LEONG HUP HOLDINGS BERHAD - Announcements
LEONG HUP HOLDINGS BERHAD - Announcements
LEONG HUP HOLDINGS BERHAD - Announcements
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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.<br />
If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant<br />
or other professional adviser immediately. If you have sold all your shares in Leong Hup Holdings Berhad, you should at once hand this<br />
Circular to the agent through whom the sale was contracted for immediate transmission to the purchaser.<br />
The Kuala Lumpur Stock Exchange takes no responsibility for the contents of this Circular, makes no representation as to its accuracy<br />
or completeness, and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or<br />
any part of the contents of this Circular.<br />
<strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong><br />
(Company No. 51316-D)<br />
(Incorporated in Malaysia)<br />
PART A<br />
CIRCULAR TO SHAREHOLDERS<br />
in relation to:-<br />
I. PROPOSED ACQUISITION BY <strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong> (“LHHB”) OF AN ADDITIONAL 20% EQUITY<br />
INTEREST IN PANGKAL BUDIMAN SDN. BHD. (“BUDIMAN”) COMPRISING 1,300,000 ORDINARY SHARES OF<br />
RM1.00 EACH FROM BUKIT GAMBIR COMPANY SDN. BHD. (“BUKIT GAMBIR”), JAYAPLUS BAKTI SDN. BHD.<br />
(“JAYAPLUS”) AND PATHALON INDUSTRIES SDN. BHD. FOR A CASH CONSIDERATION OF RM3,926,000<br />
II. PROPOSED DISPOSAL BY LHHB OF 31% EQUITY INTEREST IN ATLASPRISE SDN. BHD. COMPRISING 465,000<br />
ORDINARY SHARES OF RM1.00 EACH TO BUKIT GAMBIR FOR A CASH CONSIDERATION OF RM465,000<br />
III.<br />
IV.<br />
PROPOSED DISPOSAL BY BUDIMAN OF 73.845 ACRES OF FREEHOLD LAND IN MUKIM OF PULAI, DISTRICT OF<br />
JOHOR BAHRU, STATE OF JOHOR TO JAYAPLUS FOR A CONSIDERATION OF RM14,153,428.08 TO BE<br />
SATISFIED BY THE SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY JAYAPLUS TO<br />
BUDIMAN AND THE BALANCE IN CASH<br />
PROPOSED DISPOSAL BY BUDIMAN OF 132.395 ACRES OF FREEHOLD LAND IN MUKIM OF PULAI, DISTRICT OF<br />
JOHOR BAHRU, STATE OF JOHOR TO BUKIT GAMBIR FOR A CONSIDERATION OF RM25,375,355.28 TO BE<br />
SATISFIED BY THE SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY BUKIT GAMBIR TO<br />
BUDIMAN AND THE BALANCE IN CASH<br />
V. PROPOSED ACQUISITION BY LHHB OF AN ADDITIONAL 20% EQUITY INTEREST IN BUDIMAN COMPRISING<br />
1,300,000 ORDINARY SHARES OF RM1.00 EACH FROM AMALAN TEPAT SDN. BHD. (“AMALAN”) FOR A<br />
CONSIDERATION OF RM3,926,000 TO BE SATISFIED BY WAY OF SET-OFF AGAINST THE AMOUNT OWING BY<br />
AMALAN TO <strong>LEONG</strong> <strong>HUP</strong> MANAGEMENT SDN. BHD.<br />
VI.<br />
PROPOSED DISPOSAL BY BUDIMAN OF 119.82 ACRES OF FREEHOLD LAND IN MUKIM OF PULAI, DISTRICT OF<br />
JOHOR BAHRU, STATE OF JOHOR TO BUKIT GAMBIR FOR A CONSIDERATION OF RM22,965,180.48 TO BE<br />
SATISFIED BY RM10 MILLION CASH AND THE ISSUANCE OF NEW ORDINARY SHARES OF RM1.00 EACH WORTH<br />
RM12,965,180.48 AT THE INITIAL PUBLIC OFFERING PRICE BY THE PROPOSED NEW HOLDING COMPANY OF<br />
BUKIT GAMBIR WHICH IS IN THE COURSE OF PREPARING AN APPLICATION TO THE SECURITIES COMMISSION<br />
FOR LISTING ON THE KUALA LUMPUR STOCK EXCHANGE<br />
(COLLECTIVELY “PROPOSALS”)<br />
PART B<br />
INDEPENDENT ADVICE TO THE SHAREHOLDERS OF LHHB IN RELATION TO THE PROPOSALS<br />
Independent Adviser<br />
The Notice of Extraordinary General Meeting (“EGM”) to be held at Mutiara, Level 2, The Puteri Pan Pacific Hotel, Jalan Salim, 80730 Johor<br />
Bahru, Johor Darul Takzim on Wednesday, 27 June 2001 at 11.00 a.m. is enclosed together with the Form of Proxy in this Circular.<br />
The Form of Proxy should be lodged at the Registered Office of the Company at 201-203 Jalan Abdullah, 84000 Muar, Johor not later than<br />
48 hours before the time of the EGM. The last day and time for lodging the Form of Proxy is Monday, 25 June 2001 at 11.00 a.m..<br />
This Circular is dated 12 June 2001.
DEFINITIONS<br />
For the purpose of this Circular, except where the context otherwise requires, the following terms and expressions<br />
shall have the following meanings:-<br />
73.845-Acre Land − The 73.845 acres of freehold land, as comprised in the Budiman Land,<br />
to be disposed of by Budiman to Jayaplus pursuant to the Proposed<br />
Disposal of 73.845-Acre Land.<br />
132.395-Acre Land − The 132.395 acres of freehold land, as comprised in the Budiman<br />
Land, to be disposed of by Budiman to Bukit Gambir pursuant to the<br />
Proposed Disposal of 132.395-Acre Land.<br />
119.82-Acre Land − The 119.82 acres of freehold land, as comprised in the Budiman Land,<br />
to be disposed of by Budiman to Bukit Gambir pursuant to the<br />
Proposed Disposal of 119.82-Acre Land.<br />
Agricultural Land − Collectively the two (2) pieces of freehold land held under E.M.R.<br />
494, Lot No. 375 and Certificate of Title 6387, Lot No. 1732 in<br />
Mukim of Pengerang, District of Kota Tinggi, State of Johor<br />
measuring in total approximately 112.125 acres, of which Atlasprise is<br />
the registered proprietor. Atlasprise has obtained the approval in<br />
principle of the Johor State Authority for a leisure farm development<br />
on the Agricultural Land.<br />
Atlasprise − Atlasprise Sdn. Bhd. (418469-V), a 55.0% owned subsidiary of<br />
LHHB.<br />
Atlasprise Approvals in Principle − Collectively the following approvals in principle obtained by<br />
Atlasprise from the Johor State Authority:-<br />
(a)<br />
(b)<br />
Approval in principle dated 12 November 1998 for the proposed<br />
industrial development on the Industrial Land; and<br />
Approval in principle dated 19 August 1999 for the proposed<br />
leisure farm development on the Agricultural Land.<br />
Atlasprise Land − The Industrial Land and the Agricultural Land collectively.<br />
Amalan − Amalan Tepat Sdn. Bhd. (223294-D)<br />
Arab-Malaysian − Arab-Malaysian Merchant Bank Berhad (23742-V)<br />
Board − The Board of Directors of LHHB<br />
Budiman − Pangkal Budiman Sdn. Bhd. (309400-V), a 50.1% owned subsidiary of<br />
LHHB.<br />
Budiman Approval − The approval obtained by Budiman from the Johor State Authority on<br />
22 October 1999 for the proposed mixed development on the Budiman<br />
Land.<br />
Budiman Land − Collectively the two (2) pieces of freehold land held under H.S.(D)<br />
235359, P.T.D. 71014 and H.S.(D) 235361, P.T.D. 71016 in Mukim<br />
of Pulai, District of Johor Bahru, State of Johor measuring in total<br />
approximately 855.21 acres, of which Budiman is the registered<br />
proprietor.
Bukit Gambir − Bukit Gambir Company Sdn. Bhd. (5114-D)<br />
Bukit Gambir Loan 1 − The proposed loan of not less than RM12.646 million to be obtained<br />
by Bukit Gambir from OCBC towards completion of the Proposed<br />
Disposal of 132.395-Acre Land.<br />
Bukit Gambir Loan 2 − The proposed loan of not less than RM10 million to be obtained by<br />
Bukit Gambir from OCBC towards completion of the Proposed<br />
Disposal of 119.82-Acre Land.<br />
Consideration Shares − The new Shares worth RM12,965,180.48 to be issued by Newco to<br />
Budiman at the initial public offering price in partial satisfaction of the<br />
consideration for the Proposed Disposal of 119.82-Acre Land.<br />
EGM − Extraordinary General Meeting<br />
EPS − Earnings per Share<br />
ESOS − Employee share option scheme<br />
FIC − Foreign Investment Committee<br />
First Proposed Acquisition of<br />
Budiman Shares<br />
−<br />
The proposed acquisition by LHHB from the Vendors of an additional<br />
20% equity interest in Budiman comprising 1,300,000 Shares for a<br />
total cash consideration of RM3,926,000.<br />
Industrial Land − Collectively the two (2) pieces of freehold land held under Grant No.<br />
10427, Lot No. 1158 and Certificate of Title 6386, Lot No. 1730 in<br />
Mukim of Pengerang, District of Kota Tinggi, State of Johor<br />
measuring in total approximately 117.625 acres, of which Atlasprise is<br />
the registered proprietor. Atlasprise has obtained the approval in<br />
principle of the Johor State Authority for an industrial development on<br />
the Industrial Land.<br />
Jayaplus − Jayaplus Bakti Sdn. Bhd. (264364-A)<br />
Jayaplus Loan − The proposed loan of not less than RM7.054 million to be obtained by<br />
Jayaplus from OCBC towards completion of the Proposed Disposal of<br />
73.845-Acre Land.<br />
KLSE − Kuala Lumpur Stock Exchange (30632-P)<br />
LHHB or Company − Leong Hup Holdings Berhad (51316-D)<br />
LHHB Group or Group − LHHB and its subsidiaries<br />
LHM − Leong Hup Management Sdn. Bhd. (163695-A), a substantial<br />
shareholder of LHHB<br />
Newco − The proposed new holding company of Bukit Gambir which is in the<br />
course of preparing an application to the SC for listing on the KLSE.<br />
Newco expects to submit its application to the SC by July 2001.<br />
NTA − Net tangible assets<br />
OCBC − OCBC Bank (Malaysia) Berhad
Pathalon − Pathalon Industries Sdn. Bhd. (64921-K)<br />
Proposals − The First Proposed Acquisition of Budiman Shares, Proposed Disposal<br />
of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land,<br />
Proposed Disposal of 132.395-Acre Land, Second Proposed<br />
Acquisition of Budiman Shares and Proposed Disposal of 119.82-Acre<br />
Land collectively.<br />
Proposed Disposal of Atlasprise<br />
Shares<br />
Proposed Disposal of 73.845-Acre<br />
Land<br />
−<br />
−<br />
The proposed disposal by LHHB to Bukit Gambir of 31% equity<br />
interest in Atlasprise comprising 465,000 Shares for a total cash<br />
consideration of RM465,000.<br />
The proposed disposal by Budiman to Jayaplus of the 73.845-Acre<br />
Land for a total consideration of RM14,153,428.08 to be satisfied by<br />
the setting off of all the shareholders’ advances granted by Jayaplus to<br />
Budiman as at the completion date of the Sale and Purchase<br />
Agreement in respect of the Proposed Disposal of 73.845-Acre Land,<br />
the Jayaplus Loan and the balance in cash.<br />
Proposed Disposal of 132.395-<br />
Acre Land<br />
Proposed Disposal of 119.82-Acre<br />
Land<br />
− The proposed disposal by Budiman to Bukit Gambir of the 132.395-<br />
Acre Land for a total consideration of RM25,375,355.28 to be<br />
satisfied by the setting off of all the shareholders’ advances granted by<br />
Bukit Gambir to Budiman as at the completion date of the Sale and<br />
Purchase Agreement in respect of the Proposed Disposal of 132.395-<br />
Acre Land, the Bukit Gambir Loan 1 and the balance in cash.<br />
− The proposed disposal by Budiman to Bukit Gambir of the 119.82-<br />
Acre Land for a total consideration of RM22,965,180.48 to be<br />
satisfied by the Bukit Gambir Loan 2 and the issuance of the<br />
Consideration Shares.<br />
RM and sen − Ringgit Malaysia and sen respectively<br />
SC − Securities Commission<br />
Second Proposed Acquisition of<br />
Budiman Shares<br />
−<br />
The proposed acquisition by LHHB from Amalan of an additional<br />
20% equity interest in Budiman comprising 1,300,000 Shares for a<br />
total consideration of RM3,926,000 to be satisfied by way of set-off<br />
against the amount owing by Amalan to LHM. As at 15 May 2001,<br />
the amount owing by Amalan to LHM was RM21.707 million.<br />
Shares − Ordinary shares of RM1.00 each<br />
Vendors − In respect of the First Proposed Acquisition of Budiman Shares, Bukit<br />
Gambir, Jayaplus and Pathalon collectively.
TABLE OF CONTENTS<br />
Page<br />
PART A – DIRECTORS’ LETTER TO THE SHAREHOLDERS OF LHHB<br />
1. INTRODUCTION.................................................................................................................................... 2-3<br />
2. INFORMATION ON BUDIMAN, ATLASPRISE AND BUDIMAN LAND......................................... 3-6<br />
2.1 Budiman ...................................................................................................................................... 3-4<br />
2.2 Atlasprise..................................................................................................................................... 4-5<br />
2.3 Budiman Land ................................................................................................................................ 6<br />
3. INFORMATION ON BUKIT GAMBIR, JAYAPLUS, PATHALON, AMALAN AND LHM.............. 7-9<br />
3.1 Bukit Gambir.................................................................................................................................. 7<br />
3.2 Jayaplus ...................................................................................................................................... 7-8<br />
3.3 Pathalon ......................................................................................................................................... 8<br />
3.4 Amalan ........................................................................................................................................... 9<br />
3.5 LHM ............................................................................................................................................... 9<br />
4. DETAILS OF THE PROPOSALS ....................................................................................................... 10-17<br />
4.1 Salient Terms of the First Proposed Acquisition of Budiman Shares.......................................... 10<br />
4.2 Salient Terms of the Proposed Disposal of Atlasprise Shares................................................ 10-11<br />
4.3 Salient Terms of the Proposed Disposal of 73.845-Acre Land............................................... 11-12<br />
4.4 Salient Terms of the Proposed Disposal of 132.395-Acre Land............................................. 13-14<br />
4.5 Salient Terms of the Second Proposed Acquisition of Budiman Shares...................................... 14<br />
4.6 Salient Terms of the Proposed Disposal of 119.82-Acre Land............................................... 15-16<br />
4.7 Inter-Conditionality...................................................................................................................... 16<br />
4.8 Related-Party Transactions .................................................................................................... 16-17<br />
5. BASIS OF DETERMINING THE CONSIDERATION FOR THE PROPOSALS ............................. 17-19<br />
5.1 First and Second Proposed Acquisition of Budiman Shares........................................................ 17<br />
5.2 Proposed Disposal of Atlasprise Shares...................................................................................... 18<br />
5.3 Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land and<br />
Proposed Disposal of 119.82-Acre Land................................................................................ 18-19<br />
6. RATIONALE FOR THE PROPOSALS.................................................................................................... 19<br />
7. SOURCES OF FUNDS AND UTILISATION OF PROCEEDS .............................................................. 20<br />
7.1 Sources of Funds.......................................................................................................................... 20<br />
7.2 Utilisation of Proceeds................................................................................................................. 20<br />
8. EFFECTS OF THE PROPOSALS ....................................................................................................... 20-21<br />
8.1 Share Capital ............................................................................................................................... 20<br />
8.2 Substantial Shareholders ............................................................................................................. 20<br />
8.3 Earnings ....................................................................................................................................... 20<br />
8.4 NTA and Gearing ......................................................................................................................... 21
9. CONDITIONS PRECEDENT.............................................................................................................. 21-23<br />
9.1 Inter-Conditional Proposals ................................................................................................... 21-22<br />
9.2 Second Proposed Acquisition of Budiman Shares ....................................................................... 22<br />
9.3 Proposed Disposal of 119.82-Acre Land..................................................................................... 23<br />
10. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS............................................... 23<br />
11. INDEPENDENT ADVISER ..................................................................................................................... 24<br />
12. DIRECTORS’ RECOMMENDATION .................................................................................................... 24<br />
13. EXTRAORDINARY GENERAL MEETING .......................................................................................... 24<br />
14. FURTHER INFORMATION .................................................................................................................... 24<br />
PART B – INDEPENDENT ADVICE LETTER TO THE SHAREHOLDERS OF LHHB<br />
1. INTRODUCTION................................................................................................................................ 27-29<br />
2. LIMITATIONS TO THE EVALUATION OF THE PROPOSALS..................................................... 29-30<br />
3. DETAILS OF THE PROPOSALS ....................................................................................................... 30-43<br />
3.1 First Proposed Acquisition of Budiman Shares ...................................................................... 30-32<br />
3.2 Proposed Disposal of Atlasprise Shares................................................................................. 32-36<br />
3.3 Proposed Disposal of 73.845-Acre Land................................................................................ 36-38<br />
3.4 Proposed Disposal of 132.395-Acre Land.............................................................................. 39-40<br />
3.5 Second Proposed Acquisition of Budiman Shares .................................................................. 40-41<br />
3.6 Proposed Disposal of 119.82-Acre Land................................................................................ 42-43<br />
3.7 Inter-Conditionality...................................................................................................................... 43<br />
4. RATIONALE FOR THE PROPOSALS.................................................................................................... 44<br />
5. SOURCES OF FUNDS AND UTILISATION OF PROCEEDS ......................................................... 44-45<br />
5.1 Sources of Funds.......................................................................................................................... 44<br />
5.2 Utilisation of Proceeds................................................................................................................. 45<br />
6. CONDITIONS PRECEDENT.............................................................................................................. 45-47<br />
6.1 Inter-Conditional Proposals ................................................................................................... 45-46<br />
