GENERAL ANNOUNCEMENT (DRAFT)
Company Name
Stock code
Stock Name
Date Announced
Type
Subject
:
:
:
:
BOUSTEAD HOLDINGS BERHAD (“BHB”)
2771
BSTEAD
6 August 2008
: Announcement
: BOUSTEAD HOLDINGS BERHAD (“BHB” or the “COMPANY”)
PROPOSED DISPOSAL OF MALAKOFF ESTATE AND BEBAR ESTATE
(COLLECTIVELY REFERRED TO AS “PLANTATION ASSETS”) BY BOUSTEAD
HOLDINGS BERHAD (“BHB”) AND BOUSTEAD RIMBA NILAI SDN BHD, A
WHOLLY OWNED SUBSIDIARY OF BHB, (COLLECTIVELY THE “BOUSTEAD
COMPANIES”) TO AL-HADHARAH BOUSTEAD REIT (THE “FUND”) FOR AN
AGGREGATE SALE CONSIDERATION OF RM192,400,000 TO BE SATISFIED
BY CASH AND ISSUANCE OF NEW FUND UNITS AND THE SUBSEQUENT
LEASE OF THE PLANTATION ASSETS FROM THE FUND BACK TO
BOUSTEAD COMPANIES (“PROPOSED SALE AND LEASEBACK”).
1.
INTRODUCTION
We refer to our earlier announcement made on 29 January 2008 with regard to the Proposed
Exercise of First Call Option. In this respect, the Board of Directors of BHB (“Board”) is
pleased to announce that the Company intends to undertake the Proposed Sale And
Leaseback.
2.
DETAILS OF PROPOSED SALE AND LEASEBACK
2.1
Particulars
The Proposed Sale And Leaseback entails the disposal of the Plantation Assets by
the Boustead Companies to the Fund for an aggregate sale consideration of
RM192,400,000 and the lease of the Plantation Assets by the Fund back to the
Boustead Companies at lease payments and periods to be determined in due course
and will be undertaken immediately after the Exercise of First Call Option.
The sale consideration of RM192,400,000 above comprises:(i)
(ii)
sale consideration for Malakoff estate of RM103,531,400; and
sale consideration for Bebar estate of RM88,868,600; and
The above sale consideration for the Plantation Assets shall be settled through:(i)
(ii)
cash payment (“Cash Consideration”); and
the issuance of 60,000,000 new units in the Fund to BHB at a price to be
determined after the approval of the Securities Commission (“SC”) has been
obtained for the Proposed Sale And Leaseback by the Fund (“Consideration
Units”).
For illustrative purposes, assuming an indicative issue price of RM1.40 per unit for
the Consideration Units, the cash payment will amount to approximately
RM108,400,000.
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2.2
Salient terms of the Sale and Purchase Agreement (“SPA”) and Leaseback
Agreement (“LA”)
The SPA and the LA are currently being finalised at the date of this announcement
and shall be entered into in due course. Further details on the salient terms of the
SPA and LA shall be announced once the SPA and LA has been executed.
2.3
Basis of arriving at the sale consideration
The aggregate sale consideration of the Plantation Assets of RM192,400,000 was
arrived at on a willing buyer willing seller basis and after taking into consideration the
aggregate valuation of the Plantation Assets by Azmi & Co Sdn Bhd (“Azmi & Co”),
an independent registered firm of professional valuers, as set in Table 1.
The sale consideration represents a discount of 0.93% to the aggregate valuation of
the Plantation Assets by Azmi & Co.
2.4
Basis of arriving at the issue price of the Consideration Units
The issue price of the Consideration Units will be determined later based on the five
(5)-day weighted average market price (“WAMP”) of the Fund units immediately
prior to the price-fixing date after the approval of the SC has been obtained for the
Proposed Sale And Leaseback by the Fund.
BHB intends to retain the Consideration Units as a long term investment to earn a
stable distribution of income/yield from the Fund.
2.5
Ranking of the Consideration Units
The Consideration Units to be issued pursuant to the Proposed Sale and Leaseback
shall upon allotment and issue, rank pari passu with the existing Fund units except
that they shall not be entitled to participate in any distributable income, rights,
allotments and/or any other distribution that may be declared, made or paid prior to
the date of allotment and issue of the Consideration Units.
2.6
Information on the Plantation Assets
Information on the Plantation Assets is disclose in Table 2.
