ASIA KNIGHT BERHAD (“A-KNIGHT” OR THE “COMPANY”)
PROPOSED DISPOSAL OF TWO (2) PARCELS OF LAND TOGETHER WITH A HOTEL BY CITIVIEW
HOTEL SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF A-KNIGHT FOR A TOTAL CASH
CONSIDERATION OF RM17,000,000 (“PROPOSED DISPOSAL”)
1.
INTRODUCTION
On behalf of the Board of Directors of A-Knight (“Board”), TA Securities Holdings Berhad (“TA
Securities”) wishes to announce that Citiview Hotel Sdn Bhd (“Citiview” or “Vendor”), a whollyowned subsidiary of the Company had on 3 March 2015 entered into a sale and purchase agreement
(“SPA”) with E-Red Hotel Sdn Bhd (“E-Red” or “Purchaser”) for the proposed disposal of all that
freehold land held under Geran 10609 and Geran 10610, Lot 267 and Lot 268, both of Bandar
Kuantan, Daerah Kuantan, Negeri Pahang (“Land”) together with hotel premises erected thereon,
bearing postal address Lot 113, Seksyen 19, Jalan Haji Abdul Aziz, 25000 Kuantan, Pahang (“Hotel”)
(collectively the “Property”) for a total cash consideration of RM17,000,000 (“Disposal
Consideration”).
2.
INFORMATION ON PURCHASER
E-Red was incorporated in Malaysia under the Companies Act, 1965 on 16 October 2012 as a private
limited company. As at 23 February 2015, E-Red has an authorised share capital of RM100,000.00
divided into 100,000 ordinary shares of RM1.00 each of which RM100,000 comprising 100,000
ordinary shares of RM1.00 each have been issued and fully paid-up. The principal activities of E-Red
are to carry on the business of hotels and to provide all kinds of accommodation, restaurants,
entertainment and other services, to carry on business of importers, exporter, manufacturers,
producers and merchant in general merchandise and to carry on the business of financiers of hotels.
The directors of E-Red as at 23 February 2015 are Ang Beng Poh, Ong Lian Hout and Tan Len Gin.
The shareholders of E-Red and their respective shareholding as at 23 February 2015 are as follows:Name
Number of shares
%
50,000
25,000
25,000
50.00
25.00
25.00
Ang Beng Poh
Ong Lian Hout
Tai Len Gin
3.
DETAILS OF THE PROPOSED DISPOSAL
3.1
Description of the Property
The Proposed Disposal entails the disposal of the Land together with a two (2)-star hotel
known as Citiview Hotel comprising a ten and a half (10 ½) storey building with one (1) level
basement carpark.
Further details of the Property are set out as below:Tenure
:
Freehold
Combined land area
:
965 square metres (approximately 10,388 square feet)
Registered owner
:
Citiview Hotel Sdn Bhd
Number of guest room
as
per
approved
building plan
:
84 rooms
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Number of car park
provided by the Hotel
:
35 bays (16 out of 35 bays are temporary parking bays)
Encumbrance
:
Charged to HSBC Bank Malaysia Berhad
Existing usage
:
The Property is currently used for hotel operations.
Approximate age of the
building
:
16 years
Occupancy rate from 1
January 2014 to 31
December 2014
:
51.94%
:
RM16,000,000
:
RM17,740,000 as at 30 June 2014
Market value
(i)
Net book value
Note:(i)
3.2
Based on the valuation undertaken by the C H Williams Talhar & Wong Sdn Bhd (“Valuer”)
vide its valuation letter dated 13 February 2015.
Salient Terms of the SPA
The salient terms of the SPA are as follows:(a)
The Vendor has agreed to sell to the Purchaser and the Purchaser has agreed to
purchase the Property free from all encumbrances from the Vendor.
(b)
Settlement of the Disposal Consideration
(c)
(i)
Prior to the execution of the SPA, the Purchaser shall pay a sum of
RM340,000 only being the earnest deposit and part payment towards the
Disposal Consideration for the benefit of the Vendor to be released upon
Vendor’s execution of the SPA, which the Vendor acknowledges the
payment;
(ii)
Upon the execution of the SPA, the Purchaser shall pay a sum of
RM1,360,000, being the balance deposit and part payment towards the
Disposal Consideration for the benefit of the Vendor to be released upon
the Vendor’s execution of the SPA, which the Vendor acknowledges the
payment;
(iii)
The balance Disposal Consideration or late payment interest (if any) shall
be paid to the Vendor’s solicitors on or before four (4) months from the
date of the SPA (“Completion Date”) failing which the Vendor shall
automatically grant the Purchaser the extension of one (1) month to pay
the balance Disposal Consideration with interest at 6.0% per annum on the
balance unpaid sum calculated on a daily basis on the balance Disposal
Consideration or the remaining part thereof remain unpaid (whichever is
lower) at the Vendor’s solicitor’s office.
