BINA DARULAMAN BERHAD

Transcription

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager,
solicitor, accountant or other professional adviser immediately.
Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its
accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from, or in
reliance upon the whole or any part of the contents of this Circular. Bursa Securities has not perused the contents of this
Circular in relation to the Proposed IASC (as defined herein) and Proposed M&A Amendment (as defined herein) prior to
the issuance of this Circular.
(Company No.: 332945-X)
(Incorporated in Malaysia under the Companies Act, 1965)
CIRCULAR TO SHAREHOLDERS IN RELATION TO THE
PART A
I.
PROPOSED ACQUISITION OF APPROXIMATELY 1,154.8 ACRES (467.4 HECTARES) OF LAND
LOCATED IN KEDAH DARUL AMAN, FOR A TOTAL CONSIDERATION OF RM202 MILLION
(“PROPOSED ACQUISITION”);
II.
PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW ORDINARY SHARES OF RM1.00 EACH IN
BDB (“BDB SHARES”) TO RAISE GROSS PROCEEDS OF UP TO RM95 MILLION, TOGETHER
WITH A BONUS ISSUE OF NEW BDB SHARES;
III.
PROPOSED INCREASE IN OUR AUTHORISED SHARE CAPITAL FROM RM100,000,000
COMPRISING 100,000,000 BDB SHARES TO RM400,000,000 COMPRISING 400,000,000 BDB SHARES
(“PROPOSED IASC”); AND
IV.
PROPOSED AMENDMENT TO OUR MEMORANDUM AND ARTICLES OF ASSOCIATION
(“PROPOSED M&A AMENDMENT”)
PART B
INDEPENDENT ADVICE LETTER TO OUR NON-INTERESTED DIRECTORS AND NON-INTERESTED
SHAREHOLDERS IN RELATION TO THE PROPOSED ACQUISITION
AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
Principal Adviser for Part A
(Company No.: 19663-P)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Independent Adviser for Part B
The notice of Extraordinary General Meeting (―EGM‖) and the Proxy Form are enclosed in this Circular. Our EGM will be held as follows:
Date and time
:
Sunday, 23 November 2014 at 10.00 a.m., or any adjournment thereof
Venue
:
Centre of Learning (COL), Level 4, Menara BDB, 88, Lebuhraya Darulaman, 05100 Alor
Setar, Kedah Darul Aman
Last date and time for lodgement
:
20 November 2014 at 5.00 p.m., or any adjournment thereof
To be deposited at our registered office
:
Level 9, Menara BDB, 88, Lebuhraya Darulaman, 05100 Alor Setar, Kedah Darul Aman
Details for lodging the Proxy Form:
The lodging of the Proxy Form will not preclude you from attending and voting in person at our EGM should you subsequently wish to do
so.
This Circular is dated 31 October 2014
DEFINITIONS
For the purpose of this Circular, except where the context otherwise requires, the following definitions shall
apply:
Act
:
Companies Act, 1965 as amended from time to time and includes any reenactment thereof
AGM
:
Annual general meeting
BDB or Company or Purchaser
:
Bina Darulaman Berhad
BDB Group or Group
:
Our Company and our subsidiaries
BDB Share(s) or Share(s)
:
Ordinary shares of RM1.00 each in our Company
Board
:
Board of Directors of our Company
Bonus Share(s)
:
Such number of new BDB Shares to be issued pursuant to the bonus
issue under the Proposed Rights Issue
Bursa Depository
:
Bursa Malaysia Depository Sdn Bhd
Bursa Securities
:
Bursa Malaysia Securities Berhad
Circular
:
This Circular dated 31 October 2014
Code
:
Malaysian Code on Take-Overs and Merger 2010, including any
amendments and modifications that may be made from time to time
Completion Date
:
(i)
in respect of the Non-Malay Reserved Land, a date falling within
six months after the Non-Malay Reserved Land‘s unconditional
date;
(ii)
in respect of the Malay Reserved Land, a date falling within six
months after the Malay Reserved Land‘s unconditional date; or
any other date as may be mutually agreed in writing between the Parties
Consideration Cash
:
The collective amount of RM76,600,000 payable in cash, forming part of
the Purchase Consideration, for the following:
(i)
in respect of the Non-Malay Reserved Land, the sum of
RM58,976,900; and
(ii)
in respect of the Malay Reserved Land, the sum of RM17,623,100.
The Consideration Cash of RM76,600,000 shall be raised via the
proceeds of the Proposed Rights Issue.
Consideration Shares
:
The collective issuance of 46,120,000 new BDB Shares to be issued at
the Issue Price to the Vendor (or its nominees) which shall be adjustable
in accordance with the SPA (details are as set out in Section 2.1.8.2 of
this Circular) to take into account the effects of the Proposed Rights Issue
constituting a total value of RM115,300,000, forming part of the
Purchase Consideration, for the following:
(i)
in respect of the Non-Malay Reserved Land, 14,600,000 new BDB
Shares to be issued at the Issue Price to the Vendor (or its
nominees) constituting a total value of RM36,500,000; and
(ii)
in respect of the Malay Reserved Land, 31,520,000 new BDB
Shares to be issued at the Issue Price to the Vendor (or its
nominees) constituting a total value of RM78,800,000.
i
i
DEFINITIONS (Cont’d)
Deposit
:
A deposit of RM10,100,000 payable in cash within 5 business days upon
execution of the SPA, equivalent to 5% of the Purchase Consideration
EGM
:
Extraordinary General Meeting
Entitled Shareholders
:
Our shareholders whose names appear in our Record of Depositors on the
Entitlement Date
Entitlement Basis
:
The entitlement basis for the Entitled Shareholders under the Proposed
Rights Issue for the Rights Shares or Bonus Shares, as the case may be,
which will be determined by our Board and announced at a later date
Entitlement Date
:
A date to be determined by our Board and announced later, on which the
names of our shareholders must be registered in our Record of Depositors
as at 5.00 p.m. in order to be entitled to the Proposed Rights Issue
EPS
:
Earnings per BDB Share
GDV
:
Gross development value
HOA
:
Heads of Agreement dated 13 July 2014 entered into between BDB and
PKNK in relation to the Proposed Acquisition
Intended Gross Proceeds
:
Gross proceeds of up to RM95,000,000 to be raised pursuant to the
Proposed Rights Issue
Interested Directors
:
Collectively, Dato‘ Izham bin Yusoff and Dato‘ Abdul Rahman bin
Ibrahim
Issue Price
:
Issue price for each Consideration Share, being RM2.50, which shall be
adjusted in accordance with the SPA, as set out in Section 2.1.8.2 of this
Circular, to take into account the effects of the Proposed Rights Issue
Landbank
:
Collectively, the Malay Reserved Land and Non-Malay Reserved Land
Listing Requirements
:
Main Market Listing Requirements of Bursa Securities as amended from
time to time
LPD
:
15 October 2014, being the latest practicable date prior to the printing of
this Circular
Malay Reserved Land
:
Parcels of land located in Kedah Darul Aman, namely (i) Ulu Melaka,
Langkawi and (ii) Hosba, Kubang Pasu, amounting to 423.5 acres (171.4
hectares)
Market Day(s)
:
Any day between Monday and Friday, both days inclusive, which is not a
public holiday and on which Bursa Securities is open for the trading of
securities
NA
:
Net assets
NBV
:
Net book value
Non-Malay Reserved Land
:
Parcels of land located in Kedah Darul Aman, namely (i) Sungai Petani,
Kuala Muda, (ii) Pokok Sena and (iii) Sungai Ular, Kulim, amounting to
731.3 acres (296.0 hectares)
Parties
:
Collectively, our Company and PKNK
ii
ii
PIVB or Independent Adviser
:
Public Investment Bank Berhad, being the appointed Independent
Adviser in relation to the Proposed Acquisition
PKNK or Vendor
:
Perbadanan Kemajuan Negeri Kedah
Proposals
:
Collectively, the Proposed Acquisition, the Proposed Rights Issue, the
Proposed IASC and the Proposed M&A Amendment
Proposed Acquisition
:
Collectively, the Proposed Acquisition of Non-Malay Reserved Land and
Proposed Acquisition of Malay Reserved Land
Proposed Acquisition of Malay
Reserved Land
:
Proposed acquisition of Malay Reserved Land for a total consideration of
RM101,498,000, subject to the terms and conditions of the SPA
Proposed Acquisition of NonMalay Reserved Land
:
Proposed acquisition of Non-Malay Reserved Land for a total
consideration of RM100,502,000, subject to the terms and conditions of
the SPA
Proposed IASC
:
Proposed increase in our authorised share capital from RM100,000,000
comprising 100,000,000 BDB Shares to RM400,000,000 comprising
400,000,000 BDB Shares
Proposed M&A Amendment
:
Proposed amendment to our Memorandum and Articles of Association
:
Proposed renounceable rights issue of Rights Shares to raise the Intended
Gross Proceeds, together with a bonus issue of Bonus Shares to be
credited as fully paid-up
Purchase Consideration
:
The aggregate purchase consideration of RM202,000,000 payable by our
Company to the Vendor in relation to the Proposed Acquisition
Rahim & Co or Valuer
:
Rahim & Co Chartered Surveyors Sdn Bhd, being the appointed
independent valuer by our Company
Record of Depositors
:
A record of securities holders established by Bursa Depository under
Chapter 24 of the Rules of Bursa Depository
RHB Investment Bank
:
RHB Investment Bank Berhad, being the appointed Principal Adviser in
relation to the Proposals
Rights Share(s)
:
Such number of new BDB Share(s) to be issued pursuant to the Proposed
Rights Issue
RM and sen
:
Ringgit Malaysia and sen respectively
Rules of Bursa Depository
:
The rules of Bursa Depository as issued pursuant to the SICDA
SC
:
Securities Commission Malaysia
SICDA
:
Securities Industry (Central Depositories) Act, 1991 of Malaysia as may
be amended from time to time, including Securities Industry (Central
Depositories) Amendment Act, 1998 of Malaysia
SPA
:
Sale and purchase agreement dated 4 September 2014 (as amended and
supplemented by a supplemental agreement dated 3 October 2014)
entered into between our Company and the Vendor in relation to the
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Subscription Undertaking
:
The irrevocable and unconditional written undertaking dated 7 October
2014 by PKNK to subscribe in full for their entitlement under the
Proposed Rights Issue as at the Entitlement Date
TEAP
:
Theoretical ex-all price
Valuation Certificate
:
Certificate of valuation issued by the Valuer, as appended in Appendix II
of this Circular
VWAP
:
Volume weighted average market price
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PRESENTATION OF INFORMATION
All references to ―our Company‖ in this Circular are to BDB and references to ―our Group‖ are to our
Company and our subsidiaries, collectively.