6.2 Second Proposed Acquisition of Budiman Shares ....................................................................... 46<br />
6.3 Proposed Disposal of 119.82-Acre Land................................................................................ 46-47<br />
7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS............................................... 47<br />
8. EVALUATION OF THE PROPOSALS .............................................................................................. 47-52<br />
8.1 Rationale for the Proposals..................................................................................................... 47-48<br />
8.2 Basis of Determining the Consideration for the Proposals .................................................... 49-50<br />
8.3 Mode of Financing the First and Second Proposed Acquisition of Budiman Shares............. 50-51<br />
8.4 Financial Effects of the Proposals .......................................................................................... 51-52<br />
9. CONCLUSION AND RECOMMENDATION ........................................................................................ 52
APPENDICES<br />
1. INFORMATION ON LHHB................................................................................................................ 53-58<br />
2. INFORMATION ON BUDIMAN ....................................................................................................... 59-61<br />
3. INFORMATION ON ATLASPRISE ................................................................................................... 62-63<br />
4. AUDITED ACCOUNTS OF BUDIMAN AND ATLASPRISE FOR THE FINANCIAL YEAR ENDED<br />
31 MARCH 2000 ................................................................................................................................. 64-83<br />
5. VALUER’S LETTER ON THE 73.845-ACRE LAND, 132.395-ACRE LAND AND 119.82-ACRE<br />
LAND........................................................................................................................................................ 84<br />
6. VALUER’S LETTER ON THE ATLASPRISE LAND....................................................................... 85-86<br />
7. GENERAL INFORMATION............................................................................................................... 87-89<br />
NOTICE OF EXTRAORDINARY GENERAL MEETING 90<br />
FORM OF PROXY ENCLOSED
PART A<br />
DIRECTORS’ LETTER TO THE SHAREHOLDERS OF LHHB
<strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong><br />
(Company No. 51316-D)<br />
(Incorporated in Malaysia)<br />
Registered Office<br />
201-203 Jalan Abdullah,<br />
84000 Muar,<br />
Johor<br />
12 June 2001<br />
Directors<br />
Datuk Lau Chong Wang (Chairman & Managing Director)<br />
Dato’ Lau Eng Guang (Executive Director)<br />
Datuk Francis Lau Tuang Nguang (Executive Director)<br />
Lau Chun Yuen<br />
Datuk Paduka Hajjah Saleha bte Mohamad Ali<br />
Major General (Rtd) Datuk Haji Esa bin Ahmad<br />
Lim Meng Bin<br />
To:<br />
The Shareholders of <strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong><br />
I. PROPOSED ACQUISITION BY <strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong> (“LHHB”) OF AN<br />
ADDITIONAL 20% EQUITY INTEREST IN PANGKAL BUDIMAN SDN. BHD.<br />
(“BUDIMAN”) COMPRISING 1,300,000 ORDINARY SHARES OF RM1.00 EACH<br />
FROM BUKIT GAMBIR COMPANY SDN. BHD. (“BUKIT GAMBIR”), JAYAPLUS<br />
BAKTI SDN. BHD. (“JAYAPLUS”) AND PATHALON INDUSTRIES SDN. BHD. FOR A<br />
CASH CONSIDERATION OF RM3,926,000<br />
II.<br />
III.<br />
IV.<br />
PROPOSED DISPOSAL BY LHHB OF 31% EQUITY INTEREST IN ATLASPRISE SDN.<br />
BHD. COMPRISING 465,000 ORDINARY SHARES OF RM1.00 EACH TO BUKIT<br />
GAMBIR FOR A CASH CONSIDERATION OF RM465,000<br />
PROPOSED DISPOSAL BY BUDIMAN OF 73.845 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO<br />
JAYAPLUS FOR A CONSIDERATION OF RM14,153,428.08 TO BE SATISFIED BY<br />
THE SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY<br />
JAYAPLUS TO BUDIMAN AND THE BALANCE IN CASH<br />
PROPOSED DISPOSAL BY BUDIMAN OF 132.395 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO BUKIT<br />
GAMBIR FOR A CONSIDERATION OF RM25,375,355.28 TO BE SATISFIED BY THE<br />
SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY BUKIT<br />
GAMBIR TO BUDIMAN AND THE BALANCE IN CASH<br />
V. PROPOSED ACQUISITION BY LHHB OF AN ADDITIONAL 20% EQUITY INTEREST<br />
IN BUDIMAN COMPRISING 1,300,000 ORDINARY SHARES OF RM1.00 EACH FROM<br />
AMALAN TEPAT SDN. BHD. (“AMALAN”) FOR A CONSIDERATION OF<br />
RM3,926,000 TO BE SATISFIED BY WAY OF SET-OFF AGAINST THE AMOUNT<br />
OWING BY AMALAN TO <strong>LEONG</strong> <strong>HUP</strong> MANAGEMENT SDN. BHD.<br />
1
VI.<br />
PROPOSED DISPOSAL BY BUDIMAN OF 119.82 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO BUKIT<br />
GAMBIR FOR A CONSIDERATION OF RM22,965,180.48 TO BE SATISFIED BY RM10<br />
MILLION CASH AND THE ISSUANCE OF NEW ORDINARY SHARES OF RM1.00<br />
EACH WORTH RM12,965,180.48 AT THE INITIAL PUBLIC OFFERING PRICE BY<br />
THE PROPOSED NEW HOLDING COMPANY OF BUKIT GAMBIR WHICH IS IN THE<br />
COURSE OF PREPARING AN APPLICATION TO THE SECURITIES COMMISSION<br />
FOR LISTING ON THE KUALA LUMPUR STOCK EXCHANGE<br />
1. INTRODUCTION<br />
On 19 March 2001, the Board announced that LHHB and its subsidiary Budiman had on 19 March<br />
2001 entered into the following agreements respectively:-<br />
(a)<br />
A conditional Sale and Purchase Agreement for the proposed acquisition by LHHB from<br />
Bukit Gambir, Jayaplus and Pathalon (collectively “Vendors”) of an additional 20%<br />
equity interest in Budiman comprising 1,300,000 ordinary shares of RM1.00 each<br />
(“Shares”) for a total cash consideration of RM3,926,000 (“First Proposed Acquisition<br />
of Budiman Shares”).<br />
LHHB currently has a 50.1% equity interest in Budiman comprising 3,256,500 Shares.<br />
The First Proposed Acquisition of Budiman Shares will increase LHHB’s equity interest in<br />
Budiman to 70.1% comprising 4,556,500 Shares;<br />
(b)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by LHHB to Bukit<br />
Gambir of 31% equity interest in Atlasprise comprising 465,000 Shares for a total cash<br />
consideration of RM465,000 (“Proposed Disposal of Atlasprise Shares”).<br />
LHHB currently has a 55.0% equity interest in Atlasprise comprising 825,000 Shares. The<br />
Proposed Disposal of Atlasprise Shares will reduce LHHB’s equity interest in Atlasprise to<br />
24.0% comprising 360,000 Shares. Atlasprise will therefore cease to be a subsidiary of<br />
LHHB upon completion of the Proposed Disposal of Atlasprise Shares, and will instead<br />
become an associate company of LHHB.<br />
Bukit Gambir currently has a 20.0% equity interest in Atlasprise comprising 300,000<br />
Shares. Upon completion of the Proposed Disposal of Atlasprise Shares, Bukit Gambir<br />
will have a 51.0% equity interest in Atlasprise comprising 765,000 Shares. Atlasprise will<br />
therefore become a subsidiary of Bukit Gambir.<br />
(c)<br />
(d)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to<br />
Jayaplus of 73.845 acres of freehold land (“73.845-Acre Land”) as comprised in the two<br />
(2) pieces of land held under H.S.(D) 235359, P.T.D. 71014 and H.S.(D) 235361, P.T.D.<br />
71016 in Mukim of Pulai, District of Johor Bahru, State of Johor (collectively “Budiman<br />
Land”), for a total consideration of RM14,153,428.08 to be satisfied by the setting off of<br />
all the shareholder’s advances granted by Jayaplus to Budiman as at the completion date of<br />
the Sale and Purchase Agreement, the Jayaplus Loan and the balance in cash (“Proposed<br />
Disposal of 73.845-Acre Land”);<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to Bukit<br />
Gambir of 132.395 acres of freehold land as comprised in the Budiman Land (“132.395-<br />
Acre Land”), for a total consideration of RM25,375,355.28 to be satisfied by the setting<br />
off of all the shareholder’s advances granted by Bukit Gambir to Budiman as at the<br />
completion date of the Sale and Purchase Agreement, the Bukit Gambir Loan 1 and the<br />
balance in cash (“Proposed Disposal of 132.395-Acre Land”); and<br />
2
(e)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to Bukit<br />
Gambir of 119.82 acres of freehold land as comprised in the Budiman Land (“119.82-Acre<br />
Land”), for a total consideration of RM22,965,180.48 to be satisfied by the Bukit Gambir<br />
Loan 2 and by the issuance of new Shares worth RM12,965,180.48 (“Consideration<br />
Shares”) by the proposed new holding company of Bukit Gambir (“Newco”) which is in<br />
the course of preparing an application to the Securities Commission (“SC”) for listing on<br />
the Kuala Lumpur Stock Exchange (“KLSE”) (“Proposed Disposal of 119.82-Acre<br />
. The Consideration Shares are to be issued by Newco to Budiman at the initial<br />
public offering price.<br />
On 11 April 2001, the Board had further announced that LHHB had, on 11 April 2001, entered into<br />
a conditional Sale and Purchase Agreement for the proposed acquisition by LHHB from Amalan of<br />
an additional 20% equity interest in Budiman comprising 1,300,000 Shares for a total consideration<br />
of RM3,926,000 to be satisfied by way of set-off against the amount owing by Amalan to LHM<br />
(“Second Proposed Acquisition of Budiman Shares”). The consideration is therefore an amount<br />
owing from LHHB to LHM, and will be set off against the amount owing from LHM to LHHB.<br />
Together with the First Proposed Acquisition of Budiman Shares, the Second Proposed Acquisition<br />
of Budiman Shares will increase LHHB’s equity interest in Budiman to 90.1% comprising<br />
5,856,500 Shares.<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise Shares,<br />
Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land, Second<br />
Proposed Acquisition of Budiman Shares and Proposed Disposal of 119.82-Acre Land shall<br />
hereinafter be collectively referred to as the “Proposals”.<br />
The purpose of this Circular is to provide you with the details of the Proposals and to seek your<br />
approval for the resolutions pertaining to the Proposals to be tabled at the EGM to be convened on<br />
27 June 2001, the notice of which is set out in this Circular. The information contained in the<br />
Appendices forms part of this Circular.<br />
SHAREHOLDERS OF LHHB ARE ADVISED TO READ AND CONSIDER CAREFULLY<br />
THE INDEPENDENT ADVISER’S LETTER CONTAINED IN PART B OF THIS<br />
CIRCULAR BEFORE VOTING ON THE RESOLUTIONS TO GIVE EFFECT TO THE<br />
PROPOSALS AT THE FORTHCOMING EGM.<br />
2. INFORMATION ON BUDIMAN, ATLASPRISE AND BUDIMAN LAND<br />
2.1 Budiman<br />
Budiman was incorporated in Malaysia under the Companies Act, 1965 on 26 July 1994 as<br />
a private limited company. The current principal activity of Budiman is oil palm<br />
plantation, whilst its proposed future principal activity is property development. The<br />
principal asset of Budiman is the Budiman Land. Budiman does not have any subsidiary or<br />
associate company.<br />
The present authorised share capital of Budiman is RM10,000,000 comprising 10,000,000<br />
Shares, of which 6,500,000 Shares have been issued and are fully paid-up.<br />
3
The shareholders and directors of Budiman and their respective shareholdings as at 15 May<br />
2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Bukit Gambir 780,000 12.0 - -<br />
Jayaplus 455,000 7.0 - -<br />
Pathalon 65,000 1.0 * 455,000 7.0<br />
LHHB 3,256,500 50.1 - -<br />
Amalan Tepat Sdn. Bhd. 1,300,000 20.0 - -<br />
Chee Kim Hoon 643,500 9.9 - -<br />
Maharani Properties Sdn. Bhd. - - * 455,000 7.0<br />
Kim Yin & Sons Holdings Sdn. Bhd. - - * 455,000 7.0<br />
Binaik Sdn. Bhd. - - * 455,000 7.0<br />
Tan Lian Choo - - * 455,000 7.0<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 455,000 7.0<br />
Hasrin bin Busno - - # 520,000 8.0<br />
Lee Geok Kim - - * 455,000 7.0<br />
Lee Choon Jin - - * 455,000 7.0<br />
Foo Yin Yin - - * 455,000 7.0<br />
Leong Hup Management Sdn. Bhd. - - @ 3,256,500 50.1<br />
Datuk Lau Chong Wang - - @ 3,256,500 50.1<br />
Lau Bong Wong - - @ 3,256,500 50.1<br />
Amnah bte Ibrahim - - ^ 1,300,000 20.0<br />
Total 6,500,000 100.0<br />
Directors<br />
Datuk Lau Chong Wang - - @ 3,256,500 50.1<br />
Lau Bong Wong - - @ 3,256,500 50.1<br />
Datuk Lau Tuang Nguang - - - -<br />
Datuk Haji Esa bin Ahmad - - - -<br />
Chee Kim Hoon 643,500 9.9 - -<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 455,000 7.0<br />
Notes:-<br />
* Deemed interest through Jayaplus.<br />
# Deemed interest through Jayaplus and Pathalon.<br />
@ Deemed interest through LHHB<br />
^ Deemed interest through Amalan Tepat Sdn. Bhd.<br />
For the financial year ended 31 March 2000, Budiman recorded a profit after taxation of<br />
RM0.556 million. Its audited NTA value as at 31 March 2000 was RM9.043 million. For<br />
the financial year ended 31 March 2001, Budiman recorded an unaudited profit after<br />
taxation of RM0.267 million.<br />
Further information on Budiman is set out in Appendix 2.<br />
2.2 Atlasprise<br />
Atlasprise was incorporated in Malaysia under the Companies Act, 1965 on 24 January<br />
1997 as a private limited company. The current principal activity of Atlasprise is oil palm<br />
plantation, whilst its proposed future principal activity is property development. The<br />
principal assets of Atlasprise are as follows:-<br />
(a)<br />
Two (2) pieces of freehold land held under Grant No. 10427, Lot No. 1158 and<br />
Certificate of Title 6386, Lot No. 1730 in Mukim of Pengerang, District of Kota<br />
Tinggi, State of Johor measuring in total approximately 117.625 acres<br />
(“Industrial Land”). Atlasprise had obtained the approval in principle of the<br />
Johor State Authority on 12 November 1998 for an industrial development on the<br />
Industrial Land; and<br />
4
(b)<br />
Two (2) pieces of freehold land held under E.M.R. 494, Lot No. 375 and<br />
Certificate of Title 6387, Lot No. 1732 in Mukim of Pengerang, District of Kota<br />
Tinggi, State of Johor measuring in total approximately 112.125 acres<br />
(“Agricultural Land”). Atlasprise had obtained the approval in principle of the<br />
Johor State Authority on 19 August 1999 for a leisure farm development on the<br />
Agricultural Land.<br />
The proposed development on the Industrial Land comprises a total of 62 detached and<br />
semi-detached industrial lots, whilst the proposed development on the Agricultural Land<br />
comprises 90 homestead lots. The respective proposed developments have yet to<br />
commence as the time of their commencement would depend on the conditions in the<br />
property market.<br />
The Industrial Land and the Agricultural Land shall hereinafter be collectively referred to<br />
as the “Atlasprise Land”, and the respective approvals in principle of the Johor State<br />
Authority mentioned above shall hereinafter be collectively referred to as the “Atlasprise<br />
Approvals in Principle”.<br />
A valuation of the Atlasprise Land was carried out by Colliers Jordan Lee & Jaafar (JH)<br />
Sdn. Bhd., an independent firm of professional valuers, on 28 February 2001 using the<br />
comparison method, pursuant to which the said firm determined the open market value of<br />
the Atlasprise Land with the benefit of the Atlasprise Approvals in Principle, to be<br />
RM17,000,000 or approximately RM1.70 per square foot. As the unaudited net book<br />
value of the Atlasprise Land as at 30 November 2000 (being the reference date used for<br />
arriving at the consideration for the Proposed Disposal of Atlasprise Shares) was<br />
RM20.660 million, the loss on revaluation amounted to RM3.660 million. The loss on<br />
revaluation will not be incorporated into the accounts of Atlasprise, as the sole purpose of<br />
the revaluation was to establish a market value for the Atlasprise Land and hence the<br />
adjusted NTA value of Atlasprise. The audited net book value of the Atlasprise Land as at<br />
31 March 2000 was RM19.659 million.<br />
The Atlasprise Land is currently charged to Arab-Malaysian Finance Berhad for securing<br />
the credit facilities granted to Atlasprise towards completion of the purchase of the<br />
Atlasprise Land.<br />
Atlasprise does not have any subsidiary or associate company.<br />
The present authorised share capital of Atlasprise is RM5,000,000 comprising 5,000,000<br />
Shares, of which 1,500,000 Shares have been issued and are fully paid-up.<br />
The shareholders and directors of Atlasprise and their respective shareholdings as at 15<br />
May 2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
LHHB 825,000 55.0 - -<br />
Bukit Gambir 300,000 20.0 - -<br />
Datuk Lau Tuang Nguang 150,000 10.0 - -<br />
Dato’ Mohamed Salleh bin Ahmad 225,000 15.0 - -<br />
Leong Hup Management Sdn. Bhd. - - * 825,000 55.0<br />
Datuk Lau Chong Wang - - * 825,000 55.0<br />
Lau Bong Wong - - * 825,000 55.0<br />
Total 1,500,000 100.0<br />
Directors<br />
Datuk Lau Chong Wang - - * 825,000 55.0<br />
Datuk Lau Tuang Nguang 150,000 10.0 - -<br />
Dato’ Mohamed Salleh bin Ahmad 225,000 15.0 - -<br />
Yeo Soo Sia @ Yeo Soo Seng - - - -<br />
5
Note:-<br />
* Deemed interest through LHHB.<br />
For the financial year ended 31 March 2000, Atlasprise recorded a profit after taxation of<br />
RM0.084 million. Its audited NTA value as at 31 March 2000 was RM1.847 million. For<br />
the financial year ended 31 March 2001, Atlasprise recorded an unaudited profit after<br />
taxation of RM0.072 million.<br />
Further information on Atlasprise is set out in Appendix 3.<br />
2.3 Budiman Land<br />
The Budiman Land comprises two (2) pieces of freehold agricultural land held under<br />
H.S.(D) 235359, P.T.D. 71014 and H.S.(D) 235361, P.T.D. 71016 in Mukim of Pulai,<br />
District of Johor Bahru, State of Johor measuring in total approximately 855.21 acres.<br />
Budiman had obtained the final approval of the Johor State Authority on 22 October 1999<br />
for the alteration of the category of land use of the Budiman Land and the subdivision<br />
thereof into individual lots for the purpose of a mixed development (“Budiman<br />
Approval”). The proposed development on the Budiman Land comprises a total of 11,132<br />
units of development comprising terrace houses, semi-detached houses, detached houses,<br />
apartments, flats and shops. The proposed development has yet to commence as the time of<br />
commencement would depend on the conditions in the property market. The balance of the<br />
Budiman Land after the Proposed Disposal of 73.845-Acre Land, Proposed Disposal of<br />
132.395-Acre Land and Proposed Disposal of 119.82-Acre Land would be 529.15 acres.<br />
A valuation of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land<br />
collectively was carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an<br />
independent firm of professional valuers, on 28 February 2001 using the comparison<br />
method, and checked by the residual method, pursuant to which the said firm determined<br />
the aggregate open market value of the said lands with the benefit of the Budiman<br />
Approval, to be RM62,500,000 or approximately RM4.40 per square foot. This translates<br />
into an open market value of RM163.913 million for the entire Budiman Land. As the<br />
estimated net book value of the Budiman Land as at 31 March 2001 (being the reference<br />
date used for arriving at the consideration for the First and Second Proposed Acquisition of<br />
Budiman Shares) is RM153.470 million, the revaluation surplus is estimated to be<br />