Conditions Precedent
The sale, purchase and transfer of the Property shall be conditional upon the approval
of the shareholders of the Vendor being obtained on or before the date falling three (3)
months from the date of the SPA or any other extended date mutually agreed
between the parties in writing.
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(d)
Real Property Gains Tax
(i)
The Vendor agrees, covenants and undertakes to the Purchaser to pay all tax
payable pursuant to the Real Property Gains Tax Act 1976 (“RPGT Act”) that
may be payable in respect of the sale of the Property to the Purchaser and to
keep the Purchaser, his estate goods and effects fully indemnified against the
aforesaid tax liabilities of the Vendor.
(ii)
The Vendor and the Purchaser agree, covenant and undertake with each
other that each party shall individually at its own cost and expenses notify the
Director-General of Inland Revenue by submitting the relevant return forms
within sixty (60) days from the date of the SPA.
(iii)
The Vendor and the Purchaser agree and irrevocably authorise the
Purchaser’s solicitors to retain and deal with 3% of the Disposal
Consideration in accordance with the current law and practice (“Retention
Sum”) and pay the Retention Sum to Director General of Inland Revenue
within thirty (30) days from the date of the SPA.
(iv)
In the event the Purchaser’s solicitors receives the refund of excess payment
for real property gains tax from the Director-General of Inland Revenue in
favour of the Vendor, the Purchaser’s solicitors will release such refund of
excess payment received from the Director-General of Inland Revenue
Department to the Vendor’s solicitors.
(v)
Upon receipt of the notice of assessment served by the Director-General of
Inland Revenue Department and where the Retention Sum paid is insufficient
to pay for the real property gains tax assessed and/or penalty imposed and
payable on the disposal of the Property pursuant to the SPA, the Vendor shall
upon being notified thereof immediately pay the difference between the tax
payable and the Retention Sum to the Director-General of Inland Revenue.
(vi)
The Vendor hereby agrees, covenants and undertakes with the Purchaser to
keep the Purchaser fully indemnified against all claims, costs, damages, fines
or penalties which may be brought, suffered or levied against the Purchaser
as a result of the Vendor not complying with any of the provisions of the
RPGT Act, including any claims by the Director-General of Inland Revenue
arising from any default in payment of any real property gains tax payable on
the disposal of the Property pursuant to the SPA.
(vii)
Any sum set out in the SPA or otherwise payable by the Purchaser to the
Vendor shall be deemed to be exclusive of any goods and services tax or tax
of similar nature (“GST”) which may be chargeable under the law. If by reason
of the introduction of GST after the date of the SPA but prior to the date of
payment in full of the Disposal Consideration to the Vendor or prior to the
fulfillment of the Conditions Precedent as stipulated in Clause 3.6 above, GST
is imposed on the Disposal Consideration or any part thereof by the relevant
authorities under any applicable law, the Vendor undertakes to pay GST on
behalf of the Purchaser on the Disposal Consideration or any part thereof as
imposed as and when the same is due and payable together with interest and
penalty imposed (if any).
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(e)
No dealings of Property by Vendor and specific performance
Upon execution of the SPA and before the completion of the Proposed Disposal, the
Vendor shall not sell, transfer, assign, dispose of or otherwise deal with the Property
or create any charge or encumbrance or let or lease the Property or otherwise part
with possession of the Property or any part thereof. Notwithstanding any provision
herein contained, in the event that the Vendor shall default or willfully refuse to
complete the sale herein or be in breach of any covenant or warranty as herein
specified, and provided the Purchaser shall have performed and observed the several
obligations and liabilities on his part to be performed and observed, then the
Purchaser shall be entitled without prejudice to any other rights to which the
Purchaser is entitled under the SPA or at law, to specific performance of the SPA or
alternatively the Purchaser may terminate the SPA and the Vendor shall be liable to,
within seven (7) working days from the date of receipt by the Vendor or the Vendor’s
solicitors of the Purchaser’s termination notice, refund or cause to be refunded to the
Purchaser the deposit together with all other monies received by/paid to the Vendor
or the Vendor’s solicitors or the Vendor’s financier and in addition the Vendor shall
pay to the Purchaser a sum equivalent to the deposit as agreed liquidated damages,
failing which the Vendor shall be liable to pay late refund interest at the rate of six
percent (6%) per annum on all such sum to be refunded and/or payable to the
th
Purchaser calculated on a daily basis from the eight (8 ) day until the date of full
refund and/or payment is made.