2.7
Liabilities to be assumed by the Fund
The Plantation Assets shall be disposed to the Fund free from all claims, charges,
liens or other encumbrances and with all rights, interests and benefits attaching
thereto.
2.8
Original cost and date of investment
The original cost of investment in the Malakoff estate and the Bebar estate to the
Boustead Companies as at 23 June 2008 were RM73,800,175 and RM39,109,604
respectively.
2.9
Intended utilisation of Cash Consideration
The Cash Consideration shall be utilised to pare down the borrowings of the BHB
Group.
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2.10
Information on the Fund
The Fund was constituted pursuant to the execution of a trust deed dated 11
December 2006 by Boustead Reit Managers Sdn Bhd (“Boustead Reit Managers”)
and the trustee for the Fund, CIMB Trustee Berhad.
The Fund was listed on the Main Board of Bursa Malaysia Securities Berhad on 8
February 2008. As at 29 July 2008, the number of the Fund units in circulation is
472,001,000 units.
The principal activity of the Fund is to own and invest primarily in plantation assets
comprising oil palm estates and palm oil mills with the objective of providing stable
distribution of income or yield and long term growth in net asset value per unit.
As at 29 July 2008, the substantial unitholders of the Fund are Boustead Properties
Berhad (“BProp”), Boustead Plantations Berhad and Boustead Heah Joo Seang Sdn
Bhd, all of which are subsidiaries of BHB and Lembaga Tabung Angkatan Tentera
(“LTAT”) and Lembaga Tabung Haji.
The Fund is managed by Boustead REIT Managers which was incorporated on 7
October 1982 in Malaysia as a private limited company, under the name Emas Jeep
Sdn Bhd under the Companies Act, 1965. On 16 August 2006, Boustead REIT
Managers assumed its present name.
As at 29 July 2008, the Directors of The Fund Managers are:




Tan Sri Dato’ Lodin Wok Kamaruddin (Chairman)
Mr. Daniel Ebinesan (Non-Independent Director)
Datuk Haji Abdul Aziz Ismail (Non-Independent Director)
Tuan Haji Kamaludin Abdul Kadir (Independent Director)
Mr. David Loo Kean Beng (Independent Director)
As at 29 July 2008, the substantial shareholders of Boustead REIT Managers are
LTAT,BHB, Yayasan Warisan Perajurit and Irat Properties Sdn Bhd.
3.
RATIONALE FOR THE PROPOSED SALE AND LEASEBACK
3.1
Realise gains for BHB
The Proposed Sale And Leaseback will enable BHB to realise the underlying value of
the Plantation Assets.
3.2
Enhance BHB’s investment in the Fund
The Proposed Sale And Leaseback will enhance BHB’s investment in The Fund
through the injection of further assets. It is also aimed at promoting the growth of the
Fund while enhancing dividend payments for and possibly the market price
performance of the units in The Fund.
3.3
Increase BHB’s investment in the Fund
The subsequent disposal of the Plantation Assets into The Fund will be partly settled
through the issuance of Consideration Units to BHB. This will increase BHB’s
unitholding in The Fund.
3.4
Enhance BHB’s profile in the REIT market
BHB’s profile in the REIT market would be enhanced as the Proposed Sale And
Leaseback will expand the Fund’s current asset portfolio comprising approximately
12,680 hectares of plantation land by approximately 3,739.80 hectares to a total of
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16,419.80 hectares which will position the Fund at the forefront of the REIT market in
Malaysia as one of the leading players and one of the largest REITs in Malaysia with
a gross asset value of approximately RM664.40 million.
4.
EFFECTS OF THE PROPOSED SALE AND LEASEBACK
4.1
Share Capital and Substantial Shareholders’ Shareholding in BHB
The Proposed Sale And Leaseback would not have any effect on the share capital
and substantial shareholders’ shareholdings in BHB as it does not involve new issue
of BHB Shares to the Fund.
4.2
Net Assets (“NA”)
The proforma effects of the Proposed Sale And Leaseback on the NA of the BHB
Group based on the audited accounts as at 31 December 2007 is set out in Table 1.
4.3
Earnings
The Proposed Sale And Leaseback is expected to contribute positively to the
earnings per share of BHB Group. The Proposed Sale and Leaseback is expected to
result in a gain on disposal of RM79.5 million for the BHB Group for the financial year
ending 31 December 2008.
4.4
Gearing
The proforma effects of the Proposed Sale And Leaseback on the BHB Group’s
gearing is set out in Table 2.
