Equator Announcement
Total Page：16
File Type：pdf, Size：1020Kb
General Announcement Reference No. CP-101213-53503 EQUATOR LIFE SCIENCE BERHAD (“EQUATOR” OR THE “COMPANY”) PROPOSED DISPOSAL OF SEVEN (7) PIECES OF FREEHOLD AGRICULTURE LANDS BY EQUATOR BIOTECH SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF EQUATOR FOR A TOTAL CASH CONSIDERATION OF RM 1,898,812.50 INTRODUCTION The Board of Directors of Equator (“Board”) is pleased to announce that Equator Biotech Sdn Bhd (“EBSB”) has on 14 December 2010 entered into a sale and purchase agreement (“SPA”) with Kim Hoe Thye Industries Sdn Bhd (“KHTI”) for the disposal of seven (7) pieces of freehold agriculture lands located in Mukim of Parit Jawa, District of Muar, State of Johor for a cash consideration of RM 1,898,812.50 (thereafter referred to as the “Proposed Disposal”). 1. DETAILS OF THE PROPOSED DISPOSAL 1.1 Details of seven (7) pieces of freehold agriculture lands to be disposed pursuant to the SPA are as follows: (i) a piece of freehold agriculture land held under GM 2456 Lot 3216 measuring 0.5868 hectares / 1.45 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (ii) a piece of freehold agriculture land held under GM 2457 Lot 3217 measuring 0.7562 hectares / 1.85625 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (iii) a piece of freehold agriculture land held under GM 2458 Lot 3218 measuring 1.4239 hectares / 3.51875 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (iv) a piece of freehold agriculture land held under GM 2459 Lot 3219 measuring 2.6026 hectares / 6.43125 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (v) a piece of freehold agriculture land held under GM 2460 Lot 3220 measuring 1.2624 hectares / 3.11875 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (vi) a piece of freehold agriculture land held under GM 1347 Lot 3235 measuring 2.0083 hectares / 4.9625 acres located in Mukim Parit Jawa, District of Muar, State of Johor; (vii) a piece of freehold agriculture land held under GM 1349 Lot 3237 measuring 0.736 hectares / 1.81875 acres located in Mukim Parit Jawa, District of Muar, State of Johor; The above seven (7) pieces of the freehold agriculture lands (collectively thereafter referred to as the “The Land Properties”). General Announcement Reference No. CP-101213-53503 1.2 The Land Properties are currently used as a nursery farm. The Company will be renting the Land Properties from KHTI for a period of three (3) years to continue its business operation, as such that is no material effect on the business operation after the Proposed Disposal. 1.3 The Land Properties are located within the Mukim of Parit Jawa, District of Muar, in an area containing predominantly agricultural holdings and rural settlements. On a broader scale, the Land Properties are located about 5.1 kilometres to the north-east of Pekan Parit Jawa and 18.1 kilometres from Muar town, the main commercial and administrative centre of the area. 1.4 The audited net book value of the Land Properties as at 31 December 2009 was RM 1,320,547.50, The Land Properties were purchased in year 2003 at an original cost of RM 1,320,547.50. 1.5 The Land Properties are presently charged to CIMB Bank Berhad as security for banking facilities granted to Equator and its subsidiaries (“Equator Group”). 2. INFORMATION ON KHTI KHTI was incorporated in Malaysia on 11 March 2009 under the Companies Act, 1965 as a private limited company. Its business address is at No 26, Jalan Jabbar, 84150 Parit Jawa, Muar, Johor, Malaysia. The authorized share capital of KHTI is comprising 5,000,000 ordinary shares of RM1.00 each, of which comprising 2 ordinary shares of RM1.00 each have been issued and fully paid-up. KHTI is principally involved in the business of manufacturing and trading of bricks, machineries and other investments. Please refer to Appendix I for more information on KHTI. 3. SALIENT TERMS OF THE SPA The salient terms of the SPA are as follows:- (i) In consideration of the deposit of RM189,881.25 paid by KHTI to the Solicitor as stakeholders for EBSB. The deposit shall only be released to EBSB upon the KHTI’s Solicitor receipt of the redemption statement from the CIMB Bank Bhd confirming that the redemption sum is not more than the balance disposal consideration; (ii) The balance of RM1,708,931.25 of the disposal consideration shall be paid by KHTI as stakeholders within three (3) months from the date of the SPA; (iii) In the event that KHTI shall be unable to complete KHTI by the time stipulated in clause 3(ii) above, EBSB shall grant KHTI an extension of one (1) month to complete the purchase subject to KHTI paying an interest at a rate of eight per centum (8%) per annum calculated on daily rests basis on the late payment of the balance of the disposal consideration; General Announcement Reference