(f)
Default by Purchaser
If the Purchaser shall fail to pay the balance Disposal Consideration on or before the
Completion Date, then the deposit shall be forfeited to the Vendor as liquidated
damages and not by way of penalty and the Vendor shall within seven (7) working
days from the return of the issue documents of title, transfer and any other documents
belonging to the Vendor and withdrawal of any private caveat lodged by the
Purchaser, refund to the Purchaser all other sum or sums paid by the Purchaser to
account of the Disposal Consideration free of interest cost or compensation, failing
which the Vendor shall be liable to pay late refund interest at the rate of six per cent
(6%) per annum on such sum to be refunded and/or payable to the Purchaser
th
calculated on a daily basis from the eight (8 ) day until the date of full refund and/or
payment is made. Upon such refund being made, the SPA shall come to an end and
become null and void and of no effect and neither of the parties hereto shall have any
further claim against the other under or in respect of the SPA (safe the return of any
documents belonging to the Vendor and the Withdrawal of Caveat lodged by the
Purchaser) and the Vendor shall have the right to resell the property to such person in
such manner at such price and on such terms as the Vendor may think fit and the
Purchaser shall have no right to any part of the purchase money thereby arising.
3.3
Basis and justification of arriving at the Disposal Consideration
The Disposal Consideration for the Proposed Disposal was negotiated on a willing-buyer and
willing-seller basis after taking into consideration the indicative market value of the Property of
RM16,000,000 as appraised by the Valuer, appointed by the Company based on the
comparison method and the profit method.
The Disposal Consideration represents a premium of 6.25% to the indicative market value of
the Property as appraised by the Valuer.
3.4
Original cost and date of investment
The original cost of investment of the Land and Hotel was RM1,034,309 and RM14,523,399
respectively. The date of investment of the Land was in 1992 and the Hotel was constructed
by Citiview from 1997 to 1998.
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3.5
Liabilities to be assumed
Save for the obligations and liabilities pursuant to the SPA, there are no other liabilities to be
assumed by the Purchaser pursuant to the Proposed Disposal.
4.
UTILISATION OF PROCEEDS
The total gross proceeds of RM17,000,000 arising from the Proposed Disposal are intended to be
utilised in the following manner:Details
Estimated timeframe
To acquire new business/assets to be identified
Working capital
(i)
(ii)
Defrayal of estimated expenses in relation to the
(iii)
Proposed Disposal
RM’000
Within 24 months from the
completion of the Proposed
Disposal
5,000
Within 24 months from the
completion of the Proposed
Disposal
11,000
Immediately after the
completion of the Proposed
Disposal
1,000
17,000
Total
Notes:(i) The Company had on 31 October 2014 announced that A-Knight is an affected listed issued under Practice
Note 17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing
Requirements”) (“PN17 Company”). As a PN17 Company, A-Knight will have to submit a proposal to
regularise its condition within twelve (12) months from the date it announces it is an affected listed issuer. In
this regard, the Company intends to use part of the proceeds to acquire new business or assets to be
identified which will contribute to the bottomline of A-Knight and its subsidiaries (“A-Knight Group” or
“Group”). The Company will make the relevant announcements in the event any transaction materialises in
accordance with the Listing Requirements.
(ii) The working capital is proposed to be utilised as follows:RM’000
Payment of salaries to staff (including EPF and SOCSO) and director fee
1,113
Retrenchment expenses (pursuant to the Proposed Disposal)
600
Payment for the remaining 5 months installment (May 2015 to September 2015) for the
1,114
acquisition of T-Ventures as announced on 7 April 2014
Audit fee and annual listing fees
295
Operating expenses (Office, utilities, miscellaneous)
878
Settlement of trade payables and other payables
7,000
Total
11,000
(iii) The estimated expenses include professional fees and other related expenses incurred on the Proposed
Disposal. Any shortfall or excess in funds allocated for estimated expenses will be funded from or used for
working capital purposes.
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5.
