Download Report

IBRACO BERHAD ("IBRACO" OR THE "COMPANY")
ACQUISITION OF APPROXIMATELY 5,825 SQUARE METRES OF FREEHOLD
VACANT LAND DESCRIBED AS HSD 118736, PT 8 SEKSYEN 65 BANDAR KUALA
LUMPUR, DAERAH KUALA LUMPUR, WILAYAH PERSEKUTUAN KUALA LUMPUR
1. INTRODUCTION
Pursuant to Paragraph 10.06 of the Main Market Listing Requirements (“Listing Requirements”)
of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Board of Directors of Ibraco
("Board of Directors") wishes to announce that IBRACO had on 26 March 2015, entered into a
Sale and Purchase Agreement (“SPA”) with Bandar Park Sdn. Bhd. for the acquisition of
approximately 5,825 square metres of freehold vacant land held under HSD 118736, PT 8 Seksyen
65 Bandar Kuala Lumpur, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur (“the Said
Land”) for a purchase price of RM55,000,000 to be fully satisfied in cash (“the Acquisition”).
2. DETAILS OF THE ACQUISITION
2.1
Information on the Said Land
The Said Land, located within Kuala Lumpur, is fronting onto Jalan Tun Razak and Jalan
Yew. The freehold vacant land measures approximately 5,825 square metres, is approved
for mixed commercial development.
The Said Land is granted with Development Order by Dewan Bandaraya Kuala Lumpur
dated 22 May 2012 for mixed commercial development comprising office suite and
commercial space. However, the Company intends to apply for variation/new Development
Order in due course. The Company has yet to determine the budgeted gross development
value and gross profit to be generated from the development of the Said Land at this
juncture. The development of the Said Land will be funded via internally generated funds
and bank borrowings.
The Said Land is purchased free from all encumbrances and with vacant possession on an
“as is where is” basis.
2.2
Information on IBRACO
Ibraco is a public limited company incorporated in Malaysia on 30 August 1971 under the
Companies Act, 1965. The present share capital of Ibraco is RM126,634,095 comprising
ordinary shares of RM1.00 each (“Shares”), of which 126,634,095 Shares have been issued
and fully paid-up. Ibraco and its subsidiaries are principally involved in property
development and construction.
2.3
Information on the Vendor
Bandar Park Sdn. Bhd. (Company No. 12029-D) (“the Vendor”) is a company incorporated
in Malaysia under the Companies Act 1965 with its registered and business address at
332A-19, 19th Floor, Plaza Ampang City, Jalan Ampang, 50450 Kuala Lumpur, Wilayah
Persekutuan.
2.4
Basis of Purchase Consideration
The purchase price of RM55,000,000 was arrived at based on a willing-buyer willing-seller
basis after taking into consideration the development potential of the Said Land.
2.5
Mode of Payment and Source of Funding
The purchase price will be satisfied wholly in cash from internally generated funds and bank
borrowings.
2.6
Salient Terms of the SPA
2.6.1 The purchase price shall be paid by the Company in the following manner:a) Prior to the execution of the SPA, the Company has paid to the Vendor a sum of
RM1,237,500.00 only (“the Earnest Deposit”) being the earnest deposit of which the
Vendor hereby acknowledges receipt thereof and in the event of the completion of the
sale and purchase herein as part payment towards the purchase price.
b) Upon the execution of the SPA, the Company shall pay to the Vendor a sum of
RM4,262,500.00 only (“the Balance Deposit”) being payment of balance deposit and
in the event of completion of the sale and purchase herein as part payment towards the
purchase price.