All references to ―you‖ and ―your‖ in this Circular are to our shareholders as a whole (or as the context may
otherwise require) who are entitled to attend and vote at our forthcoming EGM and whose names are in our
Record of Depositors at the time and on the date to be determined by our Board. References to ―we‖, ―us‖,
―our‖ and ―ourselves‖ are to our Company and where the context otherwise requires, shall include our
subsidiaries.
Words incorporating the singular shall, where applicable, include the plural and vice versa. Words incorporating
the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa.
References to persons shall include a company or a corporation, unless otherwise specified.
Any reference herein to any statute is a reference to that statute as amended from time to time or re-enacted.
Any reference to a time of a day herein shall be a reference to Malaysian time, unless otherwise specified.
Certain amounts and percentage figures included herein have been subject to rounding adjustments. Any
discrepancy between the figures shown herein and figures published by our Company such as quarterly results
and annual reports, are due to rounding.
All statements other than statements of historical facts included in this Circular are or may be forward-looking
statements. Forward-looking statements include but are not limited to those using words such as ―seek‖,
―expect‖, ―anticipate‖, ―estimate‖, ―believe‖, ―intend‖, ―project‖, ―plan‖, ―strategy‖, ―forecast‖ and similar
expressions or future or conditional verbs such as ―will‖, ‖would‖, ―should‖, ―could‖, ―may‖ and ―might‖.
These statements reflect our current expectations, beliefs, hopes, intentions, or strategies regarding the future
and assumptions in light of currently available information. Such forward-looking statements are not guarantees
of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual
results may differ from those described in such forward-looking statements. Shareholders should not place
undue reliance on such forward-looking statements and we do not undertake any obligation to update publicly or
revise any forward-looking statements.
Our Board‘s expectations of the benefits derived from the Proposals are forward-looking in nature, and are thus
subject to uncertainties and contingencies. Although our Board holds that its expectations are reasonable at this
point in time given the prevailing circumstances, there can be no certainty that such expectations will
materialise.
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TABLE OF CONTENTS
PAGE
PART A
LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSALS CONTAINING:
1.
2.
INTRODUCTION ......................................................................................................................................... 1
DETAILS OF THE PROPOSALS ................................................................................................................ 3
2.1 Proposed Acquisition ............................................................................................................................ 3
2.2 Proposed Rights Issue ......................................................................................................................... 17
2.3 Proposed IASC .................................................................................................................................... 22
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
2.4 Proposed M&A Amendment ............................................................................................................... 22
RATIONALE FOR THE PROPOSALS ..................................................................................................... 22
INDUSTRY OVERVIEW AND PROSPECTS .......................................................................................... 23
RISK FACTORS ......................................................................................................................................... 27
EFFECTS OF THE PROPOSALS .............................................................................................................. 29
HISTORICAL PRICES OF OUR SHARES ............................................................................................... 32
CONDITIONS/APPROVALS REQUIRED AND INTER-CONDITIONALITY ...................................... 32
PERCENTAGE RATIOS ............................................................................................................................ 33
DIRECTORS‘ AND MAJOR SHAREHOLDERS‘ INTERESTS .............................................................. 34
STATEMENT BY AUDIT COMMITTEE ................................................................................................. 34
DIRECTORS‘ RECOMMENDATION....................................................................................................... 34
TRANSACTIONS WITH PKNK ................................................................................................................ 35
ESTIMATED TIME FRAME FOR COMPLETION .................................................................................. 35
OUTSTANDING PROPOSALS ANNOUNCED BUT PENDING COMPLETION ................................. 35
EGM ............................................................................................................................................................ 35
FURTHER INFORMATION ...................................................................................................................... 36
PART B
INDEPENDENT ADVICE LETTER FROM PIVB TO NON-INTERESTED SHAREHOLDERS
IN RELATION TO THE PROPOSED ACQUISITION………………………………………………...
37
APPENDICES
I
DETAILS OF THE LANDBANK.……………………………………………………………………..
I
II
VALUATION CERTIFICATE…………………………………………………………….……...….…
II
III
LETTER FROM THE REPORTING ACCOUNTANTS ON THE ADEQUACY OF RESERVES….
III
IV
PROFORMA CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF OUR IV
COMPANY AS AT 31 DECEMBER 2013 TOGETHER WITH REPORTING ACCOUNTANTS‘
LETTER THEREON…………...………………………….……………………………………………
V
FURTHER INFORMATION……………………………………………………………………...……
V
NOTICE OF EGM………………………………………………………………………………….ENCLOSED
PROXY FORM……………………………………………………………………………………...ENCLOSED
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PART A
LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSALS
Incorporated in Malaysia under the Act
Registered Office
Level 9, Menara BDB
88, Lebuhraya Darulaman
05100 Alor Setar
Kedah Darul Aman
31 October 2014
Board of Directors
Datuk Mohd Nasir bin Ahmad (Senior Independent Non-Executive Director)
Dato‘ Izham bin Yusoff (Group Managing Director, Executive Director)
Dato‘ Abdul Rahman bin Ibrahim (Non-Independent Non-Executive Director)
Encik Asri bin Hamidin @ Hamidon (Independent Non-Executive Director)
Datuk Wan Azhar Bin Wan Ahmad (Independent Non-Executive Director)
To:
Our shareholders
Dear Sir/Madam,
I.
II.
III.
IV.
PROPOSED ACQUISITION;
PROPOSED RIGHTS ISSUE;
PROPOSED IASC; AND
PROPOSED M&A AMENDMENT
1.
INTRODUCTION
On 14 July 2014, our Company announced that we had on 13 July 2014, entered into a HOA with
PKNK in relation to the proposed acquisition of land owned by PKNK measuring approximately 1,200
acres (485 hectares) in aggregate for a total purchase consideration of approximately RM204,000,000.
On 4 September 2014, RHB Investment Bank had, on behalf of our Board, announced that our
Company had on 4 September 2014, entered into the SPA with the Vendor for the Proposed
Acquisition. The revision in the Purchase Consideration from RM204,000,000 to RM202,000,000 is a
result of the decision of the Vendor and our Company to exclude a plot of land located in Mukim of
Jabi, District of Pokok Sena from the transaction subsequent to the signing of the HOA.
In conjunction with the Proposed Acquisition, RHB Investment Bank had, on behalf of our Board,
further announced that the Proposed Rights Issue, the Proposed IASC and the Proposed M&A
Amendment will be implemented.