RM10.443 million. The net book value incorporates the cost of the Budiman Land<br />
amounting to RM117.591 million and development expenditure amounting to RM35.879<br />
million which includes capitalised interest, subdivision costs and other incidental costs.<br />
The revaluation surplus will not be incorporated into the accounts of Budiman, as the sole<br />
purpose of the revaluation was to establish a market value for the 73.845-Acre Land,<br />
132.395-Acre Land and 119.82-Acre Land and the adjusted NTA value of Budiman.<br />
The audited net book value of the Budiman Land as at 31 March 2000 was RM147.865<br />
million. On a proportionate basis, the net book value of the 73.845-Acre Land, 132.395-<br />
Acre Land and 119.82-Acre Land collectively as at 31 March 2000 was RM56.38<br />
million.<br />
The Budiman Land is currently charged to OCBC Bank (Malaysia) Berhad (“OCBC”) for<br />
securing the credit facilities granted to Budiman towards completion of the purchase of the<br />
Budiman Land.<br />
6
3. INFORMATION ON BUKIT GAMBIR, JAYAPLUS, PATHALON, AMALAN AND LHM<br />
3.1 Bukit Gambir<br />
Bukit Gambir was incorporated in Malaysia under the Companies Act, 1965 on 19<br />
September 1963 as a private limited company. The principal activities of Bukit Gambir are<br />
plantation and housing development.<br />
The present authorised share capital of Bukit Gambir is RM2,000,000 comprising 200,000<br />
shares of RM10.00 each, of which 80,000 shares have been issued and are fully paid-up.<br />
The shareholders and directors of Bukit Gambir and their respective shareholdings as at 15<br />
May 2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Yeo Gee Meng @ Yeo Kee Tee 1,600 2.00 - -<br />
Yeo Soo Sia @ Yeo Soo Seng 6,800 8.50 - -<br />
Yeo Soo Mong 4,600 5.75 - -<br />
Yeo Poh Tee @ Yeo Tze Poh 6,400 8.00 - -<br />
Yeo Soo Kiat 10,204 12.755 - -<br />
Yeo Sze Chiang 2,000 2.50 - -<br />
Yeo Soo Kim 4,700 5.88 - -<br />
Yang Shaw Ching @ Ew Siew Tee 4,000 5.00 - -<br />
Yeo Soo How 4,700 5.88 - -<br />
Yeo Soo Ngai 6,232 7.79 - -<br />
Yeo Soo Jeng 4,900 6.125 - -<br />
Yeo Siow Poh @ Yeo Jee Tee 4,000 5.00 - -<br />
Tan Swee Tian 5,000 6.25 - -<br />
Lau Ngan Nai (deceased) 2,068 2.58 - -<br />
YBH Emas Sdn. Bhd. 7,296 9.12 - -<br />
Yeo Soo We @ You Su We 5,500 6.87 - -<br />
Total 80,000 100.00<br />
Directors<br />
Yeo Soo Kiat 10,204 12.755 - -<br />
Yeo Soo Sia @ Yeo Soo Seng 6,800 8.50 - -<br />
Yeo Soo Kim 4,700 5.88 - -<br />
Yeo Soo How 4,700 5.88 - -<br />
Yeo Soo Jeng 4,900 6.125 - -<br />
Yeo Soo Ngai 6,232 7.79 - -<br />
3.2 Jayaplus<br />
Jayaplus was incorporated in Malaysia under the Companies Act, 1965 on 17 May 1993 as<br />
a private limited company. The principal activity of Jayaplus is property development.<br />
The present authorised share capital of Jayaplus is RM5,000,000 comprising 5,000,000<br />
Shares, of which 1,572,000 Shares have been issued and are fully paid-up.<br />
7
The shareholders and directors of Jayaplus and their respective shareholdings as at 15 May<br />
2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Maharani Properties Sdn. Bhd. 1,021,800 65.00<br />
Kim Yin & Sons Holdings Sdn. Bhd. 550,200 35.00<br />
Binaik Sdn. Bhd. - - * 1,021,800 65.00<br />
Tan Lian Choo - - * 1,021,800 65.00<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 1,021,800 65.00<br />
Hasrin bin Busno - - * 1,021,800 65.00<br />
Pathalon Industries Sdn. Bhd. - - * 1,021,800 65.00<br />
Lee Geok Kim - - # 550,200 35.00<br />
Lee Choon Jin - - # 550,200 35.00<br />
Foo Yin Yin - - # 550,200 35.00<br />
Total 1,572,000 100.00<br />
Directors<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 1,021,800 65.00<br />
Yeo Soo Jeng - - - -<br />
Yeo Soo Kiat - - - -<br />
Yeo Soo Ngai - - - -<br />
Notes:-<br />
* Deemed interest through Maharani Properties Sdn. Bhd.<br />
# Deemed interest through Kim Yin & Sons Holdings Sdn. Bhd.<br />
3.3 Pathalon<br />
Pathalon was incorporated in Malaysia under the Companies Act, 1965 on 28 November<br />
1980 as a private limited company under the name of Syarikat Galian Yee Sang Sdn. Bhd.<br />
and assumed its present name on 21 May 1987. The principal activity of Pathalon is<br />
investment in properties, land and other securities.<br />
The present authorised share capital of Pathalon is RM2,500,000 comprising 2,500,000<br />
Shares, of which 250,000 Shares have been issued and are fully paid-up.<br />
The shareholders and directors of Pathalon and their respective shareholdings as at 15 May<br />
2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Hasrin bin Busno 45,000 18.00 - -<br />
Jamaludin bin Zainal 35,000 14.00 - -<br />
Yeo Soo Sia @ Yeo Soo Seng 21,250 8.50 - -<br />
Yeo Soo Jeng 21,250 8.50 - -<br />
Yeo Soo Ngai 21,250 8.50 - -<br />
Yeo Soo Kiat 21,250 8.50 - -<br />
Yeo Soo We @ You Su We 21,250 8.50 - -<br />
Yeo Soo Mong 21,250 8.50 - -<br />
Yeo Soo Kim 21,250 8.50 - -<br />
Yeo Soo How 21,250 8.50 - -<br />
Total 250,000 100.00<br />
Directors<br />
Hasrin bin Busno 45,000 18.00 - -<br />
Yeo Soo Sia @ Yeo Soo Seng 21,250 8.50 - -<br />
Yeo Soo Jeng 21,250 8.50 - -<br />
Yeo Soo Ngai 21,250 8.50 - -<br />
Yeo Soo Kiat 21,250 8.50 - -<br />
8
3.4 Amalan<br />
Amalan was incorporated in Malaysia under the Companies Act, 1965 on 20 August 1991<br />
as a private limited company. The principal activities of Amalan are property development,<br />
investment holding and property holding.<br />
The present authorised share capital of Amalan is RM10,000,000 comprising 10,000,000<br />
Shares, of which 5,100,000 Shares have been issued and are fully paid-up.<br />
The shareholders and directors of Amalan and their respective shareholdings as at 15 May<br />
2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Datuk Lau Chong Wang 487,500 9.56 - -<br />
Lau Bong Wong 487,500 9.56 - -<br />
Lau Chia Nguang 485,000 9.51 - -<br />
Datuk Lau Chir Nguan 485,000 9.51 - -<br />
Dato’ Lau Eng Guang 485,000 9.51 - -<br />
Lau Hai Nguan 485,000 9.51 - -<br />
Datuk Lau Tuang Nguang 485,000 9.51 - -<br />
Amnah bte Ibrahim 1,700,000 33.33 - -<br />
Total 5,100,000 100.00<br />
Directors<br />
Datuk Lau Chir Nguan 485,000 9.51 - -<br />
Ramlee bin Bachek - - - -<br />
3.5 LHM<br />
LHM was incorporated in Malaysia under the Companies Act, 1965 on 21 August 1987 as<br />
a private limited company. LHM is principally an investment holding company. It<br />
currently holds a controlling stake of 43.95% in LHHB.<br />
The present authorised share capital of LHM is RM250,000 comprising 250,000 Shares, of<br />
which 100,000 Shares have been issued and are fully paid-up.<br />
The shareholders and directors of LHM and their respective shareholdings as at 15 May<br />
2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Datuk Lau Chong Wang 26,000 26.00 - -<br />
Lau Bong Wong 26,000 26.00 - -<br />
Lau Chia Nguang 12,000 12.00 - -<br />
Datuk Lau Chir Nguan 12,000 12.00 - -<br />
Dato’ Lau Eng Guang 12,000 12.00 - -<br />
Lau Hai Nguan 12,000 12.00 - -<br />
Total 100,000 100.00<br />
Directors<br />
Datuk Lau Chong Wang 26,000 26.00 - -<br />
Lau Bong Wong 26,000 26.00 - -<br />
Lau Chia Nguang 12,000 12.00 - -<br />
Datuk Lau Chir Nguan 12,000 12.00 - -<br />
Dato’ Lau Eng Guang 12,000 12.00 - -<br />
Lau Hai Nguan 12,000 12.00 - -<br />
9
4. DETAILS OF THE PROPOSALS<br />
4.1 Salient Terms of the First Proposed Acquisition of Budiman Shares<br />
(a)<br />
Shares Acquired Free from Encumbrances<br />
The 1,300,000 Shares in Budiman to be acquired by LHHB pursuant to the First<br />
Proposed Acquisition of Budiman Shares will be acquired free from all<br />
encumbrances and with all rights attaching thereto or accruing thereon as at and<br />
from the date of the Sale and Purchase Agreement, including all rights to dividends<br />
and other distributions declared, made and paid thereafter.<br />
(b)<br />
LHHB to Discharge Director’s Personal Guarantee<br />
LHHB is required to procure the discharge of the joint and several personal<br />
guarantee executed by Mr. Yeo Soo Sia @ Yeo Soo Seng, the director<br />
representing the Vendors on the Board of Directors of Budiman, in favour of<br />
OCBC to secure facilities extended by OCBC to Budiman, upon the completion of<br />
the First Proposed Acquisition of Budiman Shares. The facilities extended by<br />
OCBC to Budiman comprise an overdraft facility of RM10 million and a term loan<br />
of RM55 million. The facilities are currently secured by a charge over the<br />
Budiman Land, a joint and several directors’ guarantee and a corporate guarantee<br />
by LHHB.<br />
(c)<br />
Mode of Satisfaction of Purchase Consideration<br />
The purchase consideration shall be wholly satisfied by the payment of cash on<br />
completion as no deposit is payable. The First Proposed Acquisition of Budiman<br />
Shares is expected to be completed by the third quarter of the year 2001.<br />
4.2 Salient Terms of the Proposed Disposal of Atlasprise Shares<br />
(a)<br />
Shares Disposed Of Free from Encumbrances<br />
The 465,000 Shares in Atlasprise to be disposed of by LHHB to Bukit Gambir<br />
pursuant to the Proposed Disposal of Atlasprise Shares will be disposed of free<br />
from all encumbrances and with all rights attaching thereto or accruing thereon as<br />
at and from the date of the Sale and Purchase Agreement, including all rights to<br />
dividends and other distributions declared, made and paid thereafter.<br />
LHHB currently has a 55.0% equity interest in Atlasprise comprising 825,000<br />
Shares. The Proposed Disposal of Atlasprise Shares will reduce LHHB’s equity<br />
interest in Atlasprise to 24.0% comprising 360,000 Shares. Atlasprise will<br />
therefore cease to be a subsidiary of LHHB upon completion of the Proposed<br />
Disposal of Atlasprise Shares, and will instead become an associate company of<br />
LHHB.<br />
Bukit Gambir currently has a 20.0% equity interest in Atlasprise comprising<br />
300,000 Shares. Upon completion of the Proposed Disposal of Atlasprise Shares,<br />
Bukit Gambir will have a 51.0% equity interest in Atlasprise comprising 765,000<br />
Shares. Atlasprise will therefore become a subsidiary of Bukit Gambir.<br />
10
(b)<br />
Bukit Gambir to Discharge LHHB’s Corporate Guarantee<br />
Bukit Gambir is required to procure the discharge of all corporate guarantees<br />
provided by LHHB for the benefit of Atlasprise. As at 15 May 2001, the<br />
corporate guarantees provided by LHHB for the benefit of Atlasprise amounted to<br />
RM10 million.<br />
(c)<br />
Advances Given by LHHB to Atlasprise<br />
Bukit Gambir will not be required to pay LHHB for 31/55 (based on the<br />
percentage of equity interest in Atlasprise to be disposed of by LHHB to Bukit<br />
Gambir) of the advances given by LHHB to Atlasprise (“LHHB Advances”)<br />
upon completion of the Proposed Disposal of Atlasprise Shares. As at 15 May<br />
2001, the LHHB Advances amounted to RM7.423 million. However, if upon the<br />
expiry of two (2) years from the date on which Bukit Gambir is registered as the<br />
owner of the Atlasprise Shares which are the subject of the Proposed Disposal of<br />
Atlasprise Shares, the amounts of shareholders’ advances made by LHHB and<br />
Bukit Gambir respectively to Atlasprise are not proportionate to their respective<br />
shareholdings in Atlasprise, Bukit Gambir will reimburse LHHB such excess<br />
shareholder’s advances on a Ringgit for Ringgit basis so that the resultant<br />
shareholders’ advances are proportionate to their respective shareholdings in<br />
Atlasprise.<br />
The reason why the parties had agreed that Bukit Gambir will not be required to<br />
pay LHHB for 31/55 of the LHHB Advances upon completion of the Proposed<br />
Disposal of Atlasprise Shares is because as a result of the loss arising from the<br />
revaluation of the Atlasprise Land, the adjusted NTA value of Atlasprise is<br />
negative and the consideration for the Proposed Disposal of Atlasprise Shares is at<br />
a premium to the adjusted NTA value of Atlasprise.<br />
(d)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be wholly satisfied by the payment of cash on<br />
completion as no deposit is payable. The Proposed Disposal of Atlasprise Shares<br />
will not generate any gain or loss to LHHB as the consideration of RM465,000 is<br />
equivalent to the net book value of the 465,000 Atlasprise Shares which are the<br />
subject of the Proposed Disposal of Atlasprise Shares.<br />
4.3 Salient Terms of the Proposed Disposal of 73.845-Acre Land<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman Land, to:-<br />
(i)<br />
Consent to the Proposed Disposal of 73.845-Acre Land;<br />
(ii) Accept RM7.054 million as the agreed redemption sum for the 73.845-<br />
Acre Land; and<br />
(iii)<br />
Grant to Jayaplus a loan of not less than RM7.054 million (“Jayaplus<br />
Loan”) towards completion of the Proposed Disposal of 73.845-Acre<br />
Land and settlement of the agreed redemption sum.<br />
11
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to OCBC all the<br />
separate individual titles to the subdivided lots comprised in the 73.845-<br />
Acre Land once such titles have been issued; and<br />
Execute any third party charges or such other security documents as may<br />
be required by OCBC for securing the Jayaplus Loan subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for the<br />
repayment of the Jayaplus Loan; and<br />
Jayaplus indemnifying Budiman against any loss arising from<br />
such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 73.845-Acre Land, which are<br />
estimated to amount to RM0.686 million, will be borne by Jayaplus.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Jayaplus not to have the subdivided lots comprised in the<br />
73.845-Acre Land transferred to Jayaplus after the separate individual titles<br />
thereto have been issued, and to develop, sell and transfer such subdivided lots<br />
without Jayaplus being first registered as the proprietor thereof, Budiman shall<br />
upon completion of the Proposed Disposal of 73.845-Acre Land, grant to Jayaplus<br />
an irrevocable power of attorney empowering Jayaplus to do all acts in relation to<br />
the 73.845-Acre Land as fully and effectually in all respects as Budiman itself<br />
could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Jayaplus in the following manner<br />
on completion:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Setting off all the shareholders’ advances granted by Jayaplus to Budiman<br />
as at the completion date of the Proposed Disposal of 73.845-Acre Land.<br />
As at 15 May 2001, the shareholders’ advances granted by Jayaplus to<br />
Budiman amounted to RM5.292 million;<br />
The Jayaplus Loan; and<br />
The balance in cash.<br />
12
4.4 Salient Terms of the Proposed Disposal of 132.395-Acre Land<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman Land,<br />
to:-<br />
(i)<br />
Consent to the Proposed Disposal of 132.395-Acre Land;<br />
(ii) Accept RM12.646 million as the agreed redemption sum for the 132.395-<br />
Acre Land; and<br />
(iii)<br />
Grant to Bukit Gambir a loan of not less than RM12.646 million (“Bukit<br />
Gambir Loan 1”) towards completion of the Proposed Disposal of<br />
132.395-Acre Land and settlement of the agreed redemption sum.<br />
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to OCBC all the<br />
separate individual titles to the subdivided lots comprised in the 132.395-<br />
Acre Land once such titles have been issued; and<br />
Execute any third party charges or such other security documents as may<br />
be required by OCBC for securing the Bukit Gambir Loan 1 subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for the<br />
repayment of the Bukit Gambir Loan 1; and<br />
Bukit Gambir indemnifying Budiman against any loss arising<br />
from such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 132.395-Acre Land, which are<br />
estimated to amount to RM0.790 million, will be borne by Bukit Gambir.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Bukit Gambir not to have the subdivided lots comprised in<br />
the 132.395-Acre Land transferred to Bukit Gambir after the separate individual<br />
titles thereto have been issued, and to develop, sell and transfer such subdivided<br />
lots without Bukit Gambir being first registered as the proprietor thereof, Budiman<br />
shall upon completion of the Proposed Disposal of 132.395-Acre Land, grant to<br />
Bukit Gambir an irrevocable power of attorney empowering Bukit Gambir to do all<br />
acts in relation to the 132.395-Acre Land as fully and effectually in all respects as<br />
Budiman itself could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Bukit Gambir in the following<br />
manner on completion:-<br />
(i)<br />
Setting off all the shareholders’ advances granted by Bukit Gambir to<br />
Budiman as at the completion date of the Proposed Disposal of 132.395-<br />
Acre Land. As at 15 May 2001, the shareholders’ advances granted by<br />
Bukit Gambir to Budiman amounted to RM9.783 million;<br />
13
(ii)<br />
The Bukit Gambir Loan 1; and<br />
(iii)<br />
The balance in cash.<br />
4.5 Salient Terms of the Second Proposed Acquisition of Budiman Shares<br />
(a)<br />
Shares Acquired Free from Encumbrances<br />
The 1,300,000 Shares in Budiman to be acquired by LHHB pursuant to the Second<br />
Proposed Acquisition of Budiman Shares will be acquired free from all claims,<br />
charges, liens, pledges or any other encumbrances and with all rights and<br />
advantages attaching thereto or accruing thereon as at and from the date of the Sale<br />
and Purchase Agreement, including all rights to dividends and other distributions<br />
declared, made and paid thereafter.<br />
(b)<br />
LHHB to Settle Amalan’s Advances to Budiman<br />
As at 15 May 2001, Amalan’s advances to Budiman amounted to RM7.709<br />
million (“Amalan’s Advances”). LHHB will settle Amalan’s Advances.<br />
(c)<br />
Mode of Satisfaction of Purchase Consideration and Amalan’s Advances<br />
Both the purchase consideration for the Second Proposed Acquisition of Budiman<br />
Shares of RM3,926,000 (“Purchase Consideration”) and the settlement of<br />
Amalan’s Advances shall be satisfied by LHHB by way of set-off against the<br />
amount owing by Amalan to LHM. The sum of the Purchase Consideration and<br />
Amalan’s Advances shall hereinafter be referred to as the .<br />
Amalan and LHM are controlled by common shareholders, being the Lau brothers,<br />
as set out in Sections 3.4, 3.5 and 4.8. The Second Proposed Acquisition of<br />
Budiman Shares is expected to be completed by the third quarter of the year 2001.<br />
To facilitate the settlement of the Purchase Consideration and Amalan’s Advances<br />
in the above-mentioned manner, Amalan, LHHB and LHM have executed a Set<br />
Off Document on 11 April 2001, wherein it is agreed that on the completion date<br />
of the Second Proposed Acquisition of Budiman Shares, the parties will set off the<br />
following sums representing the Set-Off Amount:-<br />
(i)<br />
(ii)<br />
(iii)<br />
LHHB will set off the Set-Off Amount against LHM and the outstanding<br />
loans from LHHB to LHM shall be correspondingly reduced by the Set-<br />
Off Amount. As at 31 March 2001, the outstanding loans from LHHB to<br />
LHM amounted to RM79.266 million. The balance after setting off the<br />
Set-Off Amount on completion and taking into account real property gains<br />
tax payable by Amalan, is expected to be approximately RM67.916<br />
million;<br />
LHM will set off the Set-Off Amount against Amalan and the outstanding<br />