(The Earnest Deposit and the Balance Deposit amounting to RM5,500,000.00 only shall
hereinafter collectively be referred to as the “Deposit”).
c) In consideration of the Vendor agreeing to allow the Company to conduct site work on
the said Land and further agreeing to grant to the Company limited power of attorney,
the Company agrees to pay to the Vendor a sum of RM8,000,000.00 only (“Part
Purchase Price”) within seven (7) days from the date of the SPA.
d) Within three (3) months from the date of the SPA (“Completion Period’) , the
Company shall pay to the Vendor’s Solicitors as stakeholders the balance purchase
price of RM41,500,000.00 only (“Balance Purchase Price”)
If at the expiry of the Completion Date, the Balance Purchase Price or any part thereof
remain unpaid, the Vendor shall grant the Company an extension of three (3) months
therefrom (“Extended Completion Date”) to pay or cause to be paid in full the Balance
Purchase Price subject to the Company paying the Vendor interest at the rate of eight per
centum (8%) per annum (“Late Payment Interest”) on the outstanding part of the Balance
Purchase Price or any party thereof calculated on a daily rest basis commencing from the
date next following the Completion Date to the date when the Vendor’s Solicitors receipt of
the same.
2.5.2 It is hereby agreed that the completion date of the SPA shall fall on the date of the Vendor's
Solicitors' receipt of the Balance Purchase Price or the written notification from the
Financier or the Financier’s Solicitors (supported by the relevant documentary proof)
confirming that the Balance Purchase Price/Loan or any part thereof has been credited into
the Vendor's Solicitors' account as stakeholder (whichever shall be applicable and later), late
payment interest (if any) (“Completion Date”).
2.5.3 In the event the measurement of the Land as indicated on the document of title now shall
differ from the measurement of Land on the final document of title upon completion, the
purchase price shall be adjusted accordingly on the basis of RM885.81 only per square foot.
2.5.4 It is hereby agreed between the parties that the Company shall be entitled to any refund of
the development charges pursuant to the existing Development Order approval previously
paid by the Vendor to the relevant authority.
2.5.5 The Vendor shall deliver vacant possession of the Said Land free from all encumbrances to
the Company within three (3) working days from the Completion Date (“Delivery Date”),
failing which the Vendor shall pay to the Company late delivery charges at the rate of eight
per centum (8%) per annum of the purchase price (“Late Delivery Interest”) calculated on a
daily basis from the day next to the Delivery Date to the date the Company shall be allowed
to take vacant possession.
2.5.6 In the event that the Company shall fail to pay the Balance Purchase Price on/or before the
Extended Completion Date shall fail, refuse or neglect to observe or perform any of its
material obligations, covenants and undertakings under the SPA or there shall be material
breach by the Company of any representations and warranties and covenants made by the
Company to the Vendor stipulated in the SPA, then the Vendor shall be at liberty either :(a)
to enforce the SPA by specific performance whereupon the Company shall be liable
for all cost and expenses incidental to the legal proceedings; or
(b)
in the alternative, the Vendor shall terminate the SPA by serving a notice in writing
via the Vendor’s Solicitors on the Company’s Solicitors and to forfeit absolutely the
Deposit as agreed reasonable liquidated damages.
2.5.7 If the Vendor shall fail, refuse or neglect to observe or perform any of its material
obligations, covenants and undertakings under the SPA or there shall be material breach by
the Vendor of any representations and warranties and covenants made by the Vendor to the
Company stipulated in the SPA, then the Company shall at liberty either :-
2.6
(a)
to enforce the SPA by specific performance whereupon the Vendor shall be liable for
all cost and expenses incidental to the legal proceedings; or
(b)
in the alternative, the Company shall be entitled at their option to terminate this
Agreement whereupon the Vendor shall refund all monies received from the
Company towards the Purchase Price under or pursuant to this Agreement free of
interest together with a sum equivalent to ten per centum (10%) of the Purchase Price
as liquidated damages.
Expected Completion Date
The Board of Directors expects the Acquisition to be completed within 90 days from the date
of the SPA.
2.7
Highest Percentage Ratio
The highest percentage ratio applicable for the Acquisition pursuant to Paragraph 10.02(g) of
the
Listing
Requirements
of
Bursa
Securities
was
23.66%.
2.8
Particular of Liabilities to be Assumed
There is no liability arising from the Acquisition to be assumed by the Company.
3. RATIONALE OF THE ACQUISITION
The Ibraco Group is a well establish property developer in Sarawak. All of the Ibraco Group’s
development has been in Kuching and Bintulu and the Board believes that it is time to expand and
explore opportunities outside Sarawak. The Board has identified the Said Land as an appropriate
and strategic investment as it is located strategically within Bandar Kuala Lumpur. The
development of the Said Land would help enhance the future earning potential of Ibraco Group and
its presence in West Malaysia.
