Pg 147 - Berjaya Corporation Berhad

notes to thefinancial statements30 April 200639 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)GMOC which is principally involved in property development and investment, is currently contemplating to undertake a mixeddevelopment project comprising retail, entertainment, theme park and water park located at Yanjiao Development & EconomicTech, Sanhe City, Hebei Province, People’s Republic of China.Subsequently, on 7 April 2006, the Company announced that GMOC had received the approval from National DevelopmentReform Committee of Central Government, China for its Great Mall Project subject to GMOC increasing its registered capital toRMB890.0 million (about RM414.0 million) payable within 3 years from the current registered capital of approximately RMB98.0million (about RM45.6 million). In view of the aforementioned requirement, BLCL’s proposed 51% subscription in GMOC will alsoincrease from RMB33.3 million to RMB453.9 million or equivalent to approximately RM211.1 million (“Proposed Revision”).The Proposed Subscription is now subject to the approvals being obtained from the Administration of Commerce and IndustryAuthority, China and the Ministry of Commerce of the People’s Republic of China. In addition, the Proposed Revision is alsosubject to approval being obtained from the shareholders of the Company. The approval from Bank Negara Malaysia for theremittance of funds was obtained on 2 May 2006.7 In 1999, pursuant to a debt conversion exercise, the Company entered into several put option agreements (“Put Options”) withfinancial institutions (“FIs”) wherein the FIs are entitled to put to the Company the ICULS 1999/2009 at a pre-determined optionprice for a period of 3 years commencing from 31 December 2001. BGB had agreed with the Company to assume the put options(“BGB Put Option”). However, BGB later informed the Company that it would not be able to meet its obligation. In view of this,the Company had made arrangements to finance the Put Options with internally generated funds and external borrowings. TheCompany had also arranged for Immediate Capital Sdn Bhd, a wholly owned subsidiary company of the Company, to take up thePut Options. BGB had undertaken to indemnify the Company and /or its subsidiary companies for all costs incurred in relationto any funding obtained to fulfil the Company’s obligations under the BGB Put Option. Notwithstanding the BGB’s proposal toindemnify the Company, BGB continues to be liable to the Company for its failure to assume the BGB Put Option.BGB and the Company had previously proposed to offer the ICULS 1999/2009 under the Put Options to the shareholders ofBGB and the Company. However, the low market price of the ICULS 1999/2009 precludes the successful implementation ofthe proposal.Based on the actual holding costs incurred/deemed incurred in respect of 797,241,290 ICULS 1999/2009 by the Companyup to 31 December 2004 (being the expiry date of the BGB Put Option), the compensation had as such been determined tobe RM226,891,428 through the release of the Company’s obligation to distribute 576,304,227 BCorp ICULS to BGB pursuantto the Company’s distribution of BCorp ICULS to its shareholders via a capital repayment. In addition, the total net financingcosts incurred by the Company up to 31 December 2004 to take up these ICULS 1999/2009 amounted to RM24.590 millionand have been included in the amount due from penultimate holding company, BGB as disclosed in Note 12 to the financialstatements.8 The Company had completed the following proposals:i) the settlement of inter-company balance by BCorp on behalf of BGB amounting to RM1,617,585,000 through the issuanceof 4,108,666,000 new BCorp ICULS on 23 December 2005;ii) bonus issue of 890,323,360 new ordinary shares of RM1.00 each, credited as fully paid-up, on the basis of one new sharefor every one share held on 13 December 2005 which was allotted on 14 December 2005 (“1st Bonus Issue”);iii) capital repayment and consolidation which comprised the following were completed on 14 December 2005:- capital repayment pursuant to Section 64 of the Companies Act, 1965 of RM0.80 for every share held after 1st BonusIssue via the distribution of BCorp ICULS; and- consolidation of five ordinary shares of RM0.20 each held after the capital repayment mentioned above into one ordinaryshare of RM1.00 each;iv) bonus issue of 534,194,016 new ordinary shares of RM1.00 each, credited as fully paid-up, on the basis of three new sharesfor every two shares held immediately after the 1st Bonus Issue and capital repayment and consolidation allotted on 15December 2005; andv) a special dividend-in-specie, of 65% gross less 28% income tax from the remaining BCorp ICULS held by the Companyupon completion of the capital repayment and compensation received from BGB in respect of termination of BGB PutOption.94Annual Report 2006Berjaya Land Berhad (201765-A)