loans from LHM to Amalan shall be correspondingly reduced by the Set-<br />
Off Amount. As at 15 May 2001, the outstanding loans from LHM to<br />
Amalan amounted to RM21.707 million. The balance after setting off the<br />
Set-Off Amount on completion and taking into account real property gains<br />
tax payable by Amalan, is expected to be approximately RM10.357<br />
million; and<br />
Thereafter, the Purchase Consideration and Amalan’s Advances shall be<br />
deemed to have been paid and fully settled by LHHB to Amalan.<br />
14
4.6 Salient Terms of the Proposed Disposal of 119.82-Acre Land<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman Land,<br />
to:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Consent to the Proposed Disposal of 119.82-Acre Land;<br />
Accept RM10 million as the agreed redemption sum for the 119.82-Acre<br />
Land; and<br />
Grant to Bukit Gambir a loan of not less than RM10 million (“Bukit<br />
Gambir Loan 2”) towards completion of the Proposed Disposal of<br />
119.82-Acre Land and settlement of the agreed redemption sum.<br />
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to OCBC the<br />
block titles and master titles to the 119.82-Acre Land once such titles<br />
have been issued; and<br />
Execute any third party charges or such other security documents as may<br />
be required by OCBC for securing the Bukit Gambir Loan 2 subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for the<br />
repayment of the Bukit Gambir Loan 2; and<br />
Bukit Gambir indemnifying Budiman against any loss arising<br />
from such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 119.82-Acre Land, which are<br />
estimated to amount to RM0.738 million, will be borne by Bukit Gambir.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Bukit Gambir not to have the subdivided lots comprised in<br />
the 119.82-Acre Land transferred to Bukit Gambir after the separate individual<br />
titles thereto have been issued, and to develop, sell and transfer such subdivided<br />
lots without Bukit Gambir being first registered as the proprietor thereof, Budiman<br />
shall upon completion of the Proposed Disposal of 119.82-Acre Land, grant to<br />
Bukit Gambir an irrevocable power of attorney empowering Bukit Gambir to do all<br />
acts in relation to the 119.82-Acre Land as fully and effectually in all respects as<br />
Budiman itself could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Bukit Gambir in the following<br />
manner:-<br />
(i)<br />
The Bukit Gambir Loan 2 within three (3) months from the date on which<br />
the Sale and Purchase Agreement in respect of the Proposed Disposal of<br />
119.82-Acre Land becomes unconditional; and<br />
15
(ii)<br />
The balance of RM12,965,180.48 by the issuance of new Shares by<br />
Newco at the initial public offering price (“Consideration Shares”). The<br />
initial public offering price and the basis therefor and hence the number of<br />
Consideration Shares, will be determined after Newco has obtained the<br />
SC’s approval for its proposed listing on the KLSE. Budiman undertakes<br />
to sell 40% of the Consideration Shares to Bumiputra parties approved by<br />
the Ministry of International Trade & Industry.<br />
Newco expects to submit its application to the SC by July 2001. In the<br />
event that the proposed listing of Newco does not take place, the Proposed<br />
Disposal of 119.82-Acre Land will be aborted.<br />
(f)<br />
Rights Attaching to Consideration Shares<br />
The Consideration Shares shall rank pari passu in all respects with the other Shares<br />
of Newco and shall be similarly listed and quoted on the KLSE.<br />
4.7 Inter-Conditionality<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land are inter-conditional with one another.<br />
The Second Proposed Acquisition of Budiman Shares is not inter-conditional with any of<br />
the other Proposals.<br />
The Proposed Disposal of 119.82-Acre Land is not inter-conditional with any of the other<br />
Proposals.<br />
4.8 Related-Party Transactions<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land<br />
and Proposed Disposal of 119.82-Acre Land are related-party transactions because Mr.<br />
Yeo Soo Sia @ Yeo Soo Seng is a director and substantial shareholder of Budiman, Bukit<br />
Gambir, Jayaplus and Pathalon, as well as a director of Atlasprise.<br />
The Second Proposed Acquisition of Budiman Shares is a related-party transaction for the<br />
following reasons:-<br />
(a)<br />
(b)<br />
(c)<br />
Datuk Lau Chong Wang is the Chairman and Managing Director of LHHB and a<br />
substantial shareholder of LHHB through his interest in LHM. He is a director<br />
and substantial shareholder of LHM. He is also a substantial shareholder of<br />
Amalan, and a director and an indirect substantial shareholder of Budiman through<br />
his interest in LHHB;<br />
Dato Lau Eng Guang is an Executive Director of LHHB and a substantial<br />
shareholder of LHHB. He is a director and substantial shareholder of LHM. He is<br />
also a substantial shareholder of Amalan;<br />
Datuk Lau Tuang Nguang is an Executive Director of LHHB and a substantial<br />
shareholder of LHHB. He is a substantial shareholder of Amalan and a director of<br />
Budiman;<br />
16
(d)<br />
(e)<br />
(f)<br />
(g)<br />
(h)<br />
(i)<br />
Mr. Lau Bong Wong is a substantial shareholder of LHHB through his interest in<br />
LHM. He is a director and substantial shareholder of LHM. He is also a<br />
substantial shareholder of Amalan, and a director and an indirect substantial<br />
shareholder of Budiman through his interest in LHHB;<br />
Mr. Lau Chia Nguang is a director and substantial shareholder of LHM, and a<br />
substantial shareholder of Amalan;<br />
Datuk Lau Chir Nguan is a director and substantial shareholder of both LHM and<br />
Amalan;<br />
Mr. Lau Hai Nguan is a director and substantial shareholder of LHM, and a<br />
substantial shareholder of Amalan;<br />
Datuk Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang Nguang, Mr.<br />
Lau Bong Wong, Mr. Lau Chia Nguang, Datuk Lau Chir Nguan, Mr. Lau Hai<br />
Nguan and Mr. Lau Chun Yuen (who is a director of LHHB) are brothers; and<br />
LHM is a substantial shareholder of LHHB and an indirect substantial shareholder<br />
of Budiman through its interest in LHHB.<br />
5. BASIS OF DETERMINING THE CONSIDERATION FOR THE PROPOSALS<br />
5.1 First and Second Proposed Acquisition of Budiman Shares<br />
The purchase consideration for each of the First and Second Proposed Acquisition of<br />
Budiman Shares of RM3,926,000 was arrived at on a willing-buyer willing-seller basis<br />
after taking into consideration the estimated NTA of Budiman as at 31 March 2001 of<br />
RM9.218 million after adjusting for the revaluation surplus of RM10.443 million arising<br />
from the revaluation of the Budiman Land, as well as the various land disposals. The<br />
adjusted estimated NTA is RM19.661 million. 20% of the adjusted estimated NTA<br />
therefore amounts to RM3.932 million.<br />
The adjusted estimated NTA of Budiman as at 31 March 2001 takes into account a<br />
valuation of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land collectively<br />
carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an independent firm of<br />
professional valuers, on 28 February 2001 using the comparison method, and checked by<br />
the residual method, pursuant to which the said firm determined the aggregate open market<br />
value of the said lands with the benefit of the Budiman Approval, to be RM62,500,000 or<br />
approximately RM4.40 per square foot. A copy of the valuer’s letter in relation to the said<br />
valuation is set out in Appendix 5.<br />
The purchase consideration represents a discount of RM0.006 million or 0.16% to the<br />
relevant proportion of the adjusted estimated NTA of Budiman as at 31 March 2001.<br />
The Vendors’ total cost of investment in the 1,300,000 Budiman Shares proposed to be<br />
acquired by LHHB pursuant to the First Proposed Acquisition of Budiman Shares, since the<br />
date of incorporation of Budiman, is RM1,300,000.<br />
Amalan’s cost of investment in the 1,300,000 Budiman Shares proposed to be acquired by<br />
LHHB pursuant to the Second Proposed Acquisition of Budiman Shares, since the date of<br />
incorporation of Budiman, is RM1,300,000.<br />
17
5.2 Proposed Disposal of Atlasprise Shares<br />
The disposal consideration for the Proposed Disposal of Atlasprise Shares of RM465,000 is<br />
based on the par value of the Shares concerned, and was arrived at on a willing-buyer<br />
willing-seller basis after taking into consideration the unaudited NTA of Atlasprise as at 30<br />
November 2000 of RM1.886 million and after adjusting for the loss on revaluation of<br />
RM3.660 million arising from the revaluation of the Atlasprise Land. The adjusted<br />
unaudited NTA is negative RM1.774 million. 31% of the adjusted unaudited NTA<br />
therefore amounts to negative RM0.550 million.<br />
The loss on revaluation was derived based on a valuation of the Atlasprise Land carried out<br />
by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an independent firm of professional<br />
valuers, on 28 February 2001 using the comparison method, pursuant to which the said firm<br />
determined the open market value of the Atlasprise Land with the benefit of the Atlasprise<br />
Approvals in Principle, to be RM17,000,000 or approximately RM1.70 per square foot. A<br />
copy of the valuer’s letter in relation to the said valuation is set out in Appendix 6.<br />
The disposal consideration represents a premium of RM1.015 million to the relevant<br />
proportion of the adjusted unaudited NTA of Atlasprise as at 30 November 2000.<br />
The total cost of investment to LHHB of the 465,000 Atlasprise Shares is RM465,000.<br />
LHHB made the investment on 22 May 1997. As at 15 May 2001, the net book value of<br />
the investment was RM465,000. The Proposed Disposal of Atlasprise Shares will therefore<br />
not generate any gain or loss to LHHB.<br />
5.3 Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land and<br />
Proposed Disposal of 119.82-Acre Land<br />
The respective disposal consideration for the Proposed Disposal of 73.845-Acre Land,<br />
Proposed Disposal of 132.395-Acre Land and Proposed Disposal of 119.82-Acre Land was<br />
arrived at on a willing-buyer willing-seller basis after taking into consideration their<br />
respective open market values with the benefit of the Budiman Approval.<br />
A valuation of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land<br />
collectively was carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an<br />
independent firm of professional valuers, on 28 February 2001 using the comparison<br />
method, and checked by the residual method, pursuant to which the said firm determined the<br />
aggregate open market value of the said lands with the benefit of the Budiman Approval, to<br />
be RM62,500,000 or approximately RM4.40 per square foot. A copy of the valuer’s letter<br />
in relation to the said valuation is set out in Appendix 5. Based on this valuation, the<br />
disposal consideration for each of the said lands was determined by apportioning the<br />
aggregate open market value of the said lands.<br />
Budiman had acquired the Budiman Land on 25 April 1997 for a consideration of<br />
RM117.591 million. The total estimated cost of investment to Budiman of the Budiman<br />
Land as at 31 March 2001 is RM153.470 million. On a proportionate basis, the total<br />
estimated cost of investment to Budiman of the 73.845-Acre Land, 132.395-Acre Land and<br />
119.82-Acre Land as at 31 March 2001 is RM58.512 million.<br />
The table below sets out the respective disposal consideration, open market value and<br />
estimated net book value of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre<br />
Land, as well as the estimated gain to Budiman on the disposals.<br />
18
73.845-Acre 132.395-Acre 119.82-Acre<br />
Land<br />
Land<br />
Land<br />
RM RM RM<br />
Disposal consideration 14,153 25,375 22,965<br />
Open market value based on valuation by Colliers<br />
Jordan Lee & Jaafar (JH) Sdn. Bhd. dated 28<br />
February 2001<br />
14,155 25,378 22,967<br />
Estimated net book value as at 31 March 2001 13,252 23,758 21,502<br />
Estimated gain to Budiman on disposal 901 1,617 1,463<br />
6. RATIONALE FOR THE PROPOSALS<br />
The Proposed Disposal of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed<br />
Disposal of 132.395-Acre Land and Proposed Disposal of 119.82-Acre Land will raise gross<br />
proceeds of approximately RM46.068 million for the LHHB Group, excluding:-<br />
(a)<br />
(b)<br />
(c)<br />
The proceeds to be raised from the sale of the Consideration Shares arising from the<br />
Proposed Disposal of 119.82-Acre Land, which the Company is currently unable to<br />
determine as the initial public offering price of Newco Shares has yet to be determined;<br />
The expenses of the Proposals; and<br />
After deducting the purchase consideration for the First Proposed Acquisition of Budiman<br />
Shares.<br />
The breakdown of the proceeds is as follows:-<br />
Proposal<br />
Cash Proceeds<br />
(RM’000)<br />
Proposed Disposal of Atlasprise Shares 465<br />
Proposed Disposal of 73.845-Acre Land 14,153<br />
Proposed Disposal of 132.395-Acre Land 25,375<br />
Proposed Disposal of 119.82-Acre Land 10,000<br />
49,994<br />
Less: First Proposed Acquisition of Budiman Shares (3,926)<br />
46,068<br />
The disposal proceeds will improve the Group’s cash flow for the financial year ending 31 March<br />
2002 and allow the Group to reduce its bank borrowings which amounted to RM308.406 million as<br />
at 31 March 2001. The interest saving arising from the repayment of bank borrowings is expected<br />
to be approximately RM2.465 million per annum assuming an average borrowing cost of 8.3% per<br />
annum (based on the actual interest rate currently charged by OCBC). At the same time, the First<br />
and Second Proposed Acquisition of Budiman Shares will enable LHHB to retain a significant stake<br />
of 90.1% in Budiman and hence the remainder of the Budiman Land amounting to 529.15 acres.<br />
19
7. SOURCES OF FUNDS AND UTILISATION OF PROCEEDS<br />
7.1 Sources of Funds<br />
As shown in Section 6 above, the purchase consideration for the First Proposed Acquisition<br />
of Budiman Shares will be set off against the proceeds from the Proposed Disposal of<br />
Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-<br />
Acre Land and Proposed Disposal of 119.82-Acre Land. As stated in Section 4.5(c) above,<br />
the Second Proposed Acquisition of Budiman Shares will be funded by LHHB by way of<br />
set-off against the amount owing by Amalan to LHM.<br />
7.2 Utilisation of Proceeds<br />
Utilisation<br />
Cash Proceeds<br />
(RM’000)<br />
Setting off shareholders’ advances granted by Jayaplus and Bukit Gambir to Budiman * 15,075<br />
Repayment of LHHB Group’s bank borrowings # 29,700<br />
Working capital 943<br />
Expenses of the Proposals 350<br />
Total 46,068<br />
The proceeds from the Proposals as stated in Section 6 above will be utilised in the<br />
following manner:-<br />
Notes:-<br />
* Based on the total estimated shareholders’ advances on completion of the Proposed Disposal<br />
of 73.845-Acre Land and Proposed Disposal of 132.395-Acre Land, as stated in Sections<br />
4.3(e)(i) and 4.4(e)(i) above.<br />
# As stated in Sections 4.3(e)(ii) and 4.4(e)(ii) above.<br />
8. EFFECTS OF THE PROPOSALS<br />
8.1 Share Capital<br />
The Proposals will not have any effect on the share capital of LHHB.<br />
8.2 Substantial Shareholders<br />
The Proposals will not have any effect on the substantial shareholders of LHHB.<br />
8.3 Earnings<br />
The Proposals are expected to be completed in the financial year ending 31 March 2002, in<br />
the third quarter of the calendar year 2001. On completion of the Proposals, LHHB is<br />
expected to realise an estimated gain of approximately RM3.631 million at the LHHB<br />
Group level. This will translate into an increase of approximately 1.55 sen in LHHB’s<br />
consolidated net EPS for the financial year ending 31 March 2002.<br />
20
8.4 NTA and Gearing<br />
Based on the audited consolidated accounts of LHHB as at 31 March 2000 and the<br />
estimated accounts of Budiman and Atlasprise as at 30 September 2001, the pro-forma<br />
effects of the Proposals on the NTA and gearing ratio of LHHB are shown in the table<br />
below.<br />
As at<br />
(A) (B) (C)<br />
31.03.2000<br />
RM’000 RM’000 RM’000 RM’000<br />
Share Capital 151,568 151,568 151,568 151,568<br />
Share Premium 23,534 23,534 23,534 23,534<br />
Revaluation reserves - 3,970 3,970 2,507<br />
Foreign Exchange Fluctuation Reserve (9,894) (9,894) (9,894) (9,894)<br />
Unappropriated Profit 52,688 * 50,766 # 50,716 @ 51,770<br />
Shareholders’ Funds 217,896 219,945 219,895 219,485<br />
Less: Intangibles (58,262) (58,262) (58,262) (58,262)<br />
NTA 159,634 161,683 161,633 161,223<br />
NTA per Share (RM) 1.05 1.07 1.07 1.06<br />
Total Borrowings 329,156 299,296 299,296 289,296<br />
Gearing Ratio (times) 1.51 1.36 1.36 1.32<br />
Notes:-<br />
(A)<br />
(B)<br />
(C)<br />
After all the Proposals except the Second Proposed Acquisition of Budiman Shares and the<br />
Proposed Disposal of 119.82-Acre Land<br />
After (A) and the Second Proposed Acquisition of Budiman Shares<br />
After (B) and the Proposed Disposal of 119.82-Acre Land<br />
* Assuming a consolidated gain on disposal of RM2.218 million net of expenses relating to all<br />
the Proposals except the Second Proposed Acquisition of Budiman Shares. Apart from the<br />
said gain, the unappropriated profit of RM50.766 million takes into account the relevant<br />
portions of the estimated profits of Budiman and Atlasprise for the six (6) months ending 30<br />
September 2001, as well as the interest expense arising from the existing bank borrowings for<br />
the said period of six (6) months.<br />
# Assuming expenses of RM50,000 relating to the Second Proposed Acquisition of Budiman<br />
Shares<br />
@<br />
Assuming a consolidated gain on disposal after tax of RM1.053 million<br />
Apart from the proportionate share of Budiman’s liabilities attaching to the 40% equity<br />
interest to be acquired by LHHB pursuant to the First and Second Proposed Acquisition of<br />
Budiman Shares, no other liabilities will be assumed by LHHB arising from the Proposals.<br />
9. CONDITIONS PRECEDENT<br />
9.1 Inter-Conditional Proposals<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land are inter-conditional and are subject to the following conditions precedent which have<br />
to be fulfilled within four (4) months from the date of the respective Sale and Purchase<br />
Agreements or such extended period as may be mutually agreed to by the parties:-<br />
21
(a)<br />
(b)<br />
(c)<br />
(d)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB;<br />
The approval of the shareholders of Bukit Gambir, Jayaplus, Pathalon and<br />
Budiman;<br />
The approval of OCBC for:-<br />
(i)<br />
The Proposed Disposal of 73.845-Acre Land and Proposed Disposal of<br />
132.395-Acre Land;<br />
(ii) The fixing of the respective redemption sums in respect of the 73.845-<br />
Acre Land and 132.395-Acre Land; and<br />
(iii) The granting of the Jayaplus Loan and the Bukit Gambir Loan 1.<br />
The approval of the FIC was obtained on 25 April 2001 and was subject to the following<br />
conditions, amongst others:-<br />
(A)<br />
(B)<br />
(C)<br />