4. PROSPECT
While the global economy continues to expand at a moderate pace, there has been increasing
divergence in the growth momentum among the major economies. For most of Asia, growth is
supported by the continued expansion in both domestic and external demand. Looking ahead,
despite the varying impacts of the significantly lower oil prices on economies, the overall global
economy is expected to benefit from this development. Nevertheless, the downside risk to the
global economic outlook has increased following the weakening growth momentum in a number of
major economies due to external and domestic specific factors.
Volatility in the international financial markets has increased amid shifts in global liquidity and
heightened uncertainty particularly with regard to global growth prospects and the decline in
commodity prices. While the Malaysian financial markets have been affected by these global
developments, there has been no disruption to financial intermediation. There remains ample
liquidity in the domestic financial system with continued orderly functioning of the financial
markets. The banking institutions are operating with strong capital and liquidity buffers, and
continue to provide financing to the economy.
For Malaysia, economic activity continues to be supported by growth in domestic demand amid a
moderation in exports in the fourth quarter of 2014. Going forward, domestic demand will remain
as the key driver of growth. While private consumption is expected to moderate, it will remain
supported by the steady rise in income and employment, and the additional disposable income
from the lower oil prices. Investment activity is projected to remain resilient, with broad-based
capital spending by both the private and public sectors cushioning the lower oil and gas-related
investment activity.
(Source: Bank Negara Press Statement dated 28 January 2015)
The Board is optimistic of the future prospect of the Said Land that is expected to enhance future
earnings of Ibraco Group and expand its profile to West Malaysia.
5. RISK FACTORS
The Acquisition is subject to risks inherent in the property development industry. These may
include, amongst others, changes in general economic and business conditions and government
policies. These factors would inevitably affect the property market and the economic benefits to be
derived by Ibraco from the Acquisition and development of the Said Land. Nevertheless, these risk
factors are similar to those already experienced by Ibraco in its current activities as a property
developer and may not represent new risks to the Group's operations
6. EFFECTS OF THE ACQUISITION
Share Capital, Net Assets per Share and Shareholding Structure
The Acquisition is not expected to have any material effect on the issued and paid-up share capital,
net assets per share and shareholding structure of the Company.
Earnings per Share
The Acquisition is not expected to have any material effect on the earnings per share of the
Company for the year ending 31 December 2015. However, the Said Land is expected to
contribute positively to the future earnings of Ibraco.
Gearing
Based on the financial statements of the Ibraco Group for the year ended 31 December 2014 and
on the assumption that the Acquisition had been effected on that date, the proforma effects of the
Acquisition on the gearing of Ibraco Group are as follows:-
Share Capital
Share Premium
Other Reserves
Retained Earnings
Shareholders’ funds
Borrowings
Gearing (times)
As at 31 December 2014
RM’000
126,624
9,964
17
95,874
232,479
100,304
0.43
After Acquisition
RM’000
126,624
9,964
17
95,874
232,479
138,804
0.60
7. APPROVALS REQUIRED
The Acquisition is not subject to the approval of Ibraco’s shareholders and the authorities.
8. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
None of the directors and/or major shareholders of Ibraco or persons connected to the directors
and/or major shareholders of Ibraco have any interest, direct or indirect, in the Acquisition.
9. DIRECTORS' RECOMMENDATION
The Board of Directors having taken into consideration all aspects of the Acquisition, is of the
opinion that the Acquisition in the best interest of the Company.
10. DOCUMENTS AVAILABLE FOR INSPECTION
The following documents may be inspected at the registered office of Ibraco at IBRACO
HOUSE, No. 898, Jalan Wan Alwi, Tabuan Jaya, 93350 Kuching, Sarawak during normal office
hours from Monday to Friday (except public holidays) for a period of 3 months from the date of
this announcement:i. Financial statements for the year ended 31 December 2014; and
ii. The SPA
The announcement is dated 26 March 2015.