran 9218 ("Property 3")
(iv) Lot No. 366 Geran 63979 ("Property 4")
(v) Lot No. 465 Geran 59984 ("Property 5")


2. THE PROPOSED DISPOSAL

2.1 The Properties

MDSB is the registered owner of the following properties in the State of Penang measuring approximately 13,533.4 square metres in area (the "Properties").

(i) PT No. 100 H.S. (D) 6236 ("Property 1")
(ii) PT No. 102 H.S. (D) 6237 ("Property 2")
(iii) Lot No. 365 Geran 9218 ("Property 3")
(iv) Lot No. 366 Geran 63979 ("Property 4")
(v) Lot No. 465 Geran 59984 ("Property 5")

The Properties are freehold lands. The lands are currently vacant and are free from any encumbrances.

Messrs Jones Lang Wootton on 21 January 2008, ascribed an open market value of RM24,000,000.00 to the Properties.

2.2 Sale Consideration

The sale consideration of RM26,000,000.00 ("Sale Price") for the Proposed Disposal was arrived at on a willing buyer willing seller basis.

The net book value of the Properties as at 31 December 2007 was RM24,000,000.00.

2.3 Salient Terms of the SPA

The SPA's salient terms, inter-alia, are as follows:

(i) The Properties shall be purchased on an "as-is" basis free from all charges, liens, encumbrances, caveats or other restraints with vacant possession but subject to all conditions of title whether expressed or implied at the Sale Price and upon the terms and conditions subject to all existing encumbrances and it shall comply with conditions and restrictions affecting the properties and without vacant possession;

(ii) The payment terms are as follows:

(a) A payment of RM2,600,000.00 equivalent to 10% of the Sale Price was paid upon execution of the SPA as deposit and part payment of the Sale Price (the "Deposit")

(b) The balance of the Sale Price of RM23,400,000.00 being 90% of the Sale Price shall be paid to MDSB within one (1) month from the Completion Date or the Extended Completion Date as defined in the SPA.

(iii) Estimated time frame for completion

The estimated time frame for the completion of the SPA is 3 months from the date of execution of SPA.

(iv) Default by the Purchaser

(a) In the event the Purchaser failing to pay or refusing to complete the Proposed Disposal, MDSB shall be entitled, at the cost and expense of the Purchaser to take proceedings to enforce specific performance of this Agreement and to all reliefs flowing therefrom or be entitled at the cost and expense of the Purchaser and at MDSB's sole discretion to terminate the SPA and the Deposit sum of RM2,600,000.00 shall be forfeited in favour of MDSB as liquidated damages and shall refund or cause to be refunded to the Purchaser all payments other than the Deposit Sum which have been paid by the Purchaser towards the account of the Sale Price free from interest.

(b) if the Purchaser shall have entered a private caveat, the Purchaser shall withdraw the private caveat and re-deliver vacant possession of the said Land to MDSB if the same shall have been delivered.

(v) Default by MDSB
(a) If MDSB commits a breach of the terms and conditions contained in the SPA or fails to perform and observe all or any of the covenants herein contained compulsory or voluntary; then as an alternative to the Purchaser's right to specific performance, the Purchaser shall be entitled to forthwith terminate the SPA by written notice to MDSB;

(b) all sums paid to MDSB (including the Deposit Sum) towards account of the Sale Price under this Agreement shall be refunded free of interest to the Purchaser. Upon the full receipt of the said sums, the Purchaser shall re-deliver the vacant possession of the said Properties to MDSB and subject to the Purchaser returning all of MDSB's documents which have been forwarded to the Purchaser pursuant to this Agreement including the Transfer and the original Issue Document of Title in respect of the said Properies (if the same have been delivered earlier) with MDSB's interest intact and the Purchaser withdrawing the Private Caveat lodged by them against the said Properties. If the Purchaser shall have entered a private caveat, the Purchaser shall withdraw the private caveat and re-deliver vacant possession of the said Land to MDSB if the same shall have been delivered.

2.4 Brief Details On The Purchaser

The Purchaser, Malaysian Resources Corporation Bhd (7994-D), was incorporated in Malaysia under the Companies Act, 1965. Its registered address is Level 21, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, 50470 Kuala Lumpur. .

The Purchaser is principally an investment holding company. The Purchaser is also engaged in construction related activities, infrastructure, properties development and provision of management services to its subsidiaries.

3. RATIONALE FOR THE DISPOSAL

The Proposed Disposal is in line with the Group's objective to dispose of properties transferred or acquired through Sale and Purchase Agreements.

4. ORIGINAL DATE OF INVESTMENT AND COST OF INVESTMENT OF THE PROPERTIES

The Properties were purchased on 23 March 1999 for RM24,034,874.00.

5. CONDITIONS PRECEDENT

The Proposed Disposal is subject to the following conditions:


(i) the Foreign Investment Committee's approval; and

(ii) The Penang State Authority Consent in respect of Properties.

6. UTILISATION OF PROCEEDS

The proceeds of RM26,000,000.00 from the Proposed Disposal would be utilised towards 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 net book value of the Properties is based on audited accounts for the 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 of MBSB as there is no issuance of shares or other securities.

11.2 Earnings

The Proposed Disposal is expected to be completed in 2008 and would result in an approximately net gain of RM1.480 million to the Group for the financial year ending 31 December 2008.

The improvement arising from the Proposed Disposal to the basic earnings per share (based on the weighted average number of shares in issue as at 30 June 2008 of 351,334,270) of the Group for the financial year ending 31 December 2008 is 0.4 sen.

11.3 Net Tangible Assets

The Proposed Disposal would not have any material effect on the net tangible assets per share of MBSB and of the Group.

11.4 Gearing

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

12. DIRECTORS AND/OR MAJOR SHAREHOLDERS' INTERESTS OR PERSONS CONNECTED

Pursuant to Chapter 10.08 of the Listing Requirements of Bursa Malaysia Securities Berhad, the transaction is deemed a related party transaction by virtue of Employees Provident Fund Board being the major shareholder of Malaysian Resources Corporation Bhd and Malaysia Building Society Berhad. Puan Cindy Tan Ler Chin is deemed an interested party of the transaction by virtue of her being an officer of Employees Provident Fund Board. As such, Puan Cindy Tan Ler Chin had abstained from Board's deliberation and voting in respect of the SPA.

Save as disclosed above, none of the other directors or major shareholders of MBSB or persons connected with them has any interest, direct or indirect in the SPA

13. STATEMENT BY DIRECTORS

The Board of Directors of MBSB is of the opinion that the aforesaid Proposed Disposal is fair and reasonable and is in the best interests of MBSB, MDSB 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 MBSB'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.

This announcement is dated 21st July 2008.