The approval of the shareholders of LHHB is to be obtained at an EGM wherein<br />
all interested parties are to abstain from voting;<br />
Competent independent advice is provided to the shareholders of LHHB and the<br />
appointment of the Independent Adviser is subject to the approval of the FIC; and<br />
The circular to the shareholders of LHHB shall contain the details of the relevant<br />
Proposals and the interested parties, and the circular is subject to clearance by the<br />
FIC.<br />
The FIC had approved the appointment of Arab-Malaysian as Independent Adviser to the<br />
shareholders of LHHB and cleared this Circular vide its letters dated 23 May 2001.<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land will be completed simultaneously within three (3) months from the date of fulfillment<br />
of the last of the conditions precedent stated above.<br />
9.2 Second Proposed Acquisition of Budiman Shares<br />
The Second Proposed Acquisition of Budiman Shares is not inter-conditional with any of<br />
the other Proposals and is subject to the following conditions precedent which have to be<br />
fulfilled within four (4) months from the date of the Sale and Purchase Agreement, being 11<br />
April 2001, or such extended period as may be mutually agreed to by the parties:-<br />
(a)<br />
(b)<br />
(c)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB; and<br />
The approval of the shareholders of Amalan.<br />
Completion of the Second Proposed Acquisition of Budiman Shares will take place within<br />
fourteen (14) days from the date of fulfillment of the last of the conditions precedent stated<br />
above.<br />
22
9.3 Proposed Disposal of 119.82-Acre Land<br />
The Proposed Disposal of 119.82-Acre Land is not inter-conditional with any of the other<br />
Proposals and is subject to the following conditions precedent which have to be fulfilled<br />
within twelve (12) months from the date of the Sale and Purchase Agreement or such<br />
extended period as may be mutually agreed to by the parties:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB;<br />
The approval of the shareholders of Budiman;<br />
The approval of OCBC for:-<br />
(i)<br />
(ii)<br />
(iii)<br />
The Proposed Disposal of 119.82-Acre Land;<br />
The fixing of the redemption sum in respect of the 119.82-Acre Land; and<br />
The granting of the Bukit Gambir Loan 2; and<br />
(e)<br />
The approval of the SC for the proposed listing of Newco and the proposed<br />
acquisition of the 119.82-Acre Land by Bukit Gambir.<br />
10. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS<br />
As disclosed in Section 4.8 above, Mr. Yeo Soo Sia @ Yeo Soo Seng is a director and substantial<br />
shareholder of Budiman, Bukit Gambir, Jayaplus and Pathalon. He is also a director of Atlasprise.<br />
He is therefore deemed interested in the First Proposed Acquisition of Budiman Shares, Proposed<br />
Disposal of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of<br />
132.395-Acre Land and Proposed Disposal of 119.82-Acre Land. As such, he has abstained and<br />
will continue to abstain from all deliberations and voting on the aforesaid Proposals at Board<br />
meetings of Budiman, Bukit Gambir, Jayaplus, Pathalon and Atlasprise. He will also abstain from<br />
voting in respect of his direct and indirect shareholdings, on the shareholders’ resolutions of<br />
Budiman, Bukit Gambir, Jayaplus and Pathalon pertaining to the aforesaid Proposals.<br />
In view of the interests of Datuk Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang<br />
Nguang and Mr. Lau Chun Yuen in the Second Proposed Acquisition of Budiman Shares as<br />
disclosed in Section 4.8 above, they have abstained and will continue to abstain from all<br />
deliberations and voting on the Second Proposed Acquisition of Budiman Shares at Board meetings<br />
of LHHB. They will also abstain from voting at the forthcoming EGM of LHHB on the resolution<br />
pertaining to the Second Proposed Acquisition of Budiman Shares in respect of their direct and<br />
indirect shareholdings in LHHB.<br />
Mr. Lau Bong Wong and LHM will abstain from voting at the forthcoming EGM of LHHB on the<br />
resolution pertaining to the Second Proposed Acquisition of Budiman Shares in respect of their<br />
direct and indirect shareholdings in LHHB.<br />
Save as disclosed above, none of the directors or substantial shareholders of LHHB or persons<br />
deemed to be connected to them has any interest, direct or indirect, in the Proposals.<br />
23
11. INDEPENDENT ADVISER<br />
In view of the interests of the various parties as explained in Section 10 above, the Board has<br />
appointed Arab-Malaysian to act as Independent Adviser to the shareholders of LHHB on the<br />
Proposals.<br />
The Independent Advice Letter containing Arab-Malaysian’s evaluation and recommendation on the<br />
Proposals is set out in Part B of this Circular. You are advised to read both Part A and Part B of<br />
this Circular carefully before taking any action to vote on the resolutions pertaining to the Proposals<br />
to be tabled at the forthcoming EGM.<br />
12. DIRECTORS’ RECOMMENDATION<br />
Having considered the rationale for and effects of the Proposals, the Board is of the opinion that the<br />
Proposals are in the best interests of the LHHB Group and accordingly recommends (save for Datuk<br />
Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang Nguang and Mr. Lau Chun Yuen who<br />
are interested in the Second Proposed Acquisition of Budiman Shares) that you vote in favour of the<br />
resolutions to be tabled at the forthcoming EGM<br />
13. EXTRAORDINARY GENERAL MEETING<br />
An EGM, notice of which is enclosed with this Circular, is to be held at Mutiara, Level 2, The<br />
Puteri Pan Pacific Hotel, Jalan Salim, 80730 Johor Bahru, Johor Darul Takzim on Wednesday, 27<br />
June 2001 at 11.00 a.m. for the purpose of considering and, if thought fit, passing the resolutions to<br />
give effect to the Proposals.<br />
If you are unable to attend and vote in person at the EGM, you are requested to complete, sign and<br />
return the enclosed Form of Proxy in accordance with the instructions therein contained, as soon as<br />
possible, so as to arrive at the Registered Office of the Company no later than 48 hours before the<br />
time fixed for the EGM or any adjournment thereof. The completion and return of the Form of<br />
Proxy will not preclude you from attending and voting in person at the EGM should you<br />
subsequently decide to do so.<br />
14. FURTHER INFORMATION<br />
Shareholders are requested to refer to the Appendices for further information.<br />
Yours faithfully,<br />
For and on behalf of the Board<br />
LIM MENG BIN<br />
Director<br />
24
PART B<br />
INDEPENDENT ADVICE LETTER TO THE SHAREHOLDERS OF LHHB<br />
25
Registered Address: 22nd Floor, Bangunan Arab-Malaysian, Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia.<br />
Postal Address: P. O. Box 10233, 50708 Kuala Lumpur, Malaysia.<br />
Tel: 03-2382633, 2382644, 2382655 Fax: 03-2382842 Telex: MA 31167 & 31169 ABMAL<br />
Arab-Malaysian Banking Group Website: http://ambg.com.my • http://www.mol-usa.com/ambg/ambg.html<br />
12 June 2001<br />
To:<br />
The Shareholders of Leong Hup Holdings Berhad<br />
Dear Sir/Madam,<br />
I. PROPOSED ACQUISITION BY <strong>LEONG</strong> <strong>HUP</strong> <strong>HOLDINGS</strong> <strong>BERHAD</strong> (“LHHB”) OF AN<br />
ADDITIONAL 20% EQUITY INTEREST IN PANGKAL BUDIMAN SDN. BHD.<br />
(“BUDIMAN”) COMPRISING 1,300,000 ORDINARY SHARES OF RM1.00 EACH<br />
FROM BUKIT GAMBIR COMPANY SDN. BHD. (“BUKIT GAMBIR”), JAYAPLUS<br />
BAKTI SDN. BHD. (“JAYAPLUS”) AND PATHALON INDUSTRIES SDN. BHD. FOR A<br />
CASH CONSIDERATION OF RM3,926,000<br />
II.<br />
III.<br />
IV.<br />
PROPOSED DISPOSAL BY LHHB OF 31% EQUITY INTEREST IN ATLASPRISE SDN.<br />
BHD. COMPRISING 465,000 ORDINARY SHARES OF RM1.00 EACH TO BUKIT<br />
GAMBIR FOR A CASH CONSIDERATION OF RM465,000<br />
PROPOSED DISPOSAL BY BUDIMAN OF 73.845 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO<br />
JAYAPLUS FOR A CONSIDERATION OF RM14,153,428.08 TO BE SATISFIED BY<br />
THE SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY<br />
JAYAPLUS TO BUDIMAN AND THE BALANCE IN CASH<br />
PROPOSED DISPOSAL BY BUDIMAN OF 132.395 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO BUKIT<br />
GAMBIR FOR A CONSIDERATION OF RM25,375,355.28 TO BE SATISFIED BY THE<br />
SETTING OFF OF ALL THE SHAREHOLDERS’ ADVANCES GRANTED BY BUKIT<br />
GAMBIR TO BUDIMAN AND THE BALANCE IN CASH<br />
V. PROPOSED ACQUISITION BY LHHB OF AN ADDITIONAL 20% EQUITY INTEREST<br />
IN BUDIMAN COMPRISING 1,300,000 ORDINARY SHARES OF RM1.00 EACH FROM<br />
AMALAN TEPAT SDN. BHD. (“AMALAN”) FOR A CONSIDERATION OF<br />
RM3,926,000 TO BE SATISFIED BY WAY OF SET-OFF AGAINST THE AMOUNT<br />
OWING BY AMALAN TO <strong>LEONG</strong> <strong>HUP</strong> MANAGEMENT SDN. BHD.<br />
Branch Offices : JOHOR BAHRU: Tel: 07-3348766 Fax: 07-3348799 • KOTA KINABALU: Tel: 088-221728 Fax: 088-221050 • KUCHING: Tel: 082-<br />
244791 Fax: 082-414944 • PULAU PINANG: Tel: 04-2261818 Fax: 04-2297634 •<br />
26
VI.<br />
PROPOSED DISPOSAL BY BUDIMAN OF 119.82 ACRES OF FREEHOLD LAND IN<br />
MUKIM OF PULAI, DISTRICT OF JOHOR BAHRU, STATE OF JOHOR TO BUKIT<br />
GAMBIR FOR A CONSIDERATION OF RM22,965,180.48 TO BE SATISFIED BY RM10<br />
MILLION CASH AND BY THE ISSUANCE OF NEW ORDINARY SHARES OF RM1.00<br />
EACH WORTH RM12,965,180.48 AT THE INITIAL PUBLIC OFFERING PRICE BY<br />
THE PROPOSED NEW HOLDING COMPANY OF BUKIT GAMBIR WHICH IS IN THE<br />
COURSE OF PREPARING AN APPLICATION TO THE SECURITIES COMMISSION<br />
FOR LISTING ON THE KUALA LUMPUR STOCK EXCHANGE<br />
1. INTRODUCTION<br />
On 19 March 2001, your Board had made an announcement to the KLSE that LHHB and its<br />
subsidiary Budiman had on 19 March 2001 entered into the following agreements respectively:-<br />
(a)<br />
A conditional Sale and Purchase Agreement for the proposed acquisition by LHHB from<br />
Bukit Gambir, Jayaplus and Pathalon (collectively “Vendors”) of an additional 20%<br />
equity interest in Budiman comprising 1,300,000 ordinary shares of RM1.00 each<br />
(“Shares”) for a total cash consideration of RM3,926,000 (“First Proposed Acquisition<br />
of Budiman Shares”).<br />
LHHB currently has a 50.1% equity interest in Budiman comprising 3,256,500 Shares.<br />
The First Proposed Acquisition of Budiman Shares will increase LHHB’s equity interest in<br />
Budiman to 70.1% comprising 4,556,500 Shares;<br />
(b)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by LHHB to Bukit<br />
Gambir of 31% equity interest in Atlasprise comprising 465,000 Shares for a total cash<br />
consideration of RM465,000 (“Proposed Disposal of Atlasprise Shares”).<br />
LHHB currently has a 55.0% equity interest in Atlasprise comprising 825,000 Shares. The<br />
Proposed Disposal of Atlasprise Shares will reduce LHHB’s equity interest in Atlasprise to<br />
24.0% comprising 360,000 Shares. Atlasprise will therefore cease to be a subsidiary of<br />
LHHB upon completion of the Proposed Disposal of Atlasprise Shares, and will instead<br />
become an associate company of LHHB.<br />
Bukit Gambir currently has a 20.0% equity interest in Atlasprise comprising 300,000<br />
Shares. Upon completion of the Proposed Disposal of Atlasprise Shares, Bukit Gambir<br />
will have a 51.0% equity interest in Atlasprise comprising 765,000 Shares. Atlasprise will<br />
therefore become a subsidiary of Bukit Gambir.<br />
(c)<br />
(d)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to<br />
Jayaplus of 73.845 acres of freehold land (“73.845-Acre Land”) as comprised in the two<br />
(2) pieces of land held under H.S.(D) 235359, P.T.D. 71014 and H.S.(D) 235361, P.T.D.<br />
71016 in Mukim of Pulai, District of Johor Bahru, State of Johor (collectively “Budiman<br />
Land”), for a total consideration of RM14,153,428.08 to be satisfied by the setting off of<br />
all the shareholder’s advances granted by Jayaplus to Budiman as at the completion date of<br />
the Sale and Purchase Agreement, the Jayaplus Loan and the balance in cash (“Proposed<br />
Disposal of 73.845-Acre Land”);<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to Bukit<br />
Gambir of 132.395 acres of freehold land as comprised in the Budiman Land (“132.395-<br />
Acre Land”), for a total consideration of RM25,375,355.28 to be satisfied by the setting<br />
off of all the shareholder’s advances granted by Bukit Gambir to Budiman as at the<br />
completion date of the Sale and Purchase Agreement, the Bukit Gambir Loan 1 and the<br />
balance in cash (“Proposed Disposal of 132.395-Acre Land”); and<br />
27
(e)<br />
A conditional Sale and Purchase Agreement for the proposed disposal by Budiman to Bukit<br />
Gambir of 119.82 acres of freehold land as comprised in the Budiman Land (“119.82-Acre<br />
Land”), for a total consideration of RM22,965,180.48 to be satisfied by the Bukit Gambir<br />
Loan 2 and by the issuance of new Shares worth RM12,965,180.48 (“Consideration<br />
Shares”) by the proposed new holding company of Bukit Gambir (“Newco”) which is in<br />
the course of preparing an application to the Securities Commission (“SC”) for listing on<br />
the Kuala Lumpur Stock Exchange (“KLSE”) (“Proposed Disposal of 119.82-Acre<br />
. The Consideration Shares are to be issued by Newco to Budiman at the initial<br />
public offering price.<br />
On 11 April 2001, the Board had further announced that LHHB had, on 11 April 2001, entered into<br />
a conditional Sale and Purchase Agreement for the proposed acquisition by LHHB from Amalan of<br />
an additional 20% equity interest in Budiman comprising 1,300,000 Shares for a total consideration<br />
of RM3,926,000 to be satisfied by way of set-off against the amount owing by Amalan to LHM<br />
(“Second Proposed Acquisition of Budiman Shares”). The consideration is therefore an amount<br />
owing from LHHB to LHM, and will be set off against the amount owing from LHM to LHHB.<br />
Together with the First Proposed Acquisition of Budiman Shares, the Second Proposed Acquisition<br />
of Budiman Shares will increase LHHB’s equity interest in Budiman to 90.1% comprising<br />
5,856,500 Shares.<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise Shares,<br />
Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land, Second<br />
Proposed Acquisition of Budiman Shares and Proposed Disposal of 119.82-Acre Land shall<br />
hereinafter be collectively referred to as the “Proposals”.<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise Shares,<br />
Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land and Proposed<br />
Disposal of 119.82-Acre Land are related-party transactions because Mr. Yeo Soo Sia @ Yeo Soo<br />
Seng is a director and substantial shareholder of Budiman, Bukit Gambir, Jayaplus and Pathalon, as<br />
well as a director of Atlasprise.<br />
The Second Proposed Acquisition of Budiman Shares is a related-party transaction for the following<br />
reasons:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
(e)<br />
(f)<br />
Datuk Lau Chong Wang is the Chairman and Managing Director of LHHB and a<br />
substantial shareholder of LHHB through his interest in LHM. He is a director and<br />
substantial shareholder of LHM. He is also a substantial shareholder of Amalan, and a<br />
director and an indirect substantial shareholder of Budiman through his interest in LHHB;<br />
Dato Lau Eng Guang is an Executive Director of LHHB and a substantial shareholder of<br />
LHHB. He is a director and substantial shareholder of LHM. He is also a substantial<br />
shareholder of Amalan;<br />
Datuk Lau Tuang Nguang is an Executive Director of LHHB and a substantial shareholder<br />
of LHHB. He is a substantial shareholder of Amalan and a director of Budiman;<br />
Mr. Lau Bong Wong is a substantial shareholder of LHHB through his interest in LHM.<br />
He is a director and substantial shareholder of LHM. He is also a substantial shareholder<br />
of Amalan, and a director and an indirect substantial shareholder of Budiman through his<br />
interest in LHHB;<br />
Mr. Lau Chia Nguang is a director and substantial shareholder of LHM, and a substantial<br />
shareholder of Amalan;<br />
Datuk Lau Chir Nguan is a director and substantial shareholder of both LHM and Amalan;<br />
28
(g)<br />
(h)<br />
(i)<br />
Mr. Lau Hai Nguan is a director and substantial shareholder of LHM, and a substantial<br />
shareholder of Amalan;<br />
Datuk Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang Nguang, Mr. Lau Bong<br />
Wong, Mr. Lau Chia Nguang, Datuk Lau Chir Nguan, Mr. Lau Hai Nguan and Mr. Lau<br />
Chun Yuen (who is a director of LHHB) are brothers; and<br />
LHM is a substantial shareholder of LHHB and an indirect substantial shareholder of<br />
Budiman through its interest in LHHB.<br />
Accordingly, pursuant to the requirements of Section 10.08 of the KLSE Listing Requirements and<br />
Chapter 20 of the SC’s Policies and Guidelines on Special Requirements for Related-Party<br />
Transactions, your Board had appointed Arab-Malaysian Merchant Bank Berhad (“Arab-<br />
Malaysian”) as Independent Adviser to the shareholders of LHHB.<br />
Arab-Malaysian was not in any way involved in the negotiations on the terms and conditions of the<br />
Proposals and accordingly our evaluation of the Proposals will be based on information provided by<br />
LHHB and discussions with the management of LHHB.<br />
The purpose of this Independent Advice Letter is to provide the shareholders of LHHB with an<br />
independent evaluation of the Proposals and Arab-Malaysian’s recommendation in relation to the<br />
resolutions pertaining to the Proposals to be tabled at the forthcoming EGM.<br />
This Independent Advice Letter is prepared solely for the use of the shareholders of LHHB<br />
for the purpose of considering the merits of the Proposals and should not be used or relied<br />
upon by any other party.<br />
SHAREHOLDERS OF LHHB ARE ADVISED TO READ BOTH THIS INDEPENDENT<br />
ADVICE LETTER AND THE LETTER FROM THE BOARD AND TO CONSIDER<br />
CAREFULLY THE RECOMMENDATIONS CONTAINED IN BOTH LETTERS<br />
BEFORE VOTING ON THE RESOLUTIONS TO GIVE EFFECT TO THE PROPOSALS<br />
AT THE FORTHCOMING EGM OF THE COMPANY.<br />
2. LIMITATIONS TO THE EVALUATION OF THE PROPOSALS<br />
Arab-Malaysian was not involved in any negotiations on the terms and conditions of the Proposals<br />
and accordingly our evaluation of the Proposals is based on information provided by LHHB and<br />
discussions with the management of LHHB. In performing our evaluation, we have relied on the<br />
following sources of information:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
Information contained in Part A of this Circular and the Appendices thereto;<br />
The Sale and Purchase Agreements dated 19 March 2001 in relation to the First Proposed<br />
Acquisition of Budiman Shares, Proposed Disposal of Atlasprise Shares, Proposed<br />
Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre Land and Proposed<br />
Disposal of 119.82-Acre Land;<br />
The Sale and Purchase Agreement and the Set Off Document, both dated 11 April 2001, in<br />
relation to the Second Proposed Acquisition of Budiman Shares;<br />
The valuation reports dated 28 February 2001 prepared by Colliers Jordan Lee & Jaafar<br />
(JH) Sdn. Bhd. in respect of the following properties:-<br />
(i)<br />
(ii)<br />
The 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land collectively;<br />
and<br />
The Atlasprise Land;<br />
29
(e)<br />
(f)<br />