RATIONALE
Following the Proposed Disposal, A-Knight will cease its business in hotel operations. Based on the
latest audited financial statements of A-Knight for the financial period ending (“FPE”) 30 June 2014,
the Group’s Hotel operations contributed revenues of RM4.17 million and segment results (profit
before finance cost, shared corporate expenses and taxation) of RM0.187 million. Notwithstanding the
above, the Board is of the view that the proceeds arising from the Proposed Disposal will strengthen
the Group’s cash flow position and shall be largely utilised to finance the Group’s working capital. In
addition, as A-Knight is a PN17 Company, the Board also intends to use part of the proceeds to
finance any future investments or assets if suitable in order to regularise the financial position of the
Group.
6.
FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL
6.1
Share capital and substantial shareholders’ shareholdings
The Proposed Disposal will not have any effect on the issued and paid-up share capital and
substantial shareholders’ shareholdings of the Company as it does not involve any issuance
of shares.
6.2
Earnings and earnings per share (“EPS”)
Barring any unforeseen circumstances and on the assumption that the Proposed Disposal will
be completed by the second half of year 2015, the Proposed Disposal is expected to result in
an estimated net loss on disposal of approximately RM0.74 million to A-Knight for the
financial year ending 30 June 2015 after taking into consideration the audited net book value
of the Property as at 30 June 2014 of approximately RM17.74 million, translating to a
decrease in EPS of approximately 1.27 sen.
6.3
Net Assets (“NA”) and gearing
The proforma effects of the Proposed Disposal on the NA, NA per share and gearing of AKnight based on its audited consolidated financial statements for the FPE 30 June 2014 are
set out below:Audited as at
FPE 30 June 2014
Share capital
Capital reserve
Accumulated losses
Total equity
No. of shares in issue
NA per share (RM)
Total borrowings
Gearing (times)
RM
Proforma effects
after the
Proposed Disposal
RM
58,132,908
2,502,440
(29,318,457)
31,316,891
58,132,908
2,502,440
(i)
(31,058,457)
29,576,891
58,132,908
0.54
6,061,797
0.19
58,132,908
0.51
(ii)
-
Notes:(i)
After deducting estimated expenses of RM1,0 million and after taking into consideration the
loss of disposal of RM0.74 million.
(ii)
Based on the latest unaudited financial statements for the period ended 31 December 2014,
the Group does not have any borrowings
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7.
ADVISER
TA Securities has been appointed as the Adviser for the Proposed Disposal.
8.
APPROVALS REQUIRED
The Proposed Disposal is subject to the following being obtained/fulfilled:(a)
the approval of shareholders of A-Knight at an extraordinary general meeting to be convened;
and
(b)
the approvals of other relevant authorities and/or parties, if any.
The Proposed Disposal is not conditional upon any other corporate exercise undertaken by the
Company, if any.
9.
HIGHEST PERCENTAGE RATIO
Pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements (“Listing Requirements”)
of Bursa Malaysia Securities Berhad (“Bursa Securities”), the highest percentage ratio applicable to
the Proposed Disposal is 54.30%, based on the latest audited consolidated financial statements of AKnight for the FPE 30 June 2014.
10.
INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED
None of the directors and/or major shareholders of A-Knight and persons connected to them have any
interest, direct or indirect in the Proposed Disposal.
11.
STATEMENT BY DIRECTORS
The Board, having taken into consideration all aspects of the Proposed Disposal, is of the opinion that
the Proposed Disposal is in the best interest of the Company.
12.
ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by third
quarter of 2015.
13.
FINANCIAL CONDITION OF THE COMPANY
For information purposes, on 31 October 2014 A-Knight announced that the Company is a Practice
Note 17 (“PN17”) Company as defined in Paragraph 8.04 of the Listing Requirements of Bursa
Securities.
On 30 January 2015, A-Knight announced that the Company is still looking into formulating a plan to
regularise its financial condition (“Regularisation Plan”) and the Board is unable to determine if the
Regularisation Plan will result in a significant change of business direction or policy of the Company.
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14.
DOCUMENTS FOR INSPECTION
The following documents are available for inspection at the registered office of A-Knight at No 9, Jalan
Bayu Tinggi, 2A/KS6, Taipan 2 Batu Unjur, 41200 Klang, Selangor Darul Ehsan during normal office
hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of
this Announcement:a)
the SPA; and
b)
the valuation letter dated 13 February 2015, prepared by the Valuer in respect of the valuation
of the Property pursuant to the Proposed Disposal.
This announcement is dated 3 March 2015.
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