|The Board wishes to announce that Century Advance Technology Sdn Bhd (“Company”), a wholly-owned subsidiary of Century, had on 28 March 2012 entered into a Sale and Purchase Agreement ("SPA") with Nakamichi Malaysia Sdn Bhd. ("Vendor") to purchase a double storey factory and office buildings erected on a piece of leasehold land held under HS(D)116398, PT 224, Bandar Sultan Suleiman, Daerah Klang, Negeri Selangor measuring approximately 23,892 square metres in area ("Property"), for a purchase consideration of RM19,000,000 ("Acquisition").
1. INFORMATION OF THE PROPERTY
The Property is an industrial premise bearing address Lot 4A, Jalan Sultan Mohamed 3, Kawasan Perindustrian Bandar Sultan Suleiman, 42000 Port Klang, Selangor. The double storey factory and office buildings, totaling approximately 26,926 square metres, are estimated to be 13 years old. The remaining leasehold tenure is 93 years, expiring on 30 June 2105.
The Property is purchased on an "as-is-where-is" basis with vacant possession, subject to the following express condition and restriction in interest:
Express Condition: Perusahaan (Industrial)
Restriction in Interest: Tanah yang diberi milik ini tidak boleh dipindah milik, dipajak atau digadai melainkan dengan kebenaran Pihak Berkuasa Negeri
2. INFORMATION OF THE VENDOR
The Vendor was incorporated in Malaysia with its registered office at 312, 3rd Floor, Block C, Kelana Square, 17, Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan.
The Vendor is a wholly-owned subsidiary of Nakamichi Corporation Berhad (“NCB”), a company listed on the Main Market of Bursa Malaysia.
3. BASIS OF ARRIVING THE PURCHASE PRICE
The purchase consideration for the Property of RM19,000,000 was arrived at on a willing buyer willing seller basis after taking into consideration the Group’s knowledge of the market value of land within Kawasan Perindustrian Bandar Sultan Suleiman as well as expected replacement costs of buildings in similar condition. No formal valuation was carried out by any independent valuer in conjunction with the Acquisition.
Based on the audited financial statements of NCB as at 31 December 2010, the net book value of the Property is RM24,487,573. The Vendor represents that the net book value of the Property as at 31 December 2011 is RM18,300,000.
The Vendor further represents that the original cost and date of investment of the Property is RM29,595,282 and October 1998, respectively.
4. PAYMENT AND FUNDING
The purchase price shall be paid in the following manner:
(i) upon execution of a letter of offer, the Company had paid an initial deposit sum amounting to RM380,000, being two per cent (2%) of the purchase price.
(ii) upon execution of the SPA, a balance deposit sum amounting to RM1,520,000, being eight per cent (8%) of the purchase price payable to the Vendor’s Solicitors as stakeholder.
(iii) payment of the balance RM17,100,000, being the balance payment of 90% (“Balance Payment”), to the Vendor's solicitors as stakeholder within three (3) months from the Unconditional Date (as defined below) ("Original Period"), provided always that the Vendor shall grant the Company an extension of one (1) month from the expiry of the Original Period to pay the Balance Payment subject to the payment of interest at the rate of eight per cent (8%) in the event the Balance Payment is not paid within the Original Period.
The Unconditional Date is defined as the last of the consent of NCB and the consent of the shareholders of NCB for the disposal of the Property as well as the approval of the state authority for the transfer of the Property.
The purchase consideration for the Property is expected to be funded via bank borrowings, indicatively in the proportion of 80% to 85%, while the balance will be from internal generated funds. There will not be any liabilities to be assumed arising from the Acquisition.
5. RATIONALE / PROSPECTS FOR THE ACQUISITION
The Property is intended to be used to house the Procurement Logistics operation of the Century Group, as it is more suited for such an operation. The Procurement Logistics operation is currently carried out in Century’s Distribution Centre 1A in Port Klang. Century’s distribution centres are currently full and the space vacated in Distribution Centre 1A will enable the expansion of Century’s total logistics operation.
The Acquisition is in line with the Century’s Group’s expansion plans, in particular the increase of warehousing capacity.
6. RISKS OF THE ACQUISITION
Save for the approvals required prior to the Unconditional Date, as defined above, there is no other risk expected to arise from the Acquisition. However, in the event the necessary approvals are not obtained within the stipulated timeframe, it may result in the SPA being terminated.
7. FINANCIAL EFFECTS OF THE ACQUISITION
(i) Share Capital and Major Shareholders' Shareholding
There will be no change in Century’s share capital and the major shareholders' shareholdings as the Acquistion does not involve any issue of shares by the Company.
(ii) Net Assets ("NA")
The Acquisition is not expected to have any material effect on the NA of the Century Group.
The Acquisition is not expected to have any material impact on the earnings of the Century Group for the financial year ending 31 December 2012.
The gearing of the Century Group will increase as a result of the Acquisition. The net debt to equity ratio of the Century Group as at 31 December 2011 will increase from 21.65% to 31.11%.
8. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
In so far as the Directors are aware, none of the Directors and / or major shareholders and / or persons connected to them has any interests, direct or indirect in the Acquisition.
9. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors, having considered all aspects of the Acquisition, is of the opinion that the Acquisition is in the best interest of Century.
10. APPROVALS REQUIRED
The Acquisition does not require the approval of Century’s shareholders.
11. HIGHEST PERCENTAGE RATIO
The highest percentage ratio applicable to the Acquisition is 9.47%, which is the value of the Property compared to the consolidated NA of Century for the financial year ended 31 December 2011.
12. ESTIMATED TIME FRAME FOR COMPLETION
The SPA is conditional upon and subject to the approvals required prior to the Unconditional Date, as defined above. The Acquisition, which is to be completed within three (3) months from Unconditional Date, is estimated to be completed by September 2012.
13. DOCUMENTS FOR INSPECTION
A copy of the SPA is available for inspection during normal business hours from Monday to Friday (excluding public holidays) at Century’s registered office at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur for a period of three (3) months from the date of this announcement.
This announcement is dated 28 March 2012.