Other relevant information furnished to us by the management of LHHB; and<br />
Other publicly available information.<br />
We have not independently verified such information for its reasonableness, reliability, accuracy<br />
and/or completeness but have obtained confirmation from the Board that all material facts and<br />
information required for the purpose of our evaluation have been disclosed to us. The Board has<br />
also accepted responsibility for the accuracy of the information provided herein and confirmed that<br />
after making all reasonable enquiries and to the best of their knowledge and belief, there are no<br />
other facts the omission of which would make any information provided herein misleading.<br />
It is not within our terms of reference to express any opinion on the commercial merits of the<br />
Proposals and this remains the sole responsibility of the Board. We also wish to emphasise that our<br />
role as Independent Adviser does not extend to conducting any valuation in respect of Budiman,<br />
Atlasprise, the 73.845-Acre Land, 132.395-Acre Land or 119.82-Acre Land. Our appointment also<br />
does not require us to express an opinion on the future plans of LHHB or to consider the specific<br />
investment objectives, financial situation and particular needs of any individual shareholder or<br />
group of shareholders. In preparing this letter of advice, we have paid attention to those factors<br />
which we believe are of general importance to an assessment of the Proposals and therefore of<br />
general concern to the general body of shareholders, and our evaluation is rendered solely for the<br />
benefit of the shareholders of LHHB as a whole.<br />
We recommend that any individual shareholder or group of shareholders who may require advice in<br />
relation to the Proposals in the context of their individual objectives, financial situation and<br />
particular needs should consult their stockbroker, bank manager, solicitor, accountant or other<br />
professional adviser. We shall not be liable for any damage or loss of any kind sustained or<br />
suffered by any individual shareholder or group of shareholders in reliance on the opinion stated<br />
herein for any purpose whatsoever which is particular to such shareholder or group of shareholders.<br />
3. DETAILS OF THE PROPOSALS<br />
3.1 First Proposed Acquisition of Budiman Shares<br />
3.1.1 Information on Budiman<br />
Budiman was incorporated in Malaysia under the Companies Act, 1965 on 26 July<br />
1994 as a private limited company. The current principal activity of Budiman is<br />
oil palm plantation, whilst its proposed future principal activity is property<br />
development. The principal asset of Budiman is the Budiman Land. Budiman does<br />
not have any subsidiary or associate company.<br />
The present authorised share capital of Budiman is RM10,000,000 comprising<br />
10,000,000 Shares, of which 6,500,000 Shares have been issued and are fully<br />
paid-up.<br />
30
The shareholders and directors of Budiman and their respective shareholdings as at<br />
15 May 2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
Bukit Gambir 780,000 12.0 - -<br />
Jayaplus 455,000 7.0 - -<br />
Pathalon 65,000 1.0 * 455,000 7.0<br />
LHHB 3,256,500 50.1 - -<br />
Amalan Tepat Sdn. Bhd. 1,300,000 20.0 - -<br />
Chee Kim Hoon 643,500 9.9 - -<br />
Maharani Properties Sdn. Bhd. - - * 455,000 7.0<br />
Kim Yin & Sons Holdings Sdn. Bhd. - - * 455,000 7.0<br />
Binaik Sdn. Bhd. - - * 455,000 7.0<br />
Tan Lian Choo - - * 455,000 7.0<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 455,000 7.0<br />
Hasrin bin Busno - - # 520,000 8.0<br />
Lee Geok Kim - - * 455,000 7.0<br />
Lee Choon Jin - - * 455,000 7.0<br />
Foo Yin Yin - - * 455,000 7.0<br />
Leong Hup Management Sdn. Bhd. - - @ 3,256,500 50.1<br />
Datuk Lau Chong Wang - - @ 3,256,500 50.1<br />
Lau Bong Wong - - @ 3,256,500 50.1<br />
Amnah bte Ibrahim - - ^ 1,300,000 20.0<br />
Total 6,500,000 100.0<br />
Directors<br />
Datuk Lau Chong Wang - - @ 3,256,500 50.1<br />
Lau Bong Wong - - @ 3,256,500 50.1<br />
Datuk Lau Tuang Nguang - - - -<br />
Datuk Haji Esa bin Ahmad - - - -<br />
Chee Kim Hoon 643,500 9.9 - -<br />
Yeo Soo Sia @ Yeo Soo Seng - - * 455,000 7.0<br />
Notes:-<br />
* Deemed interest through Jayaplus.<br />
# Deemed interest through Jayaplus and Pathalon.<br />
@ Deemed interest through LHHB<br />
^ Deemed interest through Amalan Tepat Sdn. Bhd.<br />
For the financial year ended 31 March 2000, Budiman recorded a profit after<br />
taxation of RM0.556 million. Its audited NTA value as at 31 March 2000 was<br />
RM9.043 million. For the financial year ended 31 March 2001, Budiman recorded<br />
an unaudited profit after taxation of RM0.267 million.<br />
3.1.2 Salient Terms<br />
(a)<br />
Shares Acquired Free from Encumbrances<br />
The 1,300,000 Shares in Budiman to be acquired by LHHB pursuant to<br />
the First Proposed Acquisition of Budiman Shares will be acquired free<br />
from all encumbrances and with all rights attaching thereto or accruing<br />
thereon as at and from the date of the Sale and Purchase Agreement,<br />
including all rights to dividends and other distributions declared, made and<br />
paid thereafter.<br />
(b)<br />
LHHB to Discharge Director’s Personal Guarantee<br />
LHHB is required to procure the discharge of the joint and several<br />
personal guarantee executed by Mr. Yeo Soo Sia @ Yeo Soo Seng, the<br />
director representing the Vendors on the Board of Directors of Budiman,<br />
in favour of OCBC to secure facilities extended by OCBC to Budiman,<br />
31
upon the completion of the First Proposed Acquisition of Budiman Shares.<br />
The facilities extended by OCBC to Budiman comprise an overdraft<br />
facility of RM10 million and a term loan of RM55 million. The facilities<br />
are currently secured by a charge over the Budiman Land, a joint and<br />
several directors’ guarantee and a corporate guarantee by LHHB.<br />
(c)<br />
Mode of Satisfaction of Purchase Consideration<br />
The purchase consideration shall be wholly satisfied by the payment of<br />
cash on completion as no deposit is payable. The First Proposed<br />
Acquisition of Budiman Shares is expected to be completed by the third<br />
quarter of the year 2001.<br />
3.1.3 Basis of Determining the Purchase Consideration<br />
The purchase consideration for the First Proposed Acquisition of Budiman Shares<br />
of RM3,926,000 was arrived at on a willing-buyer willing-seller basis after taking<br />
into consideration the estimated NTA of Budiman as at 31 March 2001 of<br />
RM9.218 million after adjusting for the revaluation surplus of RM10.443 million<br />
arising from the revaluation of the Budiman Land, as well as the various land<br />
disposals. The adjusted estimated NTA is RM19.661 million. 20% of the adjusted<br />
estimated NTA therefore amounts to RM3.932 million.<br />
The adjusted estimated NTA of Budiman as at 31 March 2001 takes into account a<br />
valuation of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land<br />
collectively carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an<br />
independent firm of professional valuers, on 28 February 2001 using the<br />
comparison method, and checked by the residual method, pursuant to which the<br />
said firm determined the aggregate open market value of the said lands with the<br />
benefit of the Budiman Approval, to be RM62,500,000 or approximately RM4.40<br />
per square foot. A copy of the valuer’s letter in relation to the said valuation is set<br />
out in Appendix 5.<br />
The purchase consideration represents a discount of RM0.006 million or 0.16% to<br />
the relevant proportion of the adjusted estimated NTA of Budiman as at 31 March<br />
2001.<br />
The Vendors’ total cost of investment in the 1,300,000 Budiman Shares proposed<br />
to be acquired by LHHB pursuant to the First Proposed Acquisition of Budiman<br />
Shares, since the date of incorporation of Budiman, is RM1,300,000.<br />
3.2 Proposed Disposal of Atlasprise Shares<br />
3.2.1 Information on Atlasprise<br />
Atlasprise was incorporated in Malaysia under the Companies Act, 1965 on 24<br />
January 1997 as a private limited company. The current principal activity of<br />
Atlasprise is oil palm plantation, whilst its proposed future principal activity is<br />
property development. The principal assets of Atlasprise are as follows:-<br />
(a)<br />
Two (2) pieces of freehold land held under Grant No. 10427, Lot No.<br />
1158 and Certificate of Title 6386, Lot No. 1730 in Mukim of Pengerang,<br />
District of Kota Tinggi, State of Johor measuring in total approximately<br />
117.625 acres (“Industrial Land”). Atlasprise had obtained the approval<br />
in principle of the Johor State Authority on 12 November 1998 for an<br />
industrial development on the Industrial Land; and<br />
32
(b)<br />
Two (2) pieces of freehold land held under E.M.R. 494, Lot No. 375 and<br />
Certificate of Title 6387, Lot No. 1732 in Mukim of Pengerang, District<br />
of Kota Tinggi, State of Johor measuring in total approximately 112.125<br />
acres (“Agricultural Land”). Atlasprise had obtained the approval in<br />
principle of the Johor State Authority on 19 August 1999 for a leisure<br />
farm development on the Agricultural Land.<br />
The proposed development on the Industrial Land comprises a total of 62 detached<br />
and semi-detached industrial lots, whilst the proposed development on the<br />
Agricultural Land comprises 90 homestead lots. The respective proposed<br />
developments have yet to commence as the time of their commencement would<br />
depend on the conditions in the property market.<br />
The Industrial Land and the Agricultural Land shall hereinafter be collectively<br />
referred to as the “Atlasprise Land”, and the respective approvals in principle of<br />
the Johor State Authority mentioned above shall hereinafter be collectively referred<br />
to as the “Atlasprise Approvals in Principle”.<br />
A valuation of the Atlasprise Land was carried out by Colliers Jordan Lee &<br />
Jaafar (JH) Sdn. Bhd., an independent firm of professional valuers, on 28 February<br />
2001 using the comparison method, pursuant to which the said firm determined the<br />
open market value of the Atlasprise Land with the benefit of the Atlasprise<br />
Approvals in Principle, to be RM17,000,000 or approximately RM1.70 per square<br />
foot. As the unaudited net book value of the Atlasprise Land as at 30 November<br />
2000 (being the reference date used for arriving at the consideration for the<br />
Proposed Disposal of Atlasprise Shares) was RM20.660 million, the loss on<br />
revaluation amounted to RM3.660 million. The loss on revaluation will not be<br />
incorporated into the accounts of Atlasprise, as the sole purpose of the revaluation<br />
was to establish a market value for the Atlasprise Land and hence the adjusted<br />
NTA value of Atlasprise. The audited net book value of the Atlasprise Land as at<br />
31 March 2000 was RM19.659 million.<br />
The Atlasprise Land is currently charged to Arab-Malaysian Finance Berhad for<br />
securing the credit facilities granted to Atlasprise towards completion of the<br />
purchase of the Atlasprise Land.<br />
Atlasprise does not have any subsidiary or associate company.<br />
The present authorised share capital of Atlasprise is RM5,000,000 comprising<br />
5,000,000 Shares, of which 1,500,000 Shares have been issued and are fully paidup.<br />
33
The shareholders and directors of Atlasprise and their respective shareholdings as<br />
at 15 May 2001 are set out in the table below.<br />
Name Direct Shareholding Indirect Shareholding<br />
No. of Shares % No. of Shares %<br />
Shareholders<br />
LHHB 825,000 55.0 - -<br />
Bukit Gambir 300,000 20.0 - -<br />
Datuk Lau Tuang Nguang 150,000 10.0 - -<br />
Dato’ Mohamed Salleh bin Ahmad 225,000 15.0 - -<br />
Leong Hup Management Sdn. Bhd. - - * 825,000 55.0<br />
Datuk Lau Chong Wang - - * 825,000 55.0<br />
Lau Bong Wong - - * 825,000 55.0<br />
Total 1,500,000 100.0<br />
Directors<br />
Datuk Lau Chong Wang - - * 825,000 55.0<br />
Datuk Lau Tuang Nguang 150,000 10.0 - -<br />
Dato’ Mohamed Salleh bin Ahmad 225,000 15.0 - -<br />
Yeo Soo Sia @ Yeo Soo Seng - - - -<br />
Note:-<br />
* Deemed interest through LHHB.<br />
For the financial year ended 31 March 2000, Atlasprise recorded a profit after<br />
taxation of RM0.084 million. Its audited NTA value as at 31 March 2000 was<br />
RM1.847 million. For the financial year ended 31 March 2001, Atlasprise<br />
recorded an unaudited profit after taxation of RM0.072 million.<br />
3.2.2 Salient Terms<br />
(a)<br />
Shares Disposed Of Free from Encumbrances<br />
The 465,000 Shares in Atlasprise to be disposed of by LHHB to Bukit<br />
Gambir pursuant to the Proposed Disposal of Atlasprise Shares will be<br />
disposed of free from all encumbrances and with all rights attaching<br />
thereto or accruing thereon as at and from the date of the Sale and<br />
Purchase Agreement, including all rights to dividends and other<br />
distributions declared, made and paid thereafter.<br />
LHHB currently has a 55.0% equity interest in Atlasprise comprising<br />
825,000 Shares. The Proposed Disposal of Atlasprise Shares will reduce<br />
LHHB’s equity interest in Atlasprise to 24.0% comprising 360,000<br />
Shares. Atlasprise will therefore cease to be a subsidiary of LHHB upon<br />
completion of the Proposed Disposal of Atlasprise Shares, and will instead<br />
become an associate company of LHHB.<br />
Bukit Gambir currently has a 20.0% equity interest in Atlasprise<br />
comprising 300,000 Shares. Upon completion of the Proposed Disposal of<br />
Atlasprise Shares, Bukit Gambir will have a 51.0% equity interest in<br />
Atlasprise comprising 765,000 Shares. Atlasprise will therefore become a<br />
subsidiary of Bukit Gambir.<br />
34
(b)<br />
Bukit Gambir to Discharge LHHB’s Corporate Guarantee<br />
Bukit Gambir is required to procure the discharge of all corporate<br />
guarantees provided by LHHB for the benefit of Atlasprise. As at 15 May<br />
2001, the corporate guarantees provided by LHHB for the benefit of<br />
Atlasprise amounted to RM10 million.<br />
(c)<br />
Advances Given by LHHB to Atlasprise<br />
Bukit Gambir will not be required to pay LHHB for 31/55 (based on the<br />
percentage of equity interest in Atlasprise to be disposed of by LHHB to<br />
Bukit Gambir) of the advances given by LHHB to Atlasprise (“LHHB<br />
Advances”) upon completion of the Proposed Disposal of Atlasprise<br />
Shares. As at 15 May 2001, the LHHB Advances amounted to RM7.423<br />
million. However, if upon the expiry of two (2) years from the date on<br />
which Bukit Gambir is registered as the owner of the Atlasprise Shares<br />
which are the subject of the Proposed Disposal of Atlasprise Shares, the<br />
amounts of shareholders’ advances made by LHHB and Bukit Gambir<br />
respectively to Atlasprise are not proportionate to their respective<br />
shareholdings in Atlasprise, Bukit Gambir will reimburse LHHB such<br />
excess shareholder’s advances on a Ringgit for Ringgit basis so that the<br />
resultant shareholders’ advances are proportionate to their respective<br />
shareholdings in Atlasprise.<br />
The reason why the parties had agreed that Bukit Gambir will not be<br />
required to pay LHHB for 31/55 of the LHHB Advances upon completion<br />
of the Proposed Disposal of Atlasprise Shares is because as a result of the<br />
loss arising from the revaluation of the Atlasprise Land, the adjusted NTA<br />
value of Atlasprise is negative and the consideration for the Proposed<br />
Disposal of Atlasprise Shares is at a premium to the adjusted NTA value<br />
of Atlasprise.<br />
(d)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be wholly satisfied by the payment of<br />
cash on completion as no deposit is payable. The Proposed Disposal of<br />
Atlasprise Shares will not generate any gain or loss to LHHB as the<br />
consideration of RM465,000 is equivalent to the net book value of the<br />
465,000 Atlasprise Shares which are the subject of the Proposed Disposal<br />
of Atlasprise Shares.<br />
3.2.3 Basis of Determining the Disposal Consideration<br />
The disposal consideration for the Proposed Disposal of Atlasprise Shares of<br />
RM465,000 is based on the par value of the Shares concerned, and was arrived at<br />
on a willing-buyer willing-seller basis after taking into consideration the unaudited<br />
NTA of Atlasprise as at 30 November 2000 of RM1.886 million and after<br />
adjusting for the loss on revaluation of RM3.660 million arising from the<br />
revaluation of the Atlasprise Land. The adjusted unaudited NTA is negative<br />
RM1.774 million. 31% of the adjusted unaudited NTA therefore amounts to<br />
negative RM0.550 million.<br />
The loss on revaluation was derived based on a valuation of the Atlasprise Land<br />
carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an independent firm<br />
of professional valuers, on 28 February 2001 using the comparison method,<br />
pursuant to which the said firm determined the open market value of the<br />
Atlasprise Land with the benefit of the Atlasprise Approvals in Principle, to be<br />
35
RM17,000,000 or approximately RM1.70 per square foot. A copy of the valuer’s<br />
letter in relation to the said valuation is set out in Appendix 6.<br />
The disposal consideration represents a premium of RM1.015 million to the<br />
relevant proportion of the adjusted unaudited NTA of Atlasprise as at 30<br />
November 2000.<br />
The total cost of investment to LHHB of the 465,000 Atlasprise Shares is<br />
RM465,000. LHHB made the investment on 22 May 1997. As at 15 May 2001,<br />
the net book value of the investment was RM465,000. The Proposed Disposal of<br />
Atlasprise Shares will therefore not generate any gain or loss to LHHB.<br />
3.3 Proposed Disposal of 73.845-Acre Land<br />
3.3.1 Information on 73.845-Acre Land<br />
The 73.845-Acre Land forms part of the Budiman Land. The Budiman Land<br />
comprises two (2) pieces of freehold agricultural land held under H.S.(D) 235359,<br />
P.T.D. 71014 and H.S.(D) 235361, P.T.D. 71016 in Mukim of Pulai, District of<br />
Johor Bahru, State of Johor measuring in total approximately 855.21 acres.<br />
Budiman had obtained the final approval of the Johor State Authority on 22<br />
October 1999 for the alteration of the category of land use of the Budiman Land<br />
and the subdivision thereof into individual lots for the purpose of a mixed<br />
development (“Budiman Approval”). The proposed development on the<br />
Budiman Land comprises a total of 11,132 units of development comprising terrace<br />
houses, semi-detached houses, detached houses, apartments, flats and shops. The<br />
proposed development has yet to commence as the time of commencement would<br />
depend on the conditions in the property market. The balance of the Budiman Land<br />
after the Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-<br />
Acre Land and Proposed Disposal of 119.82-Acre Land would be 529.15 acres.<br />
The Budiman Land is currently charged to OCBC Bank (Malaysia) Berhad<br />
(“OCBC”) for securing the credit facilities granted to Budiman towards<br />
completion of the purchase of the Budiman Land.<br />
3.3.2 Salient Terms<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman<br />
Land, to:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Consent to the Proposed Disposal of 73.845-Acre Land;<br />
Accept RM7.054 million as the agreed redemption sum for the<br />