No. CP-101213-53503 (iv) In the event of KHTI failing or neglecting to pay the balance of the disposal consideration on the date of completion the amount equivalent to ten per centum (10%) of the disposal consideration shall be forfeited to EBSB as pre-determined damages whereupon this SPA shall terminate and be null and void and neither party shall have any claim whatsoever over the other; (v) In the event of EBSB failing or unable to transfer the Land Properties, EBSB shall refund all monies paid by KHTI together with a further sum equivalent to ten per centum (10%) of the disposal consideration payable to KHTI as agreed pre- determined liquidated damages whereupon SPA shall terminate and be null and void and of no effect and neither party shall have any claim whatsoever over the party; 4. BASIS OF ARRIVING AT THE DISPOSAL CONSIDERATION The total disposal consideration of the Land Properties of RM 1,898,812.50 was arrived at on a willing-buyer willing-seller basis after taking into consideration the market value of the Land Properties of RM 1.8 million (together with the buildings and structures thereon) as appraised by the independent registered valuer, C H William Talhar & Wong Sdn Bhd (“Valuer”). The Valuer has in its valuation report, dated 26 July 2010, assessed the Land Properties in their existing condition respectively. The disposal consideration represents a premium of RM98,812.50 (approximately 5.49%) over the aforesaid market value. The Valuer has applied the Comparison Method of Valuation to determine the market value of the Land Properties. Recent transactions and asking prices of similar property in the locality are analysed for comparison purposes with adjustments made for differences in location, size and terrain of land, availability of infrastructure, nature, age and density of planting, maintenance of cultivation, tenure, title restrictions if any and other relevant characteristics to arrive the market value. The consideration for the Proposed Disposal will be settled wholly by way of cash. 5. EXPECTED GAIN FROM THE PROPOSED DISPOSAL The expected gain arising from the Proposed Disposal is approximately RM 537,265 after taking into consideration the audited net book value of the Land Properties as at 31 December 2009 and estimated professional fees of RM 41,000. 6. UTILISATION OF THE PROCEEDS The gross proceeds receivable for the Proposed Disposal of RM1,898,812.50 is proposed to be utilised as repayment of its bank borrowings. 7. LIABILITIES TO BE ASSUMED There are no liabilities (including contingent liabilities and guarantees) to be assumed by KHTI pursuant to the Proposed Disposal. General Announcement Reference No. CP-101213-53503 8. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal is part of the ongoing rationalisation exercise to reduce the gearing of Equator Group, as well as to rationalise the default payment of banking facilities from its subsidiaries. 9. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL 9.1 Share capital and substantial shareholders’ shareholding The Proposed Disposal will not have any effect on the issued and paid-up capital and the substantial shareholders’ shareholding. 9.2 Net assets and gearing Based on the audited consolidated balance sheet of the Equator Group as at 31 December 2009, the proforma effects of the Proposed Disposal on consolidated net assets and gearing are as follows: - Audited After the as at 31 Proposed December Disposal 2009 (RM) (RM) Share capital 23,500,800 23,500,800 Share premium 22,026,619 22,026,619 Foreign currency translation reserve (288,034) (288,034) Accumulated losses (30,580,484) (1) (30,043,219) Shareholders’ equity / NA 14,658,901 15,196,166 Number of Shares in issue 235,008,000 235,008,000 NA per Share (RM) 0.06 0.06 Borrowings (RM) 16,523,283 (2) 14,624,471 Gearing (times) 1.13 0.96 Notes: (1) After taking into consideration the expected gain of RM 537,265 arising from the Proposed Disposal. (2) RM1,898,812.50 being utilised to repay bank borrowings. 9.3 Earnings Upon completion of the Proposed Disposal, the Equator Group will realise a one-time gain of RM 537,265 upon completion in the financial year ending 31 December 2011. As a result of utilising the disposal proceeds to repay part of Equator Group’s bank borrowings, Equator will have interest savings of approximately RM 148,107 per annum or approximately 0.06 sen per share (based on an average interest rate of (7.80%). General Announcement Reference No. CP-101213-53503 10. APPROVALS REQUIRED To the best knowledge of the Board, the Proposed Disposal is not subject to the approval of shareholders of Equator save for the approvals of the relevant land office authorities, CIMB Bank Berhad for the discharge of charge on the Land Properties and other relevant authorities, if applicable.