1. INTRODUCTION

The Board of Directors of Sunway wishes to announce that Sunway TotalRubber Ltd (“STRL”), a subsidiary of Sunway has on 26 October 2018, entered into a Share Sale and Purchase Agreement (“SSPA”) with Kerlex Pty Ltd (“KPL”), B Spurrell Pty Ltd (“BSPL”) and Pacific Flow Technology Pty Ltd (“PFTPL”) to dispose of its entire shareholding in PFTPL comprising 80 ordinary shares (“Sale Shares”) which represent 80% of the issued and paid-up share capital of PFTPL to KPL and BSPL for a total consideration of A$220,000, approximately RM646,000 (“Proposed Disposal”).

2. INFORMATION ON STRL, KPL, BSPL and PFTPL

2.1 STRL

STRL is a company incorporated in Australia and having its registered office at Suite 4, 622 Ferntree Gully Road, Wheelers Hill VIC 3150. The issued and paid-up share capital of STRL is A$5,805,159/- comprising 4,937,062 ordinary shares. The principal activity of STRL is import and distribution of industrial rubber and plastics.

2.2 KPL

KPL is a company incorporated in Australia and having its registered office at Suite 4, 622 Ferntree Gully Road, Wheelers Hill VIC 3150. The issued and paid-up share capital of KPL is A$100 comprising 100 ordinary shares. KPL acts as trustee for the Kiro and Alexandra Trust. The trust is set up by the family of Mr Kiro Porjazoski, a present director and shareholder of PFTPL.

2.3 BSPL

BSPL is a company incorporated in Australia and having its registered office at 8 Ridgeview Terrace, Lysterfield VIC 3156. The issued and paid-up share capital of BSPL is A$10 comprising 10 ordinary shares. BSPL acts as trustee for the B Spurrell Family Trust. The trust is set up by Mr Brian Spurrell, a present employee of PFTPL.    

2.4 PFTPL

PFTPL is a company incorporated in Australia and having its registered office at Suite 4, 622 Ferntree Gully Road, Wheelers Hill VIC 3150. The issued and paid-up share capital of PFTPL is A$100/- comprising 100 ordinary shares. The principal activity of PFTPL is manufacturing and sale of specialty hoses.

3. SALIENT TERMS OF THE SSPA

Pursuant to the SSPA, STRL will dispose of the Sale Shares which represent 80% of the issued and paid-up share capital of PFTPL to KPL and BSPL for a total consideration of A$220,000, (approximately RM918,720) in the following manners:-

4. BASIS OF ARRIVING AT THE DISPOSAL PRICE FOR THE PROPOSED DISPOSAL

The disposal price was arrived at willing buyer, willing seller basis after taking into consideration STRL’s initial cost of investment in PFTPL.

5. LIABILITIES TO BE ASSUMED BY PURCHASER

KPL and BSPL will assume all liabilities as stated in the latest audited accounts of PFTPL as at 31 December 2017.

6. RATIONALE

The Proposed Disposal will enable the Group to streamline its business activities in Australia.

7. RISK FACTORS

Sunway is unaware of any risks arising from the Proposed Disposal which could materially or adversely affect the financial and operating performance of Sunway.

8. ORIGINAL COST OF INVESTMENT AND DATE OF INVESTMENT

STRL’s original investment for the Sale Shares was A$ 218,939 in year 2003.

9. EXPECTED GAINS AND LOSSES TO SUNWAY GROUP

The expected gain from the Proposed Disposal to Sunway Group is immaterial.

10. PROPOSED UTILISATION OF PROCEEDS FROM THE PROPOSED DISPOSAL

The proceeds from the Proposed Disposal will be utilised for repayment of borrowings and working capital of STRL.

11. EFFECTS OF THE PROPOSED DISPOSAL

11.1  On Share Capital and Substantial Shareholders’ Shareholding

The Proposed Disposal 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.

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

The Proposed Disposal 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 2018.

12. APPROVAL REQUIRED

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

13. 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 Disposal.

14. STATEMENT BY THE BOARD OF DIRECTORS

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

15. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED DISPOSAL

Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by November 2018 or such other date which the parties may agree in writing.

16. DOCUMENTS AVAILABLE FOR INSPECTION

The SSPA 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 26 October 2018.