1. INTRODUCTION
The Board of Directors of AEON (“Board”) is pleased to announce that the Company, as the Purchaser has entered into a Sale and Purchase Agreement (hereinafter referred to as the “SPA”) with the Vendor, ASIA PLYWOOD COMPANY SDN. BHD. (Company No. 5653-H) having its registered office at Plot 35-38, Kawasan Perusahaan Bukit Selambau, 08010, Sungai Petani, Kedah (hereinafter referred to as the “Vendor”) on 3rd June 2011 in respect of the acquisition a piece of freehold land measuring in area of approximately 8.162 hectares or 20.168 acres or 878,518.08 square feet (hereinafter referred to as “the Sale Property”) which is held under GRN 181086, Lot No. 2834 Seksyen 47, Bandar Sungai Petani, Daerah Kuala Muda, Negeri Kedah, at the purchase price of Ringgit Malaysia Thirty Six Million Nineteen Thousand Two Hundred Forty One and Sen Twenty Eight (RM 36,019,241.28) Only for the purpose of constructing a shopping centre thereon and operating the business of shopping centres and departmental store cum supermarkets upon completion of the construction of the shopping centre (hereinafter referred to as the “Complex”) in accordance with all the terms and conditions as stipulated in the SPA (hereinafter referred to as the “Acquisition”).
2. THE ACQUISITION
2.1 Information on the Sale Property
(i) The Vendor is the registered and beneficial owner of a piece of freehold land measuring in area approximately 8.162 hectares or 20.168 acres or 878,518.08 square feet held under GRN 181086, Lot No. 2834 Seksyen 47, Bandar Sungai Petani, District of Kuala Muda, State of Kedah (hereinafter referred to as “the Sale Property”).
(ii) The Vendor shall, at its own cost and expense, apply to the relevant authorities for the conversion of the land use of the Sale Property from “Agriculture” to “Building-Commercial Shopping Centre” or its equivalent for operating the business of shopping centres and departmental stores cum supermarkets and procure the issuance of a fresh issue document of title of the Sale Property with the land use as stated above.
(iii) The Vendor is desirous of selling the Sale Property measuring approximately 8.162 hectares or 20.168 acres or 878,518.08 square feet, subject to the measurement of the size of the Sale Property in Clause 3.2 of the SPA and the Purchaser is desirous of purchasing the Sale Property free from all encumbrances, in which both the Vendor and the Purchaser have mutually agreed to enter into a SPA for the purpose of operating the business of shopping centres and departmental store cum supermarkets (hereinafter referred to as “the Complex”) thereon.
2.2 Basis of arriving at the purchase consideration
The purchase consideration for the Acquisition amounting to Ringgit Malaysia Thirty Six Million Nineteen Thousand Two Hundred Forty One and Sen Twenty Eight (RM 36,019,241.28) Only calculated at the rate of Ringgit Malaysia Forty One (RM41.00) Only per square feet on an estimated area of 8.162 hectares or 20.168 acres or 878,518.08 square feet of the Sale Property was arrived at on a willing buyer-willing seller basis and the Acquisition will be fully satisfied by cash and financed through the Company’s internal generated funds.
2.3 Assumption of liabilities including contingent liabilities and guarantees
The Company will not be assuming any liabilities including contingent liabilities and guarantees pursuant to the Acquisition.
2.4 Salient terms and conditions of SPA
The salient terms and conditions of the SPA, among others, are as follows:-
(i) The Vendor agrees to sell and the Company agrees to purchase the Sale Property free from all encumbrances, caveats and other restraints, whether legal or equitable, but subject to all conditions express or implied in the issue document of title to the Sale Property and the terms and conditions in the SPA.
(ii) The completion of the SPA of the Sale Property is subject to, among others, the following conditions being fulfilled:-
(a) The Vendor shall, at its own costs and expenses, obtain the approval from the Relevant Authorities pertaining to conversion of the land use of the Sale Property from “Agriculture” to “Building-Commercial Shopping Centre” or its equivalent for operating the business of shopping centres and departmental stores cum supermarkets (“the Conversion Approval”) and shall cause the application for the same to be submitted to the relevant Land Office for the issuance of the issue document of title of the Sale Property;
(b) The Vendor shall, at its own costs and expenses, submit and obtain the Planning Approval / Development Order for the development of the Complex on the Sale Property of which the same shall include the ingress and egress to and from the Sale Property; road widening of Jalan Desa Jaya and the upgrading of the current road condition and traffic light(s) located at Jalan Badlishah and Jalan Lencong Timur’s junction based on the Purchaser’s requirements, including but not limited to, the approvals of the followings:-
(i) the upgrading of the existing traffic light(s) at the junction of Jalan Badlishah and Jalan Lencong Timur;
(ii) the ingress and egress from the abovementioned traffic light(s) junction to and from the outside boundary of the Sale Property;
(iii) to widen and upgrade the existing Jalan Desa Jaya to a 100 feet road as per the Purchaser’s or the relevant authority’s requirements, including the relocation or installation of the street light(s) and traffic/directional signages, if required;
(iv) the upgrading of the Jalan Badlishah and Jalan Desa Jaya junction;
(v) the ingress and egress from Jalan Desa Jaya to and from the outside boundary of the Sale Property;
(vi) the construction of the connecting road to the neighbouring roundabout of which it is connected to Jalan Perdana Heights 1/1; and
(vii) synchronizing of the above mentioned traffic lights,
in accordance with the requirements of the Purchaser;
(c) The Vendor shall, at its own costs and expenses, obtain the approval from the relevant state authorities for the transfer of the Sale Property to the Purchaser, if applicable (hereinafter referred to as the “State Authority’s Approval”);
(d) The Purchaser shall, at its own costs and expenses, obtain the approval for the Building Plan from the relevant authorities (hereinafter referred to as the “Building Plan’s Approval”) for the construction of the shopping centre on the Sale Property. The Vendor agrees to assist the Purchaser for the submission of the Building Plan by the Purchaser;
(e) The Purchaser shall, at its own costs and expenses, apply for and obtain the approval of the Economic Planning Unit, Prime Minister’s Department, if applicable, for the acquisition of the Sale Property in accordance with the terms of the SPA (hereinafter referred to as the “EPU Approval”);
(f) The Purchaser shall, at its own costs and expenses, apply for and obtain the approval of the State Authority for the acquisition of the Sale Property in accordance with the terms of the SPA under Section 433(B) of the National Land Code 1965 (hereinafter referred to as the “State Authority 433B Transfer Approval”); and
(g) The Purchaser shall, at its own costs and expenses, obtain the approval of the Distributive Trade Committee of the Ministry of Domestic Trade, Cooperatives and Consumerism for the operation of the Complex and departmental store cum supermarket on the Sale Property (hereinafter referred to as the “DTC Approval”).
(iii) The Company shall pay the purchase price in the following manners, which the events referred to hereunder are not set out in chronological order and may be fulfilled in any order or manner:-
1. The Purchaser has paid to the Vendor’s Solicitors as the stakeholders on 17th September 2010 of which the stakeholders has acknowledged receipt of the same on 27th September 2010, the sum of Ringgit Malaysia Three Hundred Sixty Thousand One Hundred Seventy Four and Sen Fifty Five (RM360,174.55) Only being the sum equivalent to one percent (1%) of the Purchase Price as the earnest deposit (hereinafter referred to as the “Earnest Deposit”) prior to the execution of the SPA SUBJECT TO the refund of the same to the Purchaser within seven (7) days from the date of the written notice of the Purchaser upon the non-agreement of the terms and conditions or the non-execution of the SPA or if the transaction is aborted for whatsoever reasons, as the case may be. However, since the qualified title of the Sale Property has been issued and there is an increase of the land size of the Sale Property, the earnest deposit shall be recomputed and the revised earnest deposit shall amount to Ringgit Malaysia Three Hundred Sixty Thousand One Hundred Ninety Two and Sen Forty One (RM360,192.41) Only. The Purchaser shall pay the difference of Ringgit Malaysia Seventeen and Sen Eighty Six (RM17.86) Only being the differential sum of the earnest deposit to the Vendor upon execution of the SPA;
2. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders, the sum of Ringgit Malaysia Two Million Five Hundred Twenty One Thousand Three Hundred Forty Six and Sen Eighty Eight (RM2,521,346.88) Only being a sum equivalent to seven percent (7%) of the Purchase Price upon the execution of the SPA as the balance deposit (hereinafter referred to as the “Balance Deposit”). The Purchaser shall retain the sum of Ringgit Malaysia Seven Hundred Twenty Thousand Three Hundred Eighty Four and Sen Eighty Two (RM720,384.82) Only being the retention sum equivalent to two percent (2%) of the Purchase Price payable under Real Property Gains Tax Act, 1976 in respect of the sale of the Sale Property to the Director-General of Inland Revenue (hereinafter referred to as the “Retention Sum”) within sixty (60) days from the Unconditional Date. The payment of the Balance Deposit is hereby acknowledged receipt by the Stakeholders. The Earnest Deposit, the Balance Deposit and the Retention Sum shall hereinafter collectively be referred to as the “Deposit” for the SPA and shall form part of the Purchase Price upon execution of the SPA;
3. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders the sum of Ringgit Malaysia Three Million Six Hundred One Thousand Nine Hundred Twenty Four and Sen Thirteen (RM3,601,924.13) Only being a sum equivalent to ten percent (10%) of the Purchase Price (hereinafter referred to as the “First Payment”) within the period of fourteen (14) days from the date of the Purchaser’s receipt of the written notice from the relevant authorities that the applications for the DTC and EPU have been duly approved by the relevant authorities;
4. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders the sum of Ringgit Malaysia Seven Million Two Hundred Three Thousand Eight Hundred Forty Eight and Sen Twenty Six (RM7,203,848.26) Only being a sum equivalent to twenty percent (20%) of the Purchase Price (hereinafter referred to as the “Second Payment”) within the period of fourteen (14) days from the date of the Vendor’s receipt of the written notice from the Purchaser that the application for the Building Plan of the Complex has been duly approved by the Relevant Authorities;
5. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders the sum of Ringgit Malaysia Seven Million Two Hundred Three Thousand Eight Hundred Forty Eight and Sen Twenty Six (RM7,203,848.26) Only being a sum equivalent to twenty percent (20%) of the Purchase Price (hereinafter referred to as the “Third Payment”) within the period of fourteen (14) days from the date of the Purchaser’s receipt of the written notice from the Vendor pertaining to the completion of the external Infrastructure, at the Vendor’s own costs and expenses, with approvals from the Relevant Authorities, which shall include but not limited to, completion of the infrastructures outside the boundary of the Sale Property, road widening and upgrading the existing road condition and traffic light(s) including synchronizing the traffic light as depicted in Schedule (3) & (4) of the SPA;
6. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders the sum of Ringgit Malaysia Seven Million Two Hundred Three Thousand Eight Hundred Forty Eight and Sen Twenty Six (RM7,203,848.26) Only being a sum equivalent to twenty percent (20%) of the Purchase Price (hereinafter referred to as the “Fourth Payment”) within the period of fourteen (14) days from the date of the Purchaser’s receipt of both the State Authority’s Approval from the Vendor and the State Authority 433B Transfer Approval from the Relevant Authorities, whichever is later; and
7. The Purchaser shall pay to the Vendor’s Solicitors as the Stakeholders the sum of Ringgit Malaysia Seven Million Two Hundred Three Thousand Eight Hundred Forty Eight and Sen Twenty Six (RM7,203,848.26) Only being a sum equivalent to twenty percent (20%) of the Purchase Price (hereinafter referred to as the “Final Payment”) fourteen (14) days after the Unconditional Date.
2.5 Background Information on the Vendor
The Vendor is a private limited company incorporated in Malaysia with its place of business at Plot 35-38, Kawasan Perusahaan Bukit Selambau, Sungai Petani, Kedah.
2.6 Completion Date
The Completion Date shall be on the day of the presentation of the Transfer Documents delivered by the Vendor to the Company for the purpose of registration at the relevant land office. The Transfer Documents include:-
i) a duly executed stamped Memorandum of Transfer of the Sale Property in favour of the Company;
ii) the original Issue Document of Title of the Sale Property with the name of the Vendor duly endorsed as the registered owner;
iii) the current quit rent and assessment receipt for the Sale Property; and
iv) such other documents (if any) required by the relevant land office to effect the registration of the Sale Property in favour of the Company free from encumbrances.
The Completion Date is expected to take place within thirty (30) months from the date of the SPA.
3. RATIONALE FOR THE ACQUISITION INCLUDING ANY BENEFIT WHICH IS EXPECTED TO ACCRUE
The Acquisition is in line with AEON’s corporate strategy of accelerating the expansion of its retail business through opening of new shopping centres and outlets.
4. FINANCIAL EFFECTS OF THE ACQUISITION
The Acquisition is not expected to have any material impact on the earnings per share, net assets per share and gearing of the Company. There will be no change in the share capital and substantial shareholders’ shareholding of the Company.
5. PROSPECT
The Acquisition is expected to contribute positively to AEON’s business in future.
6. APPROVALS REQUIRED AND ESTIMATED TIMEFRAME
The Acquisition is not subject to approval of the shareholders of AEON. Barring any unforeseen circumstances, the approvals required from the relevant authorities disclosed in item 2.4 above are expected to be obtained within twenty four (24) months.
7. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the Directors and/or major shareholders of AEON and/or persons connected to them have any interest, direct or indirect, in relation to the Acquisition.
8. DIRECTORS’ RECOMMENDATIONS
The Board having considered all aspects of the Acquisition is of the opinion that the Acquisition is in the best interests of AEON.
9. DEPARTURE FROM THE SECURITIES COMMISSION’S EQUITY GUIDELINES
To the best knowledge of the Directors of AEON, the Acquisition has not departed from the Securities Commission’s Equity Guidelines.
10. DOCUMENTS AVAILABLE FOR INSPECTION
A copy of the SPA executed on 3rd June 2011 is available for inspection at the registered office of AEON at 3rd Floor, Jusco Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.
This is a voluntary announcement made under Paragraph 10.05(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
This announcement is dated 3rd June 2011.
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