On 3 October 2014, RHB Investment Bank had, on behalf of our Board, announced that our Company
had on 3 October 2014, entered into the Supplemental SPA with the Vendor for the Proposed
Acquisition to vary and amend certain terms of the SPA after taking into consideration the timing that
may be required to complete the proposed acquisition of certain parcels of the Landbank, namely the
Malay Reserved Land.
1
1
On 28 October 2014, RHB Investment Bank had, on behalf of our Board, announced that Bursa
Securities has, vide its letter dated 27 October 2014, approved the following:
(i)
listing of and quotation for up to 93,739,838 Consideration Shares; and
(ii)
listing of and quotation for up to 91,019,820 Rights Shares and 91,019,820 Bonus Shares.
The approval of Bursa Securities for the Proposed Acquisition and Proposed Rights Issue are subject to
the conditions as set out in Section 8 of this Circular.
In view of the interests of Interested Directors and PKNK (a major shareholders of our Company) in
the Proposed Acquisition, as set out in Section 10 of Part A of this Circular, the Proposed Acquisition
is deemed as a related party transaction pursuant to the provisions of Paragraph 10.08 of the Listing
Requirements. Therefore, the Interested Directors and PKNK shall abstain from voting in respect of
their direct and/or indirect interests in our Company on the resolutions pertaining to the Proposals at
our forthcoming EGM. Further, our Board had on 25 July 2014 appointed PIVB as the independent
adviser to advise the non-interested directors and non-interested shareholders of our Company in
respect of the Proposed Acquisition.
THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE DETAILS OF THE
PROPOSALS TOGETHER WITH THE RECOMMENDATION OF OUR BOARD TO SEEK
YOUR APPROVAL FOR THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE
TABLED AT OUR FORTHCOMING EGM. THE NOTICE OF OUR FORTHCOMING EGM
AND THE FORM OF PROXY ARE ENCLOSED TOGETHER WITH THIS CIRCULAR.
YOU ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF
PARTS A AND B OF THIS CIRCULAR BEFORE VOTING ON THE RESOLUTIONS
PERTAINING TO THE PROPOSALS TO BE TABLED AT OUR FORTHCOMING EGM.
2
2
2.
DETAILS OF THE PROPOSALS
2.1
2.1.1
Details of the Proposed Acquisition
In accordance with the SPA, our Company is to acquire the Landbank, free from
encumbrances, from PKNK for a collective total consideration of RM202,000,000.
The Proposed Acquisition is to be implemented in the following manner:
(i)
proposed acquisition of Non-Malay Reserved Land for a total consideration
of RM100,502,000; and
(ii)
proposed acquisition of Malay Reserved Land for a total consideration of
RM101,498,000.
Details of the Landbank
The registered owner for the Landbank is PKNK and the brief details of the
Landbank are as follows:
Landbank
Identification
Tenure
Surveyed land
area (hectares)
-
Sungai Petani
PT 2416, PT 2418, PT 2423, PT 65003 and
PT 48856 held under Title No. HSD
126043, HSD 126045, HSD 126050, HSD
34392 and HSD 90453 respectively
Freehold
93.07
-
Pokok Sena
Lot 2516 held under Title No. HSD 2979
Freehold
51.45
-
Sungai Ular
PT 2332 to PT 2342 held under Title No.
HSD 69188 to HSD 69197
Freehold
151.41
99 year leasehold
interest expiring on
16 October, 2111
91.56
Freehold
79.85*
Malay Reserved Land
-
Ulu Melaka
PT 2042 to PT 2044 held under Title No.
HSD 1149 to HSD 1151 respectively
-
Hosba
Lot 1659 held under Title No. GRN 11523
Note:
*
After deducting the land affected by three land acquisitions on the subject
property on 2 June 1984, 16 November 1985 and 9 October 1995.
Further details of the Landbank are set out in Appendix I of this Circular.
2.1.2
Basis and justification of arriving at the Purchase Consideration
The Purchase Consideration for the Proposed Acquisition was arrived at on a willingbuyer-willing-seller basis after taking into consideration of the following:
(i)
the aggregate market value of the Landbank of RM198,280,000 as appraised
by the Valuer. The appraisals by the Valuer are set out in the Valuation
Certificate in Appendix II of this Circular
The market values of the Non-Malay Reserved Land and Malay Reserved
Land are as follows:
3
3
Landbank
Market Value (RM) *
98,650,000
Malay Reserved Land
99,630,000
Total
198,280,000
Note:
*
In assessing the market values of the Landbank, the only method of
valuation adopted by the Valuer is the Comparison Method due to the
nature of the Landbank (i.e. vacant land with development potential but
without any approved plans).
The Comparison Method entails critical analysis of recent evidence of
values of comparables in the neighbourhood and making adjustments for
differences. For further details, please refer to the Valuation Certificate in
Appendix II of this Circular.
2.1.3
(ii)
the net book value of the Landbank as stated in Appendix I of this Circular;
and
(iii)
the prospects of the Landbank as stated in Section 4.4 of this Circular.
Mode of settlement of the Purchase Consideration
The Purchase Consideration is to be satisfied in the following manner:
(i)
a total of RM10,100,000 being the total deposit that has been paid within
five business days upon execution of the SPA in respect of the Proposed
Acquisition. The breakdown of the total deposit attributable to the NonMalay Reserved Land and Malay Reserved Land is as follows:
(RM)
5,025,100
Malay Reserved Land
5,074,900
Total
(ii)
10,100,000
in respect of the Proposed Acquisition of Non-Malay Reserved Land, the
balance purchase price of RM95,476,900* shall be satisfied in the following
manner:
(a)
the issuance of 14,600,000 new BDB Shares (1) at the Issue Price (1)
to the Vendor amounting to RM36,500,000;
(b)
the allotment and issuance of Rights Shares and Bonus Shares
pursuant to the Proposed Rights Issue (2); and
(c)
the remaining balance consideration upon the subscription of the
Rights Shares will be satisfied via proceeds from the Proposed
Rights Issue.
Notes:
*
For the avoidance of doubt, the balance purchase price in respect of the
Non-Malay Reserved Land (i.e. RM RM95,476,900) is fixed and not
subject to any adjustment.
4
4
(iii)
(1)
The Issue Price and number of Consideration Shares in respect of the
Non-Malay Reserved Land shall be subject to adjustments made in
accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to
take into account the effects of the Proposed Rights Issue.
(2)
As stipulated in Sections 2.1.8.3 and 2.2.7 of this Circular, the subscription
price of the Rights Shares to be paid by the PKNK shall be set-off from the
Consideration Cash to be paid by our Company. Accordingly, the
satisfaction of balance purchase price includes the allotment and issuance
of such Rights Shares and Bonus Shares.
in respect of the Proposed Acquisition of Malay Reserved Land, the balance
purchase consideration of RM96,423,100* shall be satisfied in the following
manner:
(a)
the issuance of 31,520,000 new BDB Shares (1) at the Issue Price (1)
to the Vendor amounting to RM78,800,000; and
(b)
the remaining balance consideration of RM17,623,100 will be
satisfied via proceeds from the Proposed Rights Issue.
Notes:
*
For the avoidance of doubt, the balance purchase price in respect of the
Malay Reserved Land (i.e. RM96,423,100) is fixed and not subject to any
adjustment.
(1)
The Issue Price and number of Consideration Shares to be issued in
respect of the Malay Reserved Land shall be subject to adjustments made
in accordance with the SPA, as set out in Section 2.1.8.2 of this Circular,
to take into account the effects of the Proposed Rights Issue.
As stated in Section 8 of this Circular, upon the conditions precedent under the SPA
with respect to the Non-Malay Reserved Land being fulfilled, obtained or waived (as
the case may be), the Proposed Rights Issue will be implemented to raise the
Intended Gross Proceeds to, inter-alia, fund the settlement of the Consideration Cash.
For illustrative purposes only, based on the Assumptions (as disclosed in Section 6
of this Circular) and in accordance with Section 2.1.8.2 of this Circular that provide
for the relevant adjustments pursuant to Issue Price and number of Consideration
Shares in relation to the Proposed Acquisition are as follows:
Issue Price
(RM)
No. of Consideration
Shares
RM
Based on the SPA
-
2.50
14,600,000
36,500,000
-
Malay Reserved Land
2.50
31,520,000
78,800,000
46,120,000
115,300,000
Adjusted pursuant to the Proposed Rights Issue
-
1.53
23,856,210
36,500,000
-
Malay Reserved Land
1.53
51,503,268
78,800,000
75,359,478
115,300,000
As illustrated above, the total quantum of RM115,300,000 (i.e. the Consideration
Shares) is not affected by the relevant adjustments made in accordance with the SPA
pursuant to Issue Price and number of Consideration Shares to take into account the
effects of the Proposed Rights Issue, as set out in Section 2.1.8.2 of this Circular.
