Bursa Announcements

Date : 24 July 2014

OTHERS SUNWAY BERHAD (“SUNWAY”) - JOINT VENTURE AGREEMENT BETWEEN SUNWAY ISKANDAR SDN BHD (A SUBSIDIARY OF SUNWAY) AND TAJUL GREEN SDN BHD

SUNWAY BERHAD

TypeAnnouncement
SubjectOTHERS
DescriptionSUNWAY BERHAD (“SUNWAY”)
- JOINT VENTURE AGREEMENT BETWEEN SUNWAY ISKANDAR SDN BHD (A SUBSIDIARY OF SUNWAY) AND TAJUL GREEN SDN BHD

1. INTRODUCTION

The Board of Directors of Sunway wishes to announce that Sunway Iskandar Sdn Bhd (“SISB”), a subsidiary of Sunway, has on 24 July 2014, entered into a Joint Venture Agreement (“JVA") with    Tajul Green Sdn Bhd (“TGSB”) for the purpose of formalising and setting out the basic terms of the parties’ relationship via their respective investment participation in the joint venture through Sunway Nursery and Landscape Sdn Bhd (formerly known as Trillion Desire Sdn Bhd) (“SNLSB”) to share resources and expertise in tree planting, nurturing and ensuring consistent supply of grown trees to the property development  projects in Sunway Iskandar (“Proposed Joint Venture”).

2. INFORMATION ON SISB, TGSB AND SNLSB

2.1 SISB

SISB is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan. The authorised and paid-up capital of SISB are RM12,000,000/- and RM9,134,100/- respectively. The principal activity of SISB is property development.

2.2 TGSB
 
TGSB is a company incorporated in Malaysia and having its registered office at Unit 506, Block B3, Leisure Commerce Square, No. 9, Jalan PJS8/9, 46150 Petaling Jaya, Selangor Darul    Ehsan. The authorised and paid-up share capital of TGSB are RM500,000/- and RM310,000/- respectively. The principal activities of TGSB are landscaping contractors and property investment holding.

2.3 SNLSB
    
SNLSB is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan. The authorised and paid-up capital of SNLSB are RM400,000/- and RM2/- respectively. The principal activities of SNLSB are nursery and landscaping.

3.  SALIENT TERMS OF THE JVA

SISB and TGSB have entered into the JVA to regulate the parties' relationship as shareholders of SNLSB to undertake the Proposed Joint Venture.

Under the JVA, the shareholding of SNLSB shall be structured as follows:-

Shareholder

Number of Ordinary
Shares of RM1.00 each

Number of Redeemable Preference
Shares of RM0.01 each

Agreed Proportion (%)

SISB

50,000

2,700,000

50%

TGSB

50,000

2,700,000

50%

TOTAL:

100,000

5,400,000

100%

4.  LIABILITIES TO BE ASSUMED

There are no liabilities (including contingent liabilities and guarantees) to be assumed by Sunway arising from the Proposed Joint Venture.

5. RATIONALE
 
The Proposed Joint Venture is to share TGSB’s resources and expertise in tree planting, nurturing and ensuring consistent supply of grown trees to the Sunway Iskandar developments.

6.  PROSPECTS

In view of the booming property development activities in Johor, it is foreseen that there will be shortages of supply of grown trees in the region. SISB, via the Proposed Joint Venture will be able to ensure healthy and well grown trees are planted in the projects within Sunway Iskandar.

7.  FEASIBILITY STUDY 

A market study and feasibility study were conducted prior to entering into the Proposed Joint Venture. Based on the results of the studies and the rationale mentioned above, Sunway is of the view that it is financially viable and attractive to proceed with the Proposed Joint Venture.

8.  RISK FACTORS

The trees planted are subject to the demand from projects within Sunway Iskandar and the said demand in the property industry is cyclical in nature. The achievability of future earnings is highly dependent on inter alia, the location and type of development, ability to obtain relevant approvals, performance of building contractors as well as general market conditions. However, the risk will be mitigated as the development is located at a strategic location and Sunway with its track records, will take necessary actions to mitigate the identified risks.

9.  SOURCE OF FUND

SISB will fund its share of equity participation in SNLSB through internally generated funds.

10. EFFECTS OF THE PROPOSED JOINT VENTURE

10.1 On Share Capital and Substantial Shareholders’ Shareholding

The Proposed Joint Venture will not have any effect on the share capital and substantial shareholders' shareholding of Sunway as they do not involve any allotment or issuance of new shares by Sunway.

10.2 On Earnings Per Share, Net Assets Per Share and Gearing

The Proposed Joint Venture is not expected to have any immediate material effect on the earnings per share, net assets per share and gearing of Sunway for the financial year ending 31 December 2014. However, the Proposed Joint Venture is expected to contribute positively to the future earnings of Sunway Group.

11. APPROVAL REQUIRED

The Proposed Joint Venture does not require approval from the shareholders of Sunway or any relevant authorities.

12. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

Insofar as the Directors are aware, none of the directors or major shareholders of Sunway or persons connected with them has any interest, whether direct or indirect, in the Proposed Joint Venture.

13. STATEMENT BY THE BOARD OF DIRECTORS

The Board of Directors of Sunway is of the opinion that the Proposed Joint Venture is in the best interests of Sunway.

14. DOCUMENTS AVAILABLE FOR INSPECTION

The JVA is available for inspection at the registered office of Sunway at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan during normal business hours (9.00 a.m. to 6.00 p.m.) from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 24 July 2014.



Announcement Info

Company NameSUNWAY BERHAD  
Stock Name SUNWAY    
Date Announced24 Jul 2014  
CategoryGeneral Announcement
Reference NoSS-140724-E26C8

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