5.
APPROVALS REQUIRED
The Proposed Sale And Leaseback is subject to the following approvals to be obtained by
BHB:
(i)
(ii)
the shareholders of BHB at an Extraordinary General Meeting (“EGM’) to be
convened; and
any other relevant authorities and/or parties, if required.
The Proposed Exercise Of First Call Option is subject to the approval of the Foreign
Investment Committee which has been obtained on 11 November 2005.
The Proposed Sale And Leaseback is conditional upon the Proposed Exercise Of First Call
Option.
6.
INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND CONNECTED PERSONS
Save as disclosed below, none of the Directors of BHB, major shareholders of BHB or
persons connected with the Directors and/or major shareholders of BHB have any interest,
direct and/or indirect, in the Proposed Sale And Leaseback:6.1
Interest of Directors of BHB
Tan Sri Dato’ Lodin Wok Kamaruddin is the Chief Executive of LTAT, the Group
Managing Director of BHB and the Chairman of Boustead REIT Managers. As at 29
July 2008, he is also a unitholder of the Fund with a 0.04% direct unitholding in the
Fund. In view of this, Tan Sri Dato’ Lodin Wok Kamaruddin is an interested Director in
the Proposed Sale And Leaseback.
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Accordingly, Tan Sri Dato’ Lodin Wok Kamaruddin has and will continue to abstain
from all Board deliberations and voting on the resolution pertaining to the Proposed
Sale And Leaseback.
Tan Sri Dato’ Lodin Wok Kamaruddin will also abstain from voting in respect of his
direct and/or indirect shareholding in BHB on the resolution pertaining to the
Proposed Sale And Leaseback at the forthcoming EGM. In addition Tan Sri Dato’
Lodin Wok Kamaruddin has undertaken that all persons connected to him will abstain
from voting in respect of their direct and indirect shareholdings (if any) on the
resolution pertaining to the Proposed Sale And Leaseback at the forthcoming EGM.
6.2
Interest of Major Shareholders of BHB
As at 29 July 2008, LTAT is a 57.50% shareholder of BHB, a 31% shareholder of
Boustead REIT Managers and a 15.24% unitholder of the Fund. Hence, LTAT is
deemed interested in the Proposed Sale And Leaseback.
Accordingly, LTAT will abstain from voting in respect of its interest, direct and indirect,
in BHB, on the resolution pertaining to the Proposed Sale And Leaseback at the
forthcoming EGM. In addition LTAT has undertaken to ensure that persons
connected to it will abstain from voting in respect of their direct and indirect
shareholdings (if any) on the resolution pertaining to the Proposed Sale And
Leaseback at the forthcoming EGM.
7.
ADVISER AND INDEPENDENT ADVISER
AFFIN Investment has been appointed as the Adviser to BHB for the Proposed Sale And
Leaseback.
The Proposed Sale And Leaseback, as disclosed in Section 6 above, is a related party
transaction pursuant to paragraph 10.08 of the Listing Requirements of Bursa Securities.
Accordingly, the Board has appointed Mainstreet Advisers Sdn Bhd as the independent
adviser to advise the non-interested shareholders of BHB on the Proposed Sale And
Leaseback.
8.
BOARD OF DIRECTORS’ STATEMENT
The Board (save for Tan Sri Dato' Lodin Wok Kamaruddin who is deemed interested in the
Proposed Sale And Leaseback and have accordingly abstained from making a
recommendation), having considered all aspects of the Proposed Sale And Leaseback and
after careful deliberation, is of the opinion that the Proposed Sale And Leaseback is in the
best interest of BHB.
9.
ESTIMATED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, and subject to the receipt of all the approvals of the
relevant authorities, the Proposed Sale And Leaseback is expected to be completed in the
fourth quarter of 2008.
10.
DEPARTURE FROM THE SECURITIES COMMISSION'S GUIDELINES
As the Proposed Sale And Leaseback does not involve any issue/offer of securities by BHB,
the Securities Commission's Guidelines on the Offering of Equity and Equity-linked Securities
are not applicable.
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11.
DOCUMENTS FOR INSPECTION
The valuation reports on the Malakoff estate and Bebar estate will be made available for
inspection at the registered office of BHB at 28th Floor, Menara Boustead, 69 Jalan Raja
Chulan, 50200 Kuala Lumpur during normal business hours from Monday to Friday (except
public holidays) for a period of two (2) weeks from the date of this announcement.
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