5
5
6
2.1.8
Salient terms of the SPA
For the purpose of this section, the words and terms mentioned under this section
shall refer to the words and terms contained in the SPA. The salient terms and
conditions of the SPA include, inter-alia, the following:
2.1.8.1 Terms and Mode of Payment of the Purchase Consideration
The Purchase Consideration shall be satisfied by the Purchaser in the
following manner:
(a)
Deposit
Within five Business Days from the date of the execution of the
SPA, the Deposit, being five per cent (5%) of the Purchase
Consideration, shall be paid by the Purchaser to the Vendor in the
following manner:
(i)
a sum of RM4,040,000.00 only equivalent to two per cent
(2%) of the Purchase Consideration, being the Retention
Sum (as apportioned accordingly between the Non-Malay
Reserved Land and Malay Reserved Land), shall be paid
by the Purchaser to the Purchaser‘s Solicitors as
stakeholders to be dealt with in accordance with the
provisions of Real Property Gains Tax Act 1976; and
(ii)
a sum of RM6,060,000.00 only, equivalent to three per
cent (3%) of the Purchase Consideration shall be paid to
the Vendor, being the Balance Deposit (as apportioned
accordingly between the Non-Malay Reserved Land and
Malay Reserved Land).
In the event the conditions precedent in relation to the Proposed
Acquisition are not satisfied or are deemed not to have been
satisfied or waived by the expiry of the conditional period or the
extended conditional period, as the case may be, the SPA shall
lapse and terminate and the Vendor shall, within 30 Business Days
from the expiration of the conditional period or the extended
conditional period, refund the Deposit to the Purchaser.
(b)
Balance Purchase Price1
(i)
In respect of the Non-Malay Reserved Land, the
remaining consideration of Ringgit Malaysia Ninety Five
Million Four Hundred Seventy Six Thousand and Nine
Hundred (RM95,476,900.00) shall be satisfied by:
(aa)
the allotment and issuance of 14,600,000 new
BDB Shares at an issue price of Ringgit Malaysia
Two and Sen Fifty only (RM2.50) per BDB
Share2, constituting a total value of Ringgit
Malaysia Thirty Six Million and Five Hundred
Thousand (RM36,500,000.00);
1
For the avoidance of doubt, the balance purchase price in respect of the Non-Malay Reserved Land (i.e. RM
RM95,476,900) and the Malay Reserved Land (i.e. RM96,423,100) is fixed and not subject to any adjustment.
2
To be adjusted in accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of
the Proposed Rights Issue
7
7
(ii)
(bb)
the allotment and issuance of Rights Shares
together with Bonus Shares to the Vendor (or its
nominees) in accordance with clause 6.2 of the
SPA3;
(cc)
the payment of Ringgit Malaysia Fifty Eight
Million Nine Hundred Seventy Six Thousand and
Nine Hundred (RM58,976,900.00) being part of
the proceeds of the funds raised via the Proposed
Rights Issue; and
In respect of the Malay Reserved Land, the remaining
consideration of Ringgit Malaysia Ninety Six Million
Four Hundred Twenty Three Thousand and One Hundred
(RM96,423,100.00) shall be satisfied by:
(aa)
the allotment and issuance of 31,520,000 new
BDB Shares at an issue price of Ringgit Malaysia
Two and Sen Fifty only (RM2.50) per BDB
Share4, constituting a total value of Ringgit
Malaysia Seventy Eight Million and Eight
Hundred Thousand (RM78,800,000.00);
(bb)
the payment of Ringgit Malaysia Seventeen
Million Six Hundred Twenty Three Thousand
and One Hundred (RM17,623,100.00) being part
of the proceeds of the funds raised via the
Proposed Rights Issue.
3
As stipulated in Sections 2.1.8.3 and 2.2.7 of this Circular, the subscription price of the Rights Shares to be paid by the
PKNK shall be set-off from the Consideration Cash to be paid by our Company. Accordingly, the satisfaction of balance
purchase price includes the allotment and issuance of such Rights Shares and Bonus Shares.
4
To be adjusted in accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of
the Proposed Rights Issue
8
8
2.1.8.2 Adjustment to Consideration Shares
Pursuant to the Proposed Rights Issue, the Issue Price and the number of
Consideration Shares shall be subject to an adjustment and determined as
follows:
(a)
The Issue Price shall be adjusted in the following manner:
New Issue Price =
(b)
A
x
(B x C) + (D x E)
(B + D + F) x C
Upon adjustment to the Issue Price pursuant to Section 2.1.8.2 (a)
above, the Revised Number of Consideration Shares shall be
calculated in the following manner:
Revised Number of Consideration = Value of Consideration Shares
Shares
New Issue Price
(c)
(d)
In relation to Section 2.1.8.2 (a) and (b) above, the letters used
shall have the following meaning:
A =
The existing Issue Price
B =
The aggregate number of issued and fully paid-up BDB
Shares on the Entitlement Date;
C =
the 5-day weighted average market price of each BDB
Share up to the market day immediately preceding the
date on which the issue price for the Proposed Rights
Issue is publicly announced on Bursa Securities or (failing
any such announcement), immediately preceding the date
of the announcement of the Proposed Rights Issue;
D =
The aggregate number of Rights Shares;
E =
The issue price for the Rights Shares; and
F =
The aggregate number of Bonus Shares.
Such adjustment will be effective (if appropriate, retroactively)
from the commencement of the market day next following the
Entitlement Date.
2.1.8.3 Subscription of Rights Shares by the Vendor
The Vendor undertakes to subscribe in full its entitlement of the Rights
Shares based on its shareholding in our Company on the Entitlement Date.
The subscription price of the Rights Shares to be paid by the Vendor shall
be set-off from the Consideration Cash to be paid by the Purchaser. The
Consideration Shares to be issued to the Vendor are not entitled to
participate in the Proposed Rights Issue.
9
9
2.1.8.4 Conditions Precedent
The Proposed Acquisition is conditional and subject to the following
conditions precedent:
(a)
Conditions precedent in relation to the Landbank
The Purchaser obtaining—
(i)
clearance from Bursa Securities to issue the Circular in
relation to the Proposals;
(ii)
approval from its shareholders in matters relating to the
sale and purchase of the Landbank;
(iii)
in relation to the Malay Reserved Land:
(aa)
The Purchaser or its nominee, at its own costs
and expense, obtaining the necessary Approval
and/or declaration from the Authority pursuant to
the Malay Reserves Enactment (Kedah) No. 63
for the purpose of purchasing the Malay
Reserved Land; or
(bb)
The Vendor obtaining Approval from the
Authority to enable the Malay Reserved Land to
be transferred to the Purchaser as not being
categorized as Malay Reserved Land status
(―Change of Status‖) and having completed the
Change of Status. For the avoidance of doubt,
any condition imposed by the Authority to be
fulfilled in respect of the Change of Status shall
be the obligation of the Vendor other than the
payment of any fees and/or rates that may be
imposed by the Authority in respect of the
Change of Status which shall be borne by the
Purchaser, including any other fees and/or rates
incidental to and for the purpose of the Change of
Status under the SPA.
The Vendor obtaining—
(i)
the approval from the relevant authority for the transfer, if
any may be required, in respect of the three leasehold
lands situated at Mukim Ulu Melaka, district of Langkawi,
Kedah and each land is particularly described and
identified in Schedule 4 of the SPA, subject to terms
reasonably acceptable to the Purchaser;
(ii)
satisfactory documentary proof that all restriction in
interests in respects of the land set forth in Schedule 5 of
the SPA have been duly satisfied to enable the transfer of
the Landbank from the Vendor to the Purchaser. The
lands in Schedule 5 are summarily detailed out as follows:
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10
(iii)
(b)
(aa)
five freehold lands situated at the district of Kuala
Muda, Kedah, which are held under their
respective titles, namely, H.S. (D) 126043 PT
2416, H.S.(D) 126045 PT 2418, H.S. (D) 126050
PT 2423, H.S.(D) 34392 PT 65003, and H.S.(D)
90453 PT 48856; and
(bb)
one freehold land situated at the district of Pokok
Sena, Kedah, which is held under title H.S.(D)
2979 PT 2516,
the approval from the Minister of Finance pursuant to the
Incorporation (State Legislatures Competency) Act 1962,
and any other approval as may be required to be obtained
by the Vendor pursuant to any laws or regulations, for the
purpose of selling and disposing of the Landbank to the
Purchaser, and the Purchaser‘s receipt of a copy of the
letters containing such approval.
Conditions in relation to the issuance of the Consideration Shares,
Rights Shares and Bonus Shares (―Proposed Issuance‖)
(i)
the approval from its shareholders in matters pertaining
and in connection to the Proposed Issuance; and
(ii)
the approval of Bursa Securities for the listing of and
quotation for the Rights Shares, Bonus Shares, and the
Consideration Shares on the Main Market of Bursa
Securities.
2.1.8.5 Conditional period and unconditional date
(a)
The Purchaser and the Vendor (―Parties‖) shall fulfill the
conditions precedent within the conditional period, i.e., within a
period of 12 months commencing from the date of the SPA, or
within the extended conditional period for a period of three months
from the expiry of the aforementioned conditional period or such
other period as may be mutually agreed in writing between the
parties to the SPA;
(b)
The Proposed Acquisition of Non-Malay Reserved Land shall
become unconditional on the date where all the conditions
precedent in the SPA are satisfied, deemed satisfied or (if
permissible by law) waived, save for the conditions relating to
approvals in relation to the Malay Reserved Land and the consent
to transfer being obtained; and
(c)
The Proposed Acquisition of Malay Reserved Land shall become
unconditional on the date where all the conditions precedent in the
SPA are satisfied, deemed satisfied or (if permissible by law)
waived.
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11
2.1.8.6 Non-fulfillment of Conditions Precedent
Parties may mutually modify or waive (if permissible by law) any of the
conditions precedent in respect of the Proposed Acquisition. In the event
that the conditions precedent are not satisfied or are deemed not to have
been satisfied or waived (to the extent as may be permitted under the
applicable laws and regulations) by the expiry of the conditional period or
the extended conditional period, as the case may be, the SPA shall lapse and
terminate and be of no further effect whatsoever whereupon the Parties,
within 30 Business Days from the expiration of the conditional period or the
extended conditional period, as the case may be, shall attend to the
following:
(a)
the Vendor shall refund to the Purchaser the Deposit paid to the
Vendor towards the settlement of the Purchase Consideration;
(b)
if the Purchaser has lodged any caveat over the Landbank pursuant
to Clause 3.1 of the SPA, the Purchaser‘s solicitors shall deliver to
the Vendor the official receipt issued by the relevant land registry
as evidence that the withdrawal of private caveat have been duly
presented for registration; and
(c)
all documents which the party to the SPA or its solicitors have
delivered to the other party to the SPA or its solicitors pursuant to
the terms of the SPA shall be redelivered to the party to the SPA or
its solicitors.
Upon complete satisfaction and fulfillment of the abovementioned
obligations, neither party to the SPA shall have any further claim against the
other party to the SPA on any matter in respect of or arising from the SPA
save and except for any antecedent breach that has been committed thereon.
2.1.8.7 Completion of the SPA
Subject to the satisfaction of the conditions precedent or the waiver of any
such conditions precedent in accordance to the terms of the SPA, the
completion of the Proposed Acquisition of Non-Malay Reserved Land or the
Proposed Acquisition of Malay Reserved Land shall respectively take place
at the office of the Purchaser or such other location as may be mutually
agreed by the parties no later than 5.00 p.m. on the respective Completion
Date whereupon which the following actions shall be taken by the Parties:
(a)
the Vendor shall deliver to the Purchaser‘s solicitors in respect of
the Non-Malay Reserved Land or the Malay Reserved Land (as the
case may be), the original issue document of title, the certified true
copy of quit rent and assessment receipts for the current year, the
original authorities‘ approval (if applicable), an extract of the
Vendor‘s board resolution approving the sale to the Purchaser
including the requisite registration fees and any other documents
and the relevant land office or registry may reasonably require for
the registration of the Transfer. Similarly, the Purchaser shall
deliver to the Purchaser‘s solicitors its latest certified true copy of
memorandum & article of association, its board resolution
approving the Proposed Acquisition, certified true copy of Form 9,
24, 44 and 49 and the state authority‘s approval for the Malay
status declaration (if applicable);
12
12
(b)
(c)
(i)
in respect of the Proposed Acquisition of Non-Malay
Reserved Land, the Purchaser shall confirm to have
already allotted and issued the Consideration Shares,
Rights Shares, and Bonus Shares to the Vendor (or its
nominees) and credited the Consideration Shares to the
Vendor‘s (or its nominee‘s) securities account; and
(ii)
in respect of the Proposed Acquisition of Malay Reserved
Land, the Purchaser shall confirm to have already allotted
and issued the Consideration Shares and credited the
Consideration Shares to the Vendor‘s (or its nominees‘)
securities account;
the Purchaser shall pay the respective balance of the Consideration
Cash to the Vendor‘s appointed stakeholder who shall be
authorised to hold and place the same in an interest bearing account
or fixed deposit account pending the registration of the transfer
form in respect of the Landbank in the Form14A prescribed under
the National Land Code 1965 in favour of the Purchaser or its
nominee.
2.1.8.8 Default by Purchaser
(a)
If the Purchaser—
(i)
breaches any warranty or undertaking or any other term or
condition of the SPA and fails to rectify such breach in
accordance with the SPA;
(ii)
commences a petition for voluntary winding-up of itself;
(iii)
becomes the subject of winding-up proceedings in a court
of law; or
(iv)
applies for or consent to the appointment of or taking of
possession by a receiver and/or manager over all of or
substantially all of its properties,
the Vendor shall be entitled to terminate the SPA by giving a notice
in writing and served on the Purchaser or the Purchaser‘s solicitors.
(b)
In the event that the Vendor terminates the SPA for the above
reasons, the Parties shall, within 30 Business Days or any extended
period agreed upon by the Parties from the date of receipt by the
Purchaser of the termination notice, attend to the following:
(i)
the Vendor shall:
(aa)
refund or cause to be refunded to the Purchaser
the Deposit and/or the Consideration Cash which
has already been paid by the Purchaser towards
the settlement of Purchase Consideration; and
(bb)
pay to the Purchaser in cash the amount
equivalent to the value of the Consideration
Shares if such Consideration Shares have already
been credited by the Purchaser to the Vendor
towards
the
settlement
of
Purchase
Consideration,
13
13
failing which the Vendor shall pay to the Purchaser
compensation on such amount abovementioned calculated
at the rate of eight per cent (8%) per annum from the
expiry of 30 Business Days or any extended period agreed
upon by the Parties from the Vendor‘s receipt of the
termination notice until the date of actual payment and
refund,
(ii)
all documents which the party to the SPA or its solicitor
has delivered to the other party to the SPA or its solicitors
pursuant to the SPA shall be redelivered to the party to the
SPA or its solicitor;
(iii)
where vacant possession of the Landbank or any part
thereof has been delivered to the Purchaser, the Purchaser
shall redeliver vacant possession of the Landbank or such
part thereof to the Vendor in substantially the same state
and condition as on the date of the delivery of the vacant
possession;
(iv)
if the Purchaser has lodged any caveat over the Landbank
pursuant to Clause 3.1 of the SPA, the Purchaser‘s
solicitors shall withdraw the caveat and deliver to the
Vendor the official receipt issued by the relevant land
registry as evidence that the withdrawal of private caveat
has been duly presented for registration,
and thereafter, upon the complete satisfaction and fulfilment by the
Parties of the abovementioned obligations, and subject to Clause
7.3 of the SPA in respect of stamp duty, the SPA shall be deemed
null and void and of no further effect and neither the Vendor nor
the Purchaser shall have any claim against each other, save and
except for any antecedent breach of the SPA.
2.1.8.9 Default by Vendor
(a)
(b)
In the event that the Vendor shall be in breach of the
representations, warranties and/or undertaking given or default in
the observance or performance of any of its obligations in the SPA
for any reason whatsoever, the Purchaser shall be entitled at the
Purchaser‘s option to either:
(i)
apply for the remedy of specific performance of the sale
of the Landbank pursuant to the provisions of the SPA and
to all other relief flowing therefrom; or
(ii)
terminate the SPA by notice in writing and served on the
Vendor.
in the event that the Purchaser terminates the SPA, the Parties shall,
within 30 Business Days or any extended period agreed upon by
the Parties from the date of receipt by the Vendor of the notice,
attend to the following:
(i)
the Vendor shall:
(aa)
14
14
refund or cause to be refunded to the Purchaser
the Deposit and/or the Consideration Cash which
has already been paid by the Purchaser towards
the settlement of Purchase Consideration; and
(bb)
the Vendor shall pay to the Purchaser in cash the
amount equivalent to the value of the
Consideration Shares if such Consideration
Shares have already been credited by the
Purchaser to the Vendor towards the settlement
of Purchase Consideration,
compensation on such amount above calculated at the rate
of eight per cent (8%) per annum from the expiry of 30
business days or any extended period agreed upon by the
Parties from the Vendor‘s receipt of the notice until the
date of actual payment and refund;
(ii)
all documents which the party to the SPA or its solicitor
has delivered to the other party to the SPA or its solicitors
(iii)
possession; and
(iv)
if the Purchaser has lodged any caveat over the Landbank,
the Purchaser‘s Solicitors shall withdraw the caveat and
deliver to the Vendor the official receipt issued by the
relevant land registry as evidence that the withdrawal of
private caveat has been duly presented for registration,
Parties of the abovementioned obligations, and subject to Clause 7.3 of
the SPA in respect of stamp duty, the SPA shall be deemed null and
void and of no further effect and neither the Vendor nor the Purchaser
shall have any claim against each other, save and except for any
antecedent breach of the SPA.
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15
2.1.9
Original cost of investment
PKNK‘s original costs of investment in the Landbank are as follows:
Land (location)
-
Sungai Petani
-
Sungai Ular
-
Pokok Sena
Date of investment
Cost of investment (RM)
21 November 2007
16,029,000
29 September 1995
3,827,943
26 September 2002
6,947,078
15 June 2009
10,291,056
31 December 1987
5,950,000
Total
43,045,077
Malay Reserved Land
-
Ulu Melaka
Hosba
Based on the above, the total original costs of investment of the Vendor in the
Landbank were RM43,045,077 while the Purchase Consideration is RM202,000,000.
2.1.10
Liabilities to be assumed
Our Company will not assume any liabilities, including contingent liabilities and
guarantees, arising from the Proposed Acquisition.
2.1.11
Estimated financial commitments
As at the LPD, our Board has not identified any future development to be undertaken
on the Landbank. However, should such development potential be identified by our
Board, save for the development costs of the Landbank, our Board does not foresee
other financial commitments required to put the assets acquired on-stream. If any, the
future developments on the Landbank may be funded by our Company through
borrowings and/or internally generated funds after taking into consideration our
Company‘s future gearing level and our working capital requirements.
16
16
2.2
2.2.1
Details of the Proposed Rights Issue
Our Company proposes to undertake a renounceable rights issue of Rights Shares to
the Entitled Shareholders to raise the Intended Gross Proceeds, together with a bonus
issue of Bonus Shares.
The Entitlement Basis and the issue price for the Rights Shares have not been fixed at
this juncture. Our Board will only fix the Entitlement Basis and the issue price of the
Rights Shares after the necessary approvals as stated in Section 8 of this Circular
have been obtained to accord greater flexibility to our Board to determine the
Entitlement Basis and the issue price for the Rights Shares to ensure that we meet our
funding requirements.
Notwithstanding the above, the Intended Gross Proceeds have been determined
upfront to provide clarity to our shareholders with respect to the capital outlay
required to fully subscribe for their respective entitlements under the Proposed Rights
Issue, which can be approximated by multiplying the Intended Gross Proceeds with
their respective percentage of shareholdings our Company.
The Proposed Rights Issue is renounceable in full or in part. Accordingly, the
Entitled Shareholders can subscribe for and/or renounce their entitlements to the
Proposed Rights Issue in full or in part. Only Entitled Shareholders who subscribe for
the Rights Shares will be entitled to the Bonus Shares. For avoidance of doubt, the
Bonus Shares are attached to the Rights Shares without any cost and will be issued
only to the Entitled Shareholders and/or their renouncees (if applicable) who
subscribe for the Rights Shares. The Rights Shares and Bonus Shares are not
separately renounceable. Entitled Shareholders who renounce all or part of their
entitlement to the Rights Shares shall be deemed to have renounced the
accompanying entitlement to the Bonus Shares.
The Rights Shares which are not taken up or not validly taken up shall be made
available for excess applications by the other Entitled Shareholders and/or their
renouncee(s). It is the intention of our Board to allocate the excess Rights Shares, if
any, in a fair and equitable manner, and on such basis as they may deem fit or
expedient and in the best interest of our Company, to be determined by our Board
and announced later by us.
2.2.2
Fractional entitlement to the Rights Shares and Bonus Shares
It is the intention of our Board to fix an Entitlement Basis that will minimise the
occurrence of odd lots and fractional entitlements.
Notwithstanding the above, any fractional entitlements shall be disregarded and shall
be dealt with in such manner as our Board in their absolute discretion deem fit or
expedient in the best interest of our Company.
2.2.3
Basis and justification for the issue price of the Rights Shares
The Entitlement Basis and the corresponding number of Rights Shares and Bonus
Shares to be issued can only be determined in conjunction with the fixing of the issue
price of the Rights Shares such that the Intended Gross Proceeds are raised. The
fixing of the issue price of the Rights Shares takes into consideration, inter-alia, the
then prevailing market conditions and market price of BDB Shares as well as the
resultant TEAP of BDB Shares.
17
17
The effective issue price of each Right Share (after taking into consideration of the
Bonus Shares) is expected to be fixed at a discount of at least 40% to the TEAP
immediately preceding the price-fixing date, but the issue price of the Rights Shares
shall in no event be lower than the par value of BDB Shares of RM1.00 each.
2.2.4
Capitalisation of reserves for the Bonus Shares
The issuance of the Bonus Shares shall be wholly capitalised from firstly the entire
share premium account with the remainder to be capitalised from the retained
earnings of our Company.
For illustrative purposes only, the effects of the capitalisation for the Bonus Shares
are as depicted in Table 1 based on the following assumptions:
Number of issued and paid-up share capital as at
27 October 2014
:
72,815,856
Illustrative issue price of the Rights Share
:
RM1.26
Illustrative basis of entitlement of the Rights
Shares
:
One Rights Share for every one BDB
Share held
Illustrative basis of entitlement of the Bonus
Shares
:
One Bonus Share for every two
Rights Shares subscribed
Table 1
Share premium
account
Retained earnings
Unaudited as
at
30 June 2014
RM
17,062,137
After
issuance of
Rights
Shares
RM
18,932,123
Amount to
be
capitalised
for Bonus
Shares
RM
(35,994,260)
Estimated
expenses for
the Proposals
RM
-
Balance after
Proposed
Rights Issue
RM
-
41,323,721
-
(413,668)
(5,000,000)
35,910,053
Our Board confirms that based on our Company‘s 6-month unaudited consolidated
financial statements as at 30 June 2014, the reserves available for capitalising the
Bonus Shares are unimpaired by losses on a consolidated basis in compliance with
Paragraph 6.30(1) of the Listing Requirements.
Further, the Reporting Accountants for the Proposals, namely Messrs. KPMG has,
vide its letter dated 27 October 2014, confirmed that our Company has sufficient
reserves available for capitalisation based on our Company‘s 6-month unaudited
financial statements as at 30 June 2014, in accordance with Paragraph 6.30(3) of the
Listing Requirements. A copy of the letter is set out in Appendix III of this Circular.
2.2.5
Ranking of the Rights Shares and the Bonus Shares
The Rights Shares and Bonus Shares, shall upon being issued and allotted as fully
paid-up, rank pari passu with the then existing issued and paid-up share capital of
our Company save that they shall not be entitled to any dividends, rights, bonuses,
issues or other allotments or distributions which relevant book closing date is on or
before the date of allotment of the Rights Shares and Bonus Shares.
2.2.6
Listing of and quotation for the Rights Shares and the Bonus Shares
Bursa Securities has, vide its letter dated 27 October 2014, approved the listing of
and quotation of up to 91,019,820 Rights Shares and up to 91,019,820 Bonus Shares.
18
18
2.2.7
Shareholder’s undertaking
Our Company has procured the Subscription Undertaking. As at 27 October 2014,
PKNK holds 39,678,993 BDB Shares, representing a 54.5% equity interest in our
Company. PKNK does not intend to dispose its shareholdings up to the Entitlement
Date.
For illustrative purposes only, based on the Assumptions (as disclosed in Section 6
of this Circular), PKNK‘s subscription amount for its full entitlement under the
Proposed Rights Issue will be approximately RM50.0 million based on their
shareholdings as at 27 October 2014.
The illustration of total number of Rights Shares and Bonus Shares assuming full
subscription by PKNK pursuant to the Proposed Rights Issue based on PKNK‘s
shareholdings in our Company as at 27 October 2014 is as follows:
Name
PKNK
As at
27 October 2014
No. of BDB
Shares held % (2)
39,678,993
54.5
Entitlement under the
Proposed Rights Issue/
Rights Shares to be
subscribed under the
Subscription
Undertaking (1)
No. of Rights
Shares % (2)
39,678,993
54.5
Bonus Shares to be
issued pursuant to
the Rights Shares
subscribed (1)
No. of Bonus
Shares % (2)
19,839,497
54.5
Notes:
(1)
Illustrated based on the Assumptions as disclosed in Section 6 of this Circular. The actual
number of Rights Shares and Bonus Shares as well as its respective percentages to the issued
and paid-up share capital of our Company may vary and can only be determined upon the
fixing of the Entitlement Basis for the Rights Shares and Bonus Shares by our Board.
(2)
Computed based on the issued and paid-up share capital of our Company as at 27 October
2014 comprising 72,815,856 BDB Shares.
The Proposed Rights Issue is not undertaken on a minimum level of subscription
basis.
As stated in Section 2.1.8.3 of this Circular and as provided in the SPA, the Parties
agreed that the subscription price for such Rights Shares to be subscribed by PKNK
pursuant to the Proposed Rights Issue shall be set-off from such Consideration Cash
due to PKNK pursuant to the SPA. Further, PKNK has in the Subscription
Undertaking confirmed that the payment for the subscription price of the Rights
Shares shall be made by way of set-off from the Consideration Cash. Accordingly,
RHB Investment Bank has verified based on the SPA and the Subscription
Undertaking that PKNK would have sufficient financial resources to fulfil its
obligations pursuant to the Subscription Undertaking.
2.2.8
Underwriting arrangement
Our Company intends to enter into underwriting arrangement(s) for the remaining
open portion representing 45.5% of the total entitlement under the Proposed Rights
Issue. Such underwriting arrangement(s) are expected to be in place prior to the
implementation of the Proposed Rights Issue. Accordingly, the terms of the
underwriting agreement(s) (including the identity of the underwriter(s)) will be set
out in the abridged prospectus to be issued to the Entitled Shareholders in connection
with the Proposed Rights Issue (―Abridged Prospectus‖). In any event, the
underwriting commission is to be borne by us and will be made on an arm‘s length
basis based on normal commercial terms.
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19
There will be no implications under the Code as PKNK is already holding a 54.5%
equity interest in our Company as at 27 October 2014. Further, PKNK does not
intend to dispose its shareholdings up to the Entitlement Date.
2.2.9
Utilisation of proceeds
The actual gross proceeds to be raised from the Proposed Rights Issue will depend on
the total number of Rights Shares to be issued and the issue price for the Rights
Shares.
For illustrative purposes only, the Intended Gross Proceeds are proposed to be
utilised in the following manner:
Estimated time frame for
utilisation of proceeds
Proposed utilisation
RM
million
Reimbursement of Deposit (1) (2)
Immediately
10.1
Settlement of the consideration cash for the NonMalay Reserved Land
Immediately
59.0
Settlement of the consideration cash for the
Malay Reserved Land (2)
Within 6 months
17.6
Working capital (3)
Within 12 months
3.3
Immediately
5.0
Estimated expenses in relation to the Proposals (4)
Total proceeds from the Proposed Rights Issue
95.0
Notes:
(1)
Being the initial payment paid by our Company in relation to the Proposed Acquisition.
(2)
In the event that the Proposed Acquisition of Malay Reserved Land is not completed, the
amount allocated to the payment for the acquisition (including the corresponding amount of
Deposit) shall be utilised to finance our Group’s on-going development projects; namely
Darulaman Perdana, Bandar Darulaman and Darulaman Utama township projects.
(3)
Our Company intends to utilise part of the Intended Gross Proceeds to finance our Group’s
day-to-day operations which include the payment of staff costs, and advertising, branding and
promotional costs.
(4)
The estimated expenses relating to the Proposals comprise, inter-alia, the estimated
professional fees, regulatory fees, printing and advertising costs and other miscellaneous
expenses.
Any shortfall in the actual gross proceeds raised from the Proposed Rights Issue and
the Intended Gross Proceeds will be adjusted accordingly to the amount allocated for
working capital of our Group.
Any variation to the estimated expenses in relation to the Proposals will be adjusted
to the amount allocated for working capital of our Group.
Given the timing of utilisation of proceeds raised from the Proposed Rights Issue for
the settlement of the consideration cash for the Malay Reserved Land and for
working capital purposes may not be immediate, and as part of our Company‘s
efficient capital management to maximise interest income, our Board intends to place
the funds with licensed financial institution or money market funds.
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2.2.10
Foreign addressed shareholders
The Abridged Prospectus, together with its accompanying documents which will be
issued in connection with the Proposed Rights Issue, will not be issued to comply
with the laws of any jurisdiction other than Malaysia and have not and will not be
registered under any securities legislation of any jurisdiction other than Malaysia or
with or by any regulatory authorities or other relevant bodies of any jurisdiction other
than Malaysia and the Proposed Rights Issue will not be offered for subscription in
any country other than Malaysia.
Accordingly, the documents relating to the Proposed Rights Issue will not be sent to
the Entitled Shareholders of our Company who do not have a registered address in
Malaysia (―Foreign-Addressed Shareholders‖). Foreign-Addressed Shareholders
who wish to change their addresses should inform their respective stockbrokers as
well as our registrar to effect the change of the address. Such notification should be
done prior to the Entitlement Date. Alternatively, Foreign-Addressed Shareholders
may collect the documents relating to the Proposed Rights Issue from our registrar, in
which event, our registrar shall be entitled to request for such evidence as it deems
necessary to satisfy itself as to the identity and authority of the person collecting the
documents relating to the Proposed Rights Issue.
Our Company will not make or be bound to make any enquiry or investigation as to
whether the Entitled Shareholders have a registered address other than as stated in
our Record of Depositors as at the Entitlement Date and will not accept or be deemed
to accept any liability whether or not any enquiry or investigation is made in
connection therewith.
A Foreign-Addressed Shareholders may only exercise his/her rights in respect of the
Proposed Rights Issue to the extent that it would be lawful to do so, and our
Company and/or RHB Investment Bank would not, in connection with the Proposed
Rights Issue, be in breach of the laws of any jurisdiction which the ForeignAddressed Shareholders might be subject to.
The Foreign-Addressed Shareholders will be responsible for payment of any issue,
transfer or any other taxes or other requisite payments due in such jurisdiction and
our Company shall be entitled to be fully indemnified and held harmless by ForeignAddressed Shareholders for any issue, transfer or other taxes or duties as such
persons may be required to pay. They will have no claims whatsoever against our
Company, our registrar and/or RHB Investment Bank in respect of their rights or
entitlements under the Proposed Rights Issue. Foreign-Addressed Shareholders
should also consult their professional advisers as to whether they require any
governmental, exchange control or other consents or need to comply with any other
applicable legal requirements to enable them to exercise their rights or entitlement
under the Proposed Rights Issue. Foreign-Addressed Shareholders shall be solely
responsible to seek advice as to the laws of any jurisdiction which they are subject to,
and participation by a Foreign-Addressed Shareholders in the Proposed Rights Issue
shall be on the basis of a warranty by the Foreign-Addressed Shareholders that he/she
may lawfully so participate without our Company and/or RHB Investment Bank
being in breach of the laws of any jurisdictions.
Neither our Company, RHB Investment Bank nor any other advisers to the Proposed
Rights Issue shall accept any responsibility or liability in the event that any
acceptance by a Foreign-Addressed Shareholder of his/her rights in respect of the
Proposed Rights Issue is or shall become illegal, unenforceable, voidable or void in
any country or jurisdiction.
We reserve the right in our absolute discretion to treat any subscription for the Rights
Shares with attached Bonus Shares as being invalid if we believe or have reason to
believe that such subscription for the Rights Shares with attached Bonus Shares may
violate applicable legal or regulatory requirements.
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2.3
Proposed IASC
In order to accommodate the Consideration Shares, Rights Shares and Bonus Shares, we
propose to increase our authorised share capital from the existing RM100,000,000 comprising
100,000,000 BDB Shares to RM400,000,000 comprising 400,000,000 BDB Shares.
2.4
In order to accommodate the Proposed IASC, we propose to amend Clause 5 of our
Memorandum and Articles of Association to indicate that our authorised share capital will be
RM400,000,000 comprising 400,000,000 BDB Shares.
3.
RATIONALE FOR THE PROPOSALS
3.1
The Proposed Acquisition is undertaken with the following objectives:
(i)
to allow our Company to replenish our existing landbank as well as to provide an
opportunity for our Company to further strengthen our position as one of the main
property development players in Kedah;
(ii)
with our sizeable landbank (increased to over 2,000 acres of land with the addition of
the Landbank) in Kedah upon completion of the Proposed Acquisition, our Group
will be better positioned to reach out to a broader range of customers by offering,
inter-alia, residential, commercial and/or mixed development townships; and
(iii)
to assist in realising our Company‘s vision to be a partner of the Government in
primarily developing township and infrastructure, and construction.
The Proposed Acquisition is expected to augur well for our Group‘s plans to achieve strong
and sustainable long-term growth. We believe that the Proposed Acquisition will contribute
positively to the long-term earnings of our Group via the development of the Landbank.
3.2
The Proposed Rights Issue is undertaken with the following objectives:
(i)
to enable our Company to raise funds to part finance the Proposed Acquisition. In
addition, equity financing will allow our Company to raise funds without incurring
interest cost as well as to minimise any potential cash outflow in respect of interest
servicing, as compared with bank borrowings;
(ii)
to provide an opportunity to our Company‘s shareholders to participate in an equity
offering on a pro-rata basis and acquire new BDB Shares at a discount to prevailing
market prices, as compared with a private placement of new BDB Shares;
(iii)
to maintain the strength of our Company‘s balance sheet. In addition, the enlarged
share capital base is also expected to reduce our Company‘s gearing levels; and
(iv)
increase the number and enhance the liquidity of BDB Shares on the Main Market of
Bursa Securities, potentially enabling more active participation by the investing
market.
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Our Board is of the opinion that the Bonus Shares (attached to the Rights Shares) will provide
the Entitled Shareholders with an added incentive to subscribe for the Rights Shares while at
the same time, enhance our Company‘s capital base as the Bonus Shares will increase the
number of BDB Shares held by our Company‘s existing shareholders, albeit without
increasing their percentage of shareholdings in our Company.
4.
INDUSTRY OVERVIEW AND PROSPECTS
4.1
Overview and outlook of the Malaysian economy
The Malaysian economy expanded by 6.4% in the second quarter of 2014. Global economic
activity continued to expand at a moderate pace in the second quarter. The recovery in the US
resumed after an unusual weather-related weakness in the first quarter. Growth in Japan was,
however, affected by the implementation of the increase in the consumption tax in April. In
Asia, economic activity continued to expand, albeit at a more moderate pace in most
economies.
The Malaysian economy registered a strong growth of 6.4% in the second quarter of 2014 (1Q
2014: 6.2%), underpinned by higher exports and continued strength in private domestic
demand. On the supply side, growth in the major economic sectors remained firm, supported
by trade and domestic activity. On a quarter-on-quarter seasonally adjusted basis, the economy
grew by 1.8% (1Q 2014: 0.8%).
(Source: Economic and Financial Developments in Malaysia in the Second Quarter of 2014,
Bank Negara Malaysia)
4.2
Overview and outlook of the property and construction sector in Malaysia
The real estate and business services subsector expanded 8% during the first six months of
2014 (January – June 2013: 6.7%). The real estate segment grew 5.5% (January – June 2013:
4%) following higher real estate transactions which rebounded by 3.3% to 193,430 (January –
June 2013: -13.8%; 187,164) with transaction value recording a double-digit growth of 19% to
RM82 billion (January – June 2013: -0.3%: RM69 billion). Despite property prices hovering
at a high level, the various cooling measures introduced to curb rising property prices and
speculative activities have started to gain traction. This was reflected in the slower increase in
residential property prices at 8.1% while transactions fell 2.7% during the first half of 2014
(January – June 2013: 11%: 5.1%). Growth of the real estate and business services subsector
is projected to sustain at 7.5% in 2014 (2013: 7.5%).
The construction sector continued to register a double-digit growth of 14.3% during the first
half of 2014 (January – June 2013: 12%). During the period, 19,649 construction projects
were undertaken with contract value of RM50.1 billion. The civil engineering subsector
contributed 33% to the total construction works, followed by the non-residential (32.3%),
residential (29.6%) and special trade (5%). The private sector contributed 71.4% to the total
value of construction works. Meanwhile, the higher construction activity was led by the
residential and non-residential subsectors, while growth in the civil engineering subsector
moderated following the completion of some major projects, including KLIA2, Second
Penang Bridge and Manjung coal-power plant. Moving forward, the sector is expected to
grow 12.7% in 2014 (2013: 10.9%) and contribute 4% to GDP, supported by ongoing
residential, O&G and transportation projects.
Growth in the non-residential subsector turned around sharply by 14% (January – June 2013: 1%) in line with healthy business activity during the first half of 2014. This was reflected by
increased construction activities especially for commercial buildings with the incoming supply
of shops increasing to 72,117 units (January – June 2013: 66,167 units). In the public sector,
construction was mainly concentrated in building 33 new schools and upgrading facilities in
universities and hospitals. Industrial building starts grew significantly by 81.6% to 1,580 units
(January – June 2013: 73.7%; 870 units), particularly in Johor, Selangor and Pulau Pinang.
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The residential subsector expanded strongly by 22.1% during the first half of 2014 (January –
June 2013: 15.7%) supported by higher growth in incoming supply at 9.5% (January – June
2013: 15.3%). Meanwhile, new housing approvals increased significantly by 32.6% to 96,115
units (January – June 2013: 6.8%; 72,461 units). Despite the decline in housing starts at 5.3%
to 70,346 units (January – June 2013: 21.1%; 74,270 units), residential activity is expected to
remain stable. The take-up rate for houses priced between RM500,001 and RM1,000,000,
within six months after launch, was lower at 11.6% (January – June 2013: 34.2%) following
several measures to cool the housing sector. Meanwhile, the highest take-up rate was recorded
for houses priced between RM200,001 and RM250,000 at 49.3%.
Following several cooling measures imposed to curb speculative activity in the property
sector, the number of residential property transactions decreased 2.7% in the first half of 2014
(July – December 2013: 5.1%). During the same period, residential transactions decline in
Kuala Lumpur (-4.8%) and Selangor (-2.1%), while Johor and Pulau Pinang registered
positive growth of 17.5% and 2.7%, respectively. Meanwhile, the residential overhang
declined 11.5% to 12,105 units during the first half of 2014 (January – June 2013: -15.1%;
13,673 units), with a total value of RM4.5 billion (January – June 2013: RM5 billion).
(Source: Economic Report 2014/2015, Ministry of Finance)
4.3
Overview and outlook of the property and construction sector in Kedah
The State of Kedah’s property market softened in 2013 evidenced by the slight drop in both
volume and value of transactions. The year recorded 25,389 transactions worth RM4.40
billion as compared to 2012. Both volume and value of transaction dropped by 8.6 % and 0.6
% respectively (2012 : 27,775 transactions worth RM4.44 billion).
Market activity by sub-sectors registered positive movement with exception to the agricultural
sub-sectors. The industrial sub-sector portrayed substantial increase of 67.7 % in the review
period. Development land, residential and commercial grew by 5.2 %, 4.8 % and 2.2 %
respectively. The agricultural sub-sector continued to decrease significantly by 37.0 % against
15.2 % in 2012.
Value of agricultural sub-sector continued to decrease significantly by 22.5 % reduction.
Meanwhile, value of commercial sub-sector reduced by 23.7 % as opposed to the increase in
the number of transactions. Conversely, industrial and development lands sub-sectors saw
significant increases by 26.7 % and 21.6 % respectively, while the residential sub –sector
grew marginally by 5.6 %.
The units launched in the residential primary market softened in the review period. The
number decreased to 2,611 units (2012 : 3,804 units) with higher sales performance of 51.1 %
(2012 : 28%). Terraced houses formed the bulk of these new units, accounting for 48.4 %
(1,263 units) of the total new launches.
Overall occupancy rate of shopping complexes in the state sustained at 79% (2012 : 78.3%).
The performance of office sub-sector reduced marginally with the overall occupancy rate
declined to 91.6 % (2012 : 92.8%).
(Source: Property Market Report 2013 by the Valuation and Property Services Department,
Ministry of Finance Malaysia)
4.4
Prospects of the Landbank
Our Company‘s management is of the view that the demand for residential property in Kedah
is expected to remain favourable among local buyers, based on our Company‘s track record
and experience of effectively targeting local buyers with the right type of property offering at
the right price level. To maintain this favourable environment with the new Landbank, our
Company will constantly re-evaluate existing market and feasibility studies, and undertake
other detailed market surveys and analyses prior to finalising the development plans for the
Landbank.
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There is also potential for some areas of the Landbank to be used for mixed residential and
commercial township development with a focus on affordable housing. The prospects of the
Landbank to be acquired by our Company, located in areas listed below, are as follows:
(i)
Ulu Melaka, Langkawi
Langkawi, one of the United Nations Educational, Scientific and Cultural
Organization‘s (UNESCO) Geoparks, is one of the key tourists spots in Malaysia.
Due to its location