iconAnnouncements

Date : 12 December 2000

DISPOSAL OF ASSETS AND EQUIPMENT STOCKS BY 100% OWNED SUBSIDIARY ("DISPOSAL")

Amended Announcements
Please refer to the earlier announcement reference number: CG-001207-35214

CME GROUP BERHAD

TypeReply to query
Reply to Query Letter by KLSE reference IDMN-001206-42612
SubjectDISPOSAL OF ASSETS AND EQUIPMENT STOCKS BY 100% OWNED SUBSIDIARY ("DISPOSAL")

Contents :

We refer to your queries and wish to reply as follows :-


(1) The sale consideration was arrived at a willing buyer willing seller basis. The terms of payment was agreed as follows :-

TOTAL PRICE
INITIAL PAYMENT
BALANCE OF PAYMENT
Equipment and spare part stocks
RM4,200,000.00
RM608,100.00
(Upon execution of Sale and Purchase Agreement).
a) RM603,100.00 X 5 instalments (January 2001 to May 2001).
b) RM144,100.00 X 4 instalments (June 2001 to September 2001).

(2) The disposal will have minimal effect on the earnings per share and the net tangible assets per share of the Group.

(3) As mentioned in our announcement to the Exchange on 2 December 2000, CME Industries Sdn Bhd ("CMEI"), a 100% owned subsidiary of CME Group Berhad ("CME") is no longer the sole distributor of the JCB range of equipments in Malaysia effective from 1 December 2000. The distributorship for the Malaysia region was given to a new distributor namely, DM Equipment Sdn Bhd ("DME") by JCB Sales Asia Pacific Pte Lte ("PRINCIPAL") on even date. Since CMEI is no longer the sole distributor, it would be difficult to dispose of the JCB equipment stocks and related spare parts as we are unable to provide proper and adequate after sales service to customers without any support from the Proncipal.

(4) The salient features of the Sale and Purchase Agreement are as follows :-

  • Terms of payment (Please refer to point No. 1 above).
  • Mr Chan Eng Soon and Mr Ong Tay Phing provide personal guarantee on the payment of the sales consideration to CMEI.
  • DME to offer employment for all CMEI employees related to the JCB business.
  • DME to takeover the unexpired warranties and free services on JCB equipments sold.
  • DME to takeover all rented branch premises for the JCB operation.
  • DME to assist CMEI to collect outstanding debts relating to the JCB business

The Sale and Purchase Agreement can be inspected at the registered office of the Group during office hours.

(5) As the transaction is a direct deal in respect of acquiring all the JCB related products, save as disclosed in the salient features of the Sale and Purchase Agreement on the warranties and free service to be provided to customers, DME will not assume any liabilities.

(6) The valuation of the equipment and spare part stocks disposed is as follows :-

ORIGINAL COST
(as at 14 November 2000)
PROVISION FOR OBSOLESCENCE
(14 November 2000)
NET BOOK VALUE
(as at 14 November 2000)
Equipment and spare part stocks
RM5,689,786.00
RM1,218,432.00
RM4,471,354.00

The valuation of the equipment and spare part stocks was based on 14 November 2000. As tabulated above, the equipment and spare parts stocks was purchased or traded-in between 1994 and 14 November 2000. Due to the depressed market demand for these equipment and spare part stocks since 1997, an amount of RM1.218,432.00 was provided for obsolescence. The net book value as at 14 November 2000 is RM4,471,354.00.

(7) The Board of Directors is of the opinion that the disposal of the equipment and spare part stocks is in the best interest of the company in view of the current depressed market demand for construction equipments and the loss of the distributorship of the JCB franchise.

(8) The disposal will result in a loss of RM271,354.00.

(9) The proceeds from the disposal will be reinvested into our fire-fighting business or other new business area.

Query Letter Contents :

We refer to your Company's announcement dated 2 December 2000, in respect of
the aforesaid matter.
In this connection, kindly furnish the Exchange with the following additional
information for public release :
1. How the sale consideration was arrived at and will be satisfied, including
the terms of any arrangement for payment on a deferred basis;
2. The effects of the Disposal on the earnings per share and net tangible
assets per share of your Group;
3. The rationale of the Disposal;
4. Salient features of the Sale and Purchase Agreement and the time and place
where such document may be inspected;
5. Particulars of all liabilities to be assumed by DM Equipment Sdn Bhd,
arising from the Disposal;
6. Original cost of investment in the assets and equipment stocks to CME
Industries Sdn Bhd ("CMEI") and the date of such investment;
7. A statement by the Board of Directors stating whether or not the Disposal is
in the best interests of the company and where a director disagrees with such
statement, a statement by the director setting out the reasons and the factors
taken into consideration in forming that opinion;


Page 2/-
8. The proposed utilisation of proceeds in respect of the Disposal;
9. The expected gains or losses arising from the Disposal; and
10. The net book value of the assets and equipment stocks, based on the latest
audited accounts of CMEI.
Please furnish the Exchange with your reply within two (2) market days from the
date hereof.

Yours faithfully


TAN YEW ENG
Senior Manager, Listing Operations
LMN\
copy to:- Securities Commission (via fax)



Announcement Info

Company NameCME GROUP BERHAD  
Stock Name CME    
Date Announced12 Dec 2000  
CategoryGeneral Announcement
Reference NoCG-001212-37852

Back