73.845-Acre Land; and<br />
Grant to Jayaplus a loan of not less than RM7.054 million<br />
(“Jayaplus Loan”) towards completion of the Proposed Disposal<br />
of 73.845-Acre Land and settlement of the agreed redemption<br />
sum.<br />
36
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to<br />
OCBC all the separate individual titles to the subdivided lots<br />
comprised in the 73.845-Acre Land once such titles have been<br />
issued; and<br />
Execute any third party charges or such other security documents<br />
as may be required by OCBC for securing the Jayaplus Loan<br />
subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for<br />
the repayment of the Jayaplus Loan; and<br />
Jayaplus indemnifying Budiman against any loss arising<br />
from such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 73.845-Acre Land,<br />
which are estimated to amount to RM0.686 million, will be borne by<br />
Jayaplus.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Jayaplus not to have the subdivided lots comprised<br />
in the 73.845-Acre Land transferred to Jayaplus after the separate<br />
individual titles thereto have been issued, and to develop, sell and transfer<br />
such subdivided lots without Jayaplus being first registered as the<br />
proprietor thereof, Budiman shall upon completion of the Proposed<br />
Disposal of 73.845-Acre Land, grant to Jayaplus an irrevocable power of<br />
attorney empowering Jayaplus to do all acts in relation to the 73.845-Acre<br />
Land as fully and effectually in all respects as Budiman itself could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Jayaplus in the following<br />
manner on completion:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Setting off all the shareholders’ advances granted by Jayaplus to<br />
Budiman as at the completion date of the Proposed Disposal of<br />
73.845-Acre Land. As at 15 May 2001, the shareholders’<br />
advances granted by Jayaplus to Budiman amounted to RM5.292<br />
million;<br />
The Jayaplus Loan; and<br />
The balance in cash.<br />
37
3.3.3 Basis of Determining the Disposal Consideration<br />
The respective disposal consideration for the Proposed Disposal of 73.845-Acre<br />
Land, Proposed Disposal of 132.395-Acre Land and Proposed Disposal of 119.82-<br />
Acre Land was arrived at on a willing-buyer willing-seller basis after taking into<br />
consideration their respective open market values with the benefit of the Budiman<br />
Approval.<br />
A valuation of the 73.845-Acre Land, 132.395-Acre Land and 119.82-Acre Land<br />
collectively was carried out by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd., an<br />
independent firm of professional valuers, on 28 February 2001 using the<br />
comparison method, and checked by the residual method, pursuant to which the<br />
said firm determined the aggregate open market value of the said lands with the<br />
benefit of the Budiman Approval, to be RM62,500,000 or approximately RM4.40<br />
per square foot. A copy of the valuer’s letter in relation to the said valuation is set<br />
out in Appendix 5. Based on this valuation, the disposal consideration for each of<br />
the said lands was determined by apportioning the aggregate open market value of<br />
the said lands.<br />
Budiman had acquired the Budiman Land on 25 April 1997 for a consideration of<br />
RM117.591 million. The total estimated cost of investment to Budiman of the<br />
Budiman Land as at 31 March 2001 is RM153.470 million. On a proportionate<br />
basis, the total estimated cost of investment to Budiman of the 73.845-Acre Land,<br />
132.395-Acre Land and 119.82-Acre Land as at 31 March 2001 is RM58.512<br />
million.<br />
The table below sets out the respective disposal consideration, open market value<br />
and estimated net book value of the 73.845-Acre Land, 132.395-Acre Land and<br />
119.82-Acre Land, as well as the estimated gain to Budiman on the disposals.<br />
73.845-Acre 132.395-Acre 119.82-Acre<br />
Land<br />
Land<br />
Land<br />
RM RM RM<br />
Disposal consideration 14,153 25,375 22,965<br />
Open market value based on valuation by Colliers<br />
Jordan Lee & Jaafar (JH) Sdn. Bhd. dated 28<br />
February 2001<br />
14,155 25,378 22,967<br />
Estimated net book value as at 31 March 2001 13,252 23,758 21,502<br />
Estimated gain to Budiman on disposal 901 1,617 1,463<br />
38
3.4 Proposed Disposal of 132.395-Acre Land<br />
3.4.1 Information on 132.395-Acre Land<br />
The 132.395-Acre Land forms part of the Budiman Land. Information on the<br />
Budiman Land has been provided in Section 3.3.1 above.<br />
3.4.2 Salient Terms<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman<br />
Land, to:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Consent to the Proposed Disposal of 132.395-Acre Land;<br />
Accept RM12.646 million as the agreed redemption sum for the<br />
132.395-Acre Land; and<br />
Grant to Bukit Gambir a loan of not less than RM12.646 million<br />
(“Bukit Gambir Loan 1”) towards completion of the Proposed<br />
Disposal of 132.395-Acre Land and settlement of the agreed<br />
redemption sum.<br />
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to<br />
OCBC all the separate individual titles to the subdivided lots<br />
comprised in the 132.395-Acre Land once such titles have been<br />
issued; and<br />
Execute any third party charges or such other security documents<br />
as may be required by OCBC for securing the Bukit Gambir Loan<br />
1 subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for<br />
the repayment of the Bukit Gambir Loan 1; and<br />
Bukit Gambir indemnifying Budiman against any loss<br />
arising from such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 132.395-Acre Land,<br />
which are estimated to amount to RM0.790 million, will be borne by<br />
Bukit Gambir.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Bukit Gambir not to have the subdivided lots<br />
comprised in the 132.395-Acre Land transferred to Bukit Gambir after<br />
the separate individual titles thereto have been issued, and to develop,<br />
sell and transfer such subdivided lots without Bukit Gambir being first<br />
registered as the proprietor thereof, Budiman shall upon completion of<br />
the Proposed Disposal of 132.395-Acre Land, grant to Bukit Gambir an<br />
39
irrevocable power of attorney empowering Bukit Gambir to do all acts in<br />
relation to the 132.395-Acre Land as fully and effectually in all respects<br />
as Budiman itself could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Bukit Gambir in the<br />
following manner on completion:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Setting off all the shareholders’ advances granted by Bukit<br />
Gambir to Budiman as at the completion date of the Proposed<br />
Disposal of 132.395-Acre Land. As at 15 May 2001, the<br />
shareholders’ advances granted by Bukit Gambir to Budiman<br />
amounted to RM9.783 million;<br />
The Bukit Gambir Loan 1; and<br />
The balance in cash.<br />
3.4.3 Basis of Determining the Disposal Consideration<br />
The basis of determining the disposal consideration is set out in Section 3.3.3<br />
above.<br />
3.5 Second Proposed Acquisition of Budiman Shares<br />
3.5.1 Information on Budiman<br />
Information on Budiman has been provided in Section 3.1.1 above.<br />
3.5.2 Salient Terms<br />
(a)<br />
Shares Acquired Free from Encumbrances<br />
The 1,300,000 Shares in Budiman to be acquired by LHHB pursuant to<br />
the Second Proposed Acquisition of Budiman Shares will be acquired free<br />
from all claims, charges, liens, pledges or any other encumbrances and<br />
with all rights and advantages attaching thereto or accruing thereon as at<br />
and from the date of the Sale and Purchase Agreement, including all rights<br />
to dividends and other distributions declared, made and paid thereafter.<br />
(b)<br />
LHHB to Settle Amalan’s Advances to Budiman<br />
As at 15 May 2001, Amalan’s advances to Budiman amounted to<br />
RM7.709 million (“Amalan’s Advances”). LHHB will settle Amalan’s<br />
Advances.<br />
40
(c)<br />
Mode of Satisfaction of Purchase Consideration and Amalan’s<br />
Advances<br />
Both the purchase consideration for the Second Proposed Acquisition of<br />
Budiman Shares of RM3,926,000 (“Purchase Consideration”) and the<br />
settlement of Amalan’s Advances shall be satisfied by LHHB by way of<br />
set-off against the amount owing by Amalan to LHM. The sum of the<br />
Purchase Consideration and Amalan’s Advances shall hereinafter be<br />
referred to as the “Set-Off Amount”. Amalan and LHM are controlled<br />
by common shareholders, being the Lau brothers, as set out in Sections<br />
3.4, 3.5 and 4.8 of Part A of this Circular. The Second Proposed<br />
Acquisition of Budiman Shares is expected to be completed by the third<br />
quarter of the year 2001.<br />
To facilitate the settlement of the Purchase Consideration and Amalan’s<br />
Advances in the above-mentioned manner, Amalan, LHHB and LHM<br />
have executed a Set Off Document on 11 April 2001, wherein it is agreed<br />
that on the completion date of the Second Proposed Acquisition of<br />
Budiman Shares, the parties will set off the following sums representing<br />
the Set-Off Amount:-<br />
(i)<br />
(ii)<br />
(iii)<br />
LHHB will set off the Set-Off Amount against LHM and the<br />
outstanding loans from LHHB to LHM shall be correspondingly<br />
reduced by the Set-Off Amount. As at 31 March 2001, the<br />
outstanding loans from LHHB to LHM amounted to RM79.266<br />
million. The balance after setting off the Set-Off Amount on<br />
completion and taking into account real property gains tax<br />
payable by Amalan, is expected to be approximately RM67.916<br />
million;<br />
LHM will set off the Set-Off Amount against Amalan and the<br />
outstanding loans from LHM to Amalan shall be correspondingly<br />
reduced by the Set-Off Amount. As at 15 May 2001, the<br />
outstanding loans from LHM to Amalan amounted to RM21.707<br />
million. The balance after setting off the Set-Off Amount on<br />
completion and taking into account the real property gains tax<br />
payable by Amalan, is expected to be approximately RM10.357<br />
million; and<br />
Thereafter, the Purchase Consideration and Amalan’s Advances<br />
shall be deemed to have been paid and fully settled by LHHB to<br />
Amalan.<br />
3.5.3 Basis of Determining the Purchase Consideration<br />
The basis of determining the purchase consideration for the Second Proposed<br />
Acquisition of Budiman Shares is similar to that for the First Proposed Acquisition<br />
of Budiman Shares, and is set out in Section 3.1.3 above.<br />
41
3.6 Proposed Disposal of 119.82-Acre Land<br />
3.6.1 Information on 119.82-Acre Land<br />
The 119.82-Acre Land forms part of the Budiman Land. Information on the<br />
Budiman Land has been provided in Section 3.3.1 above.<br />
3.6.2 Salient Terms<br />
(a)<br />
OCBC’s Consent and Agreement<br />
The parties will procure OCBC, as the existing chargee of the Budiman<br />
Land, to:-<br />
(i)<br />
(ii)<br />
(iii)<br />
Consent to the Proposed Disposal of 119.82-Acre Land;<br />
Accept RM10 million as the agreed redemption sum for the<br />
119.82-Acre Land; and<br />
Grant to Bukit Gambir a loan of not less than RM10 million<br />
(“Bukit Gambir Loan 2”) towards completion of the Proposed<br />
Disposal of 119.82-Acre Land and settlement of the agreed<br />
redemption sum.<br />
(b)<br />
Budiman’s Undertakings<br />
Budiman agrees to undertake with OCBC to:-<br />
(i)<br />
(ii)<br />
Procure the Land Registry of Johor to release and deliver to<br />
OCBC the block titles and master titles to the 119.82-Acre Land<br />
once such titles have been issued; and<br />
Execute any third party charges or such other security documents<br />
as may be required by OCBC for securing the Bukit Gambir Loan<br />
2 subject to:-<br />
(A)<br />
(B)<br />
OCBC agreeing that Budiman will not be held liable for<br />
the repayment of the Bukit Gambir Loan 2; and<br />
Bukit Gambir indemnifying Budiman against any loss<br />
arising from such security arrangement.<br />
(c)<br />
Premium and Surveyors’ Fees<br />
The premium and surveyors’ fees in respect of the 119.82-Acre Land,<br />
which are estimated to amount to RM0.738 million, will be borne by<br />
Bukit Gambir.<br />
(d)<br />
Power of Attorney<br />
As it is the intention of Bukit Gambir not to have the subdivided lots<br />
comprised in the 119.82-Acre Land transferred to Bukit Gambir after the<br />
separate individual titles thereto have been issued, and to develop, sell<br />
and transfer such subdivided lots without Bukit Gambir being first<br />
registered as the proprietor thereof, Budiman shall upon completion of<br />
the Proposed Disposal of 119.82-Acre Land, grant to Bukit Gambir an<br />
irrevocable power of attorney empowering Bukit Gambir to do all acts in<br />
42
elation to the 119.82-Acre Land as fully and effectually in all respects as<br />
Budiman itself could do.<br />
(e)<br />
Mode of Satisfaction of Disposal Consideration<br />
The disposal consideration shall be satisfied by Bukit Gambir in the<br />
following manner:-<br />
(i)<br />
(ii)<br />
The Bukit Gambir Loan 2 within three (3) months from the date<br />
on which the Sale and Purchase Agreement in respect of the<br />
Proposed Disposal of 119.82-Acre Land becomes unconditional;<br />
and<br />
The balance of RM12,965,180.48 by the issuance of new Shares<br />
by Newco at the initial public offering price (“Consideration<br />
Shares”). The initial public offering price and the basis therefor<br />
and hence the number of Consideration Shares, will be<br />
determined after Newco has obtained the SC’s approval for its<br />
proposed listing on the KLSE. Budiman undertakes to sell 40%<br />
of the Consideration Shares to Bumiputra parties approved by the<br />
Ministry of International Trade & Industry.<br />
Newco expects to submit its application to the SC by July 2001.<br />
In the event that the proposed listing of Newco does not take<br />
place, the Proposed Disposal of 119.82-Acre Land will be<br />
aborted.<br />
(f)<br />
Rights Attaching to Consideration Shares<br />
The Consideration Shares shall rank pari passu in all respects with the<br />
other Shares of Newco and shall be similarly listed and quoted on the<br />
KLSE.<br />
3.6.3 Basis of Determining the Disposal Consideration<br />
The basis of determining the disposal consideration is set out in Section 3.3.3<br />
above.<br />
3.7 Inter-Conditionality<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land are inter-conditional with one another.<br />
The Second Proposed Acquisition of Budiman Shares is not inter-conditional with any of<br />
the other Proposals.<br />
The Proposed Disposal of 119.82-Acre Land is not inter-conditional with any of the other<br />
Proposals.<br />
43
4. RATIONALE FOR THE PROPOSALS<br />
The Proposed Disposal of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed<br />
Disposal of 132.395-Acre Land and Proposed Disposal of 119.82-Acre Land will raise gross<br />
proceeds of approximately RM46.068 million for the LHHB Group, excluding:-<br />
(a)<br />
(b)<br />
(c)<br />
The proceeds to be raised from the sale of the Consideration Shares arising from the<br />
Proposed Disposal of 119.82-Acre Land, which the Company is currently unable to<br />
determine as the initial public offering price of Newco Shares has yet to be determined;<br />
The expenses of the Proposals; and<br />
After deducting the purchase consideration for the First Proposed Acquisition of Budiman<br />
Shares.<br />
The breakdown of the proceeds is as follows:-<br />
Proposal<br />
Cash Proceeds<br />
(RM’000)<br />
Proposed Disposal of Atlasprise Shares 465<br />
Proposed Disposal of 73.845-Acre Land 14,153<br />
Proposed Disposal of 132.395-Acre Land 25,375<br />
Proposed Disposal of 119.82-Acre Land 10,000<br />
49,994<br />
Less: First Proposed Acquisition of Budiman Shares (3,926)<br />
46,068<br />
The disposal proceeds will improve the Group’s cash flow for the financial year ending 31 March<br />
2002 and allow the Group to reduce its bank borrowings which amounted to RM308.406 million as<br />
at 31 March 2001. The interest saving arising from the repayment of bank borrowings is expected<br />
to be approximately RM2.465 million per annum assuming an average borrowing cost of 8.3% per<br />
annum (based on the actual interest rate currently charged by OCBC). At the same time, the First<br />
and Second Proposed Acquisition of Budiman Shares will enable LHHB to retain a significant stake<br />
of 90.1% in Budiman and hence the remainder of the Budiman Land amounting to 529.15 acres.<br />
5. SOURCES OF FUNDS AND UTILISATION OF PROCEEDS<br />
5.1 Sources of Funds<br />
As shown in Section 4 above, the purchase consideration for the First Proposed Acquisition<br />
of Budiman Shares will be set off against the proceeds from the Proposed Disposal of<br />
Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-<br />
Acre Land and Proposed Disposal of 119.82-Acre Land. As stated in Section 3.5.2(c)<br />
above, the Second Proposed Acquisition of Budiman Shares will be funded by LHHB by<br />
way of set-off against the amount owing by Amalan to LHM.<br />
44
5.2 Utilisation of Proceeds<br />
Utilisation<br />
Cash Proceeds<br />
(RM’000)<br />
Setting off shareholders’ advances granted by Jayaplus and Bukit Gambir to Budiman * 15,075<br />
Repayment of LHHB Group’s bank borrowings # 29,700<br />
Working capital 943<br />
Expenses of the Proposals 350<br />
Total 46,068<br />
The proceeds from the Proposals as stated in Section 4 above will be utilised in the<br />
following manner:-<br />
Notes:-<br />
* Based on the total estimated shareholders’ advances on completion of the Proposed Disposal<br />
of 73.845-Acre Land and Proposed Disposal of 132.395-Acre Land, as stated in Sections<br />
4.3(e)(i) and 4.4(e)(i) above.<br />
# As stated in Sections 4.3(e)(ii) and 4.4(e)(ii) above.<br />
6. CONDITIONS PRECEDENT<br />
6.1 Inter-Conditional Proposals<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land are inter-conditional and are subject to the following conditions precedent which have<br />
to be fulfilled within four (4) months from the date of the respective Sale and Purchase<br />
Agreements or such extended period as may be mutually agreed to by the parties:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB;<br />
The approval of the shareholders of Bukit Gambir, Jayaplus, Pathalon and<br />
Budiman;<br />
The approval of OCBC for:-<br />
(i)<br />
The Proposed Disposal of 73.845-Acre Land and Proposed Disposal of<br />
132.395-Acre Land;<br />
(ii) The fixing of the respective redemption sums in respect of the 73.845-<br />
Acre Land and 132.395-Acre Land; and<br />
(iii) The granting of the Jayaplus Loan and the Bukit Gambir Loan 1.<br />
45
The approval of the FIC was obtained on 25 April 2001 and was subject to the following<br />
conditions, amongst others:-<br />
(A)<br />
(B)<br />
(C)<br />
The approval of the shareholders of LHHB is to be obtained at an EGM wherein<br />
all interested parties are to abstain from voting;<br />
Competent independent advice is provided to the shareholders of LHHB and the<br />
appointment of the Independent Adviser is subject to the approval of the FIC; and<br />
The circular to the shareholders of LHHB shall contain the details of the relevant<br />
Proposals and the interested parties, and the circular is subject to clearance by the<br />
FIC.<br />
The FIC had approved the appointment of Arab-Malaysian as Independent Adviser to the<br />
shareholders of LHHB and cleared this Circular vide its letters dated 23 May2001.<br />
The First Proposed Acquisition of Budiman Shares, Proposed Disposal of Atlasprise<br />
Shares, Proposed Disposal of 73.845-Acre Land and Proposed Disposal of 132.395-Acre<br />
Land will be completed simultaneously within three (3) months from the date of fulfillment<br />
of the last of the conditions precedent stated above.<br />
6.2 Second Proposed Acquisition of Budiman Shares<br />
The Second Proposed Acquisition of Budiman Shares is not inter-conditional with any of<br />
the other Proposals and is subject to the following conditions precedent which have to be<br />
fulfilled within four (4) months from the date of the Sale and Purchase Agreement, being 11<br />
April 2001, or such extended period as may be mutually agreed to by the parties:-<br />
(a)<br />
(b)<br />
(c)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB; and<br />
The approval of the shareholders of Amalan.<br />
Completion of the Second Proposed Acquisition of Budiman Shares will take place within<br />
fourteen (14) days from the date of fulfillment of the last of the conditions precedent stated<br />
above.<br />
6.3 Proposed Disposal of 119.82-Acre Land<br />
The Proposed Disposal of 119.82-Acre Land is not inter-conditional with any of the other<br />
Proposals and is subject to the following conditions precedent which have to be fulfilled<br />
within twelve (12) months from the date of the Sale and Purchase Agreement or such<br />
extended period as may be mutually agreed to by the parties:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
The approval of the FIC;<br />
The approval of the shareholders of LHHB;<br />
The approval of the shareholders of Budiman;<br />
The approval of OCBC for:-<br />
(i)<br />
The Proposed Disposal of 119.82-Acre Land;<br />
46
(ii)<br />
(iii)<br />
The fixing of the redemption sum in respect of the 119.82-Acre Land; and<br />
The granting of the Bukit Gambir Loan 2; and<br />
(e)<br />
The approval of the SC for the proposed listing of Newco and the proposed<br />
acquisition of the 119.82-Acre Land by Bukit Gambir.<br />
7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS<br />
As stated in Section 1 above, Mr. Yeo Soo Sia @ Yeo Soo Seng is a director and substantial<br />
shareholder of Budiman, Bukit Gambir, Jayaplus and Pathalon. He is also a director of Atlasprise.<br />
He is therefore deemed interested in the First Proposed Acquisition of Budiman Shares, Proposed<br />
Disposal of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of<br />
132.395-Acre Land and Proposed Disposal of 119.82-Acre Land. As such, he has abstained and<br />
will continue to abstain from all deliberations and voting on the aforesaid Proposals at Board<br />
meetings of Budiman, Bukit Gambir, Jayaplus, Pathalon and Atlasprise. He will also abstain from<br />
voting in respect of his direct and indirect shareholdings, on the shareholders’ resolutions of<br />
Budiman, Bukit Gambir, Jayaplus and Pathalon pertaining to the aforesaid Proposals.<br />
In view of the interests of Datuk Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang<br />
Nguang and Mr. Lau Chun Yuen in the Second Proposed Acquisition of Budiman Shares as<br />
disclosed in Section 1 above, they have abstained and will continue to abstain from all deliberations<br />
and voting on the Second Proposed Acquisition of Budiman Shares at Board meetings of LHHB.<br />
They will also abstain from voting at the forthcoming EGM of LHHB on the resolution pertaining to<br />
the Second Proposed Acquisition of Budiman Shares in respect of their direct and indirect<br />
shareholdings in LHHB.<br />
Mr. Lau Bong Wong and LHM will abstain from voting at the forthcoming EGM of LHHB on the<br />
resolution pertaining to the Second Proposed Acquisition of Budiman Shares in respect of their<br />
direct and indirect shareholdings in LHHB.<br />
Save as disclosed above, none of the directors or substantial shareholders of LHHB or persons<br />
deemed to be connected to them has any interest, direct or indirect, in the Proposals.<br />
8. EVALUATION OF THE PROPOSALS<br />
In our evaluation of the Proposals, we have taken the following into consideration:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
Rationale for the Proposals;<br />
Basis of determining the consideration for the Proposals;<br />
Mode of financing the First and Second Proposed Acquisition of Budiman Shares; and<br />
Financial effects of the Proposals.<br />
8.1 Rationale for the Proposals<br />
The rationale for the Proposals is stated to be as follows:-<br />
“The Proposed Disposal of Atlasprise Shares, Proposed Disposal of 73.845-Acre Land,<br />
Proposed Disposal of 132.395-Acre Land and Proposed Disposal of 119.82-Acre Land<br />
will raise gross proceeds of approximately RM46.068 million for the LHHB Group,<br />
excluding:-<br />
47
(a)<br />
(b)<br />
(c)<br />
The proceeds to be raised from the sale of the Consideration Shares arising from<br />
the Proposed Disposal of 119.82-Acre Land, which the Company is currently<br />
unable to determine as the initial public offering price of Newco Shares has yet<br />
to be determined;<br />
The expenses of the Proposals; and<br />
After deducting the purchase consideration for the First Proposed Acquisition of<br />
Budiman Shares.<br />
The breakdown of the proceeds is as follows:-<br />
Proposal<br />
Cash Proceeds<br />
(RM’000)<br />
Proposed Disposal of Atlasprise Shares 465<br />
Proposed Disposal of 73.845-Acre Land 14,153<br />
Proposed Disposal of 132.395-Acre Land 25,375<br />
Proposed Disposal of 119.82-Acre Land 10,000<br />
49,994<br />
Less: First Proposed Acquisition of Budiman Shares (3,926)<br />
46,068<br />
The disposal proceeds will improve the Group’s cash flow for the financial year ending<br />
31 March 2002 and allow the Group to reduce its bank borrowings which amounted to<br />
RM308.406 million as at 31 March 2001. The interest saving arising from the repayment<br />
of bank borrowings is expected to be approximately RM2.465 million per annum<br />
assuming an average borrowing cost of 8.3% per annum (based on the actual interest<br />
rate currently charged by OCBC). At the same time, the First and Second Proposed<br />
Acquisition of Budiman Shares will enable LHHB to retain a significant stake of 90.1% in<br />
Budiman and hence the remainder of the Budiman Land amounting to 529.15 acres.”<br />
Pursuant to the Proposals, the LHHB Group will reduce its equity interest in Atlasprise and<br />
dispose of 326.06 acres of the Budiman Land, and at the same time increase its equity<br />
interest in Budiman.<br />
Excluding the proceeds to be raised from the sale of the Consideration Shares arising from<br />
the Proposed Disposal of 119.82-Acre Land, which are not ascertainable at this point in<br />
time as the initial public offering price of Newco Shares has yet to be determined, the<br />
Proposals will raise gross proceeds of approximately RM46.068 million for the LHHB<br />
Group. This will improve the Group’s cash flow for the financial year ending 31 March<br />
2002 and allow the Group to reduce its bank borrowings which amounted to RM308.406<br />
million as at 31 March 2001. The interest saving arising from the repayment of bank<br />
borrowings is expected to be approximately RM2.465 million per annum assuming an<br />
average borrowing cost of 8.3% per annum (based on the actual interest rate currently<br />
charged by OCBC).<br />
Apart from the reduction in borrowings and the consequent interest savings, the First and<br />
Second Proposed Acquisition of Budiman Shares will enable LHHB to retain a 90.1%<br />
stake in Budiman and hence the remainder of the Budiman Land amounting to 529.15 acres.<br />
LHHB will therefore continue to participate directly in the future profits of Budiman.<br />
Based on the foregoing, we are of the view that the rationale for the Proposals is reasonable<br />
and in the best interests of LHHB and its shareholders.<br />
48
8.2 Basis of Determining the Consideration for the Proposals<br />
In any related-party transaction, shareholders should consider the fair value of the<br />
consideration in order to establish that the transaction is on arms-length terms.<br />
(a)<br />
Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-Acre<br />
Land and Proposed Disposal of 119.82-Acre Land<br />
The Budiman Land has been valued by Colliers Jordan Lee & Jaafar (JH) Sdn.<br />
Bhd. on 28 February 2001 at an open market value of RM4.40 per square foot. In<br />
arriving at their valuation, the valuers have used the comparison method, and have<br />
checked their valuation by using the residual method.<br />
Under the comparison method, sales evidence of similar properties in the locality<br />
are analysed by the valuers for comparison purposes with adjustments made for<br />
differences in location, size, shape, physical characteristics, legal and other<br />
restrictions as well as other factors which have influence on property values in<br />
order to arrive at the open market value.<br />
The residual method involves the estimation of the gross realisation value of the<br />
proposed development based on the proposed development mix and assuming that<br />
the proposed development will be completely sold over an appropriate period. The<br />
total development costs to be incurred and the developer’s estimated profit are<br />
deducted from the gross realisation value. The residual value represents the<br />
present value of the land and is calculated using an appropriate discount rate after<br />
taking into account the inherent risks of the project.<br />
(b)<br />
First and Second Proposed Acquisition of Budiman Shares<br />
Property development companies are asset-based companies and are normally<br />
valued using the NTA method. This method establishes the value of equity based<br />
on the NTA attributable to the equity holders at a specific point in time. It<br />
represents the net worth attributable to equity holders. The NTA method is<br />
appropriate when the value of the company’s assets in some way equates to the<br />
potential earnings power of the company. Based on this premise, the value of<br />
property development companies is derived from the open market value of their<br />
land bank and on-going projects.<br />
The Board has decided to base the consideration for the First and Second Proposed<br />
Acquisition of Budiman Shares on the estimated NTA of Budiman as at 31 March<br />
2001 after adjusting for the revaluation surplus arising from the revaluation of the<br />
Budiman Land. The basis for the consideration is calculated in the following<br />
manner:-<br />
RM’000 RM’000<br />
Estimated NTA as at 31 March 2001 9,218<br />
Revaluation surplus from Budiman Land<br />
Open market value based on valuation by Colliers Jordan Lee &<br />
Jaafar (JH) Sdn. Bhd. dated 28 February 2001<br />
163,913<br />
Less: Estimated net book value as at 31 March 2001 (153,470)<br />
Revaluation surplus 10,443<br />
10,443<br />
Adjusted estimated NTA 19,661<br />
20% of adjusted estimated NTA 3,932<br />
Purchase consideration 3,926<br />
Discount/(Premium) to NTA (6)<br />
Discount/(Premium) to NTA (%) 0.16%<br />
49
The purchase consideration represents a discount of RM0.006 million or 0.16% to<br />
the relevant proportion of the adjusted estimated NTA of Budiman as at 31 March<br />
2001.<br />
(c)<br />
Proposed Disposal of Atlasprise Shares<br />
The disposal consideration for the Proposed Disposal of Atlasprise Shares is based<br />
on the par value of the Shares concerned, and was arrived at on a willing-buyer<br />
willing-seller basis after taking into consideration the unaudited NTA of Atlasprise<br />
as at 30 November 2000 after adjusting for the loss on revaluation arising from the<br />
revaluation of the Atlasprise Land. The adjusted unaudited NTA is calculated in<br />
the following manner:-<br />
RM’000 RM’000<br />
Unaudited NTA as at 30 November 2000 1,886<br />
Loss on revaluation of Atlasprise Land<br />
Open market value based on valuation by Colliers Jordan Lee &<br />
Jaafar (JH) Sdn. Bhd. dated 28 February 2001<br />
17,000<br />
Less: Unaudited net book value as at 30 November 2000 (20,660)<br />
Loss on revaluation (3,660)<br />
(3,660)<br />
Adjusted unaudited NTA (1,774)<br />
31% of adjusted unaudited NTA (550)<br />
Disposal consideration 465<br />
Premium/(Discount) to NTA 1,015<br />
Premium/(Discount) to NTA (%)<br />
N.A.<br />
The disposal consideration represents a premium of RM1.015 million to the<br />
relevant proportion of the adjusted unaudited NTA of Atlasprise as at 30<br />
November 2000.<br />
The Atlasprise Land was valued by Colliers Jordan Lee & Jaafar (JH) Sdn. Bhd.<br />
on 28 February 2001 at an open market value of RM1.70 per square foot. The<br />
valuers have adopted the comparison method in arriving at their valuation.<br />
Based on the above, we are of the opinion that the consideration for the Proposals is<br />
reasonable.<br />
8.3 Mode of Financing the First and Second Proposed Acquisition of Budiman Shares<br />
The consideration for the First Proposed Acquisition of Budiman Shares amounting to<br />
RM3.926 million will be set off against the proceeds from the Proposed Disposal of<br />
Atlasprise Shares, Proposed Disposal of 73.845-Acre Land, Proposed Disposal of 132.395-<br />
Acre Land and Proposed Disposal of 119.82-Acre Land. Based on the foregoing, the First<br />
Proposed Acquisition of Budiman Shares will not have any effect on the LHHB Group’s<br />
liquidity position.<br />
The sum of the purchase consideration for the Second Proposed Acquisition of Budiman<br />
Shares and Amalan’s Advances (“Set-Off Amount”) shall be satisfied by LHHB by way<br />
of set-off in the following manner:-<br />
(a)<br />
LHHB will set off the Set-Off Amount against LHM and the outstanding loans<br />
from LHHB to LHM shall be correspondingly reduced by the Set-Off Amount. As<br />
at 31 March 2001, the outstanding loans from LHHB to LHM amounted to<br />
RM79.266 million. The balance after setting off the Set-Off Amount on<br />
completion and taking into account real property gains tax payable by Amalan, is<br />
expected to be approximately RM67.916 million;<br />
50
(b)<br />
(c)<br />
LHM will set off the Set-Off Amount against Amalan and the outstanding loans<br />
from LHM to Amalan shall be correspondingly reduced by the Set-Off Amount.<br />
As at 15 May 2001, the outstanding loans from LHM to Amalan amounted to<br />
RM21.707 million. The balance after setting off the Set-Off Amount on<br />
completion and taking into account real property gains tax payable by Amalan, is<br />
expected to be approximately RM10.357 million; and<br />
Thereafter, the purchase consideration for the Second Proposed Acquisition of<br />
Budiman Shares and Amalan’s Advances shall be deemed to have been paid and<br />
fully settled by LHHB to Amalan.<br />
In view of the above, the Second Proposed Acquisition of Budiman Shares will also not<br />
have any effect on the LHHB Group’s liquidity position.<br />
8.4 Financial Effects of the Proposals<br />
(a)<br />
Share Capital<br />
The Proposals will not have any effect on the share capital of LHHB as they do not<br />
involve the issuance of any Shares by LHHB.<br />
(b)<br />
Substantial Shareholders<br />
The Proposals will not have any effect on the substantial shareholders of LHHB as<br />
they do not involve the issuance of any Shares by LHHB.<br />
(c)<br />
Earnings<br />
The Proposals are expected to be completed in the financial year ending 31 March<br />
2002, in the third quarter of the calendar year 2001. On completion of the<br />
Proposals, LHHB is expected to realise an estimated gain of approximately<br />
RM3.631 million at the LHHB Group level. This will translate into an increase of<br />
approximately 1.55 sen in LHHB’s consolidated net EPS for the financial year<br />
ending 31 March 2002.<br />
(d)<br />
NTA and Gearing<br />
Based on the audited consolidated accounts of LHHB as at 31 March 2000 and the<br />
estimated accounts of Budiman and Atlasprise as at 30 September 2001, the proforma<br />
effects of the Proposals on the NTA and gearing ratio of LHHB are shown<br />
in the table below.<br />
As at<br />
(A) (B) (C)<br />
31.03.2000<br />
RM’000 RM’000 RM’000 RM’000<br />
Share Capital 151,568 151,568 151,568 151,568<br />
Share Premium 23,534 23,534 23,534 23,534<br />
Revaluation reserves - 3,970 3,970 2,507<br />
Foreign Exchange Fluctuation Reserve (9,894) (9,894) (9,894) (9,894)<br />
Unappropriated Profit 52,688 * 50,766 # 50,716 @ 51,770<br />
Shareholders’ Funds 217,896 219,945 219,895 219,485<br />
Less: Intangibles (58,262) (58,262) (58,262) (58,262)<br />
NTA 159,634 161,683 161,633 161,223<br />
NTA per Share (RM) 1.05 1.07 1.07 1.06<br />
Total Borrowings 329,156 299,296 299,296 289,296<br />
Gearing Ratio (times) 1.51 1.36 1.36 1.32<br />
51
Notes:-<br />
(A)<br />
(B)<br />
(C)<br />
After all the Proposals except the Second Proposed Acquisition of Budiman Shares<br />
and the Proposed Disposal of 119.82-Acre Land<br />
After (A) and the Second Proposed Acquisition of Budiman Shares<br />
After (B) and the Proposed Disposal of 119.82-Acre Land<br />
* Assuming a consolidated gain on disposal of RM2.218 million net of expenses<br />
relating to all the Proposals except the Second Proposed Acquisition of Budiman<br />
Shares. Apart from the said gain, the unappropriated profit of RM50.766 million<br />
takes into account the relevant portions of the estimated profits of Budiman and<br />
Atlasprise for the six (6) months ending 30 September 2001, as well as the interest<br />
expense arising from the existing bank borrowings for the said period of six (6)<br />
months.<br />
# Assuming expenses of RM50,000 relating to the Second Proposed Acquisition of<br />
Budiman Shares<br />
@<br />
Assuming a consolidated gain on disposal after tax of RM1.053 million<br />
Apart from the proportionate share of Budiman’s liabilities attaching to the 40%<br />
equity interest to be acquired by LHHB pursuant to the First and Second Proposed<br />
Acquisition of Budiman Shares, no other liabilities will be assumed by LHHB<br />
arising from the Proposals.<br />
Based on the above, the Proposals are not expected to have any material adverse financial<br />
effects on the LHHB Group.<br />
9. CONCLUSION AND RECOMMENDATION<br />
As stated in the letter from the Board to you, the Board is of the opinion that the Proposals are in the<br />
best interests of the LHHB Group and accordingly, the Board has recommended (save for Datuk<br />
Lau Chong Wang, Dato Lau Eng Guang, Datuk Lau Tuang Nguang and Mr. Lau Chun Yuen who<br />
are interested in the Second Proposed Acquisition of Budiman Shares) that you vote in favour of the<br />
resolutions pertaining to the Proposals to be tabled at the forthcoming EGM.<br />
After taking into consideration the various factors discussed above, we are of the opinion<br />
that, on the basis of the information available to us, the financial terms of the Proposals are<br />
fair and reasonable and not detrimental to the shareholders of LHHB and accordingly would<br />
recommend that you vote in favour of the resolutions pertaining to the Proposals to be tabled<br />
at the forthcoming EGM.<br />
Yours faithfully,<br />
ARAB-MALAYSIAN MERCHANT BANK <strong>BERHAD</strong><br />
PUSHPA RAJADURAI<br />
Director / Head of Corporate Finance<br />
TAN KENG LIN<br />
Director, Corporate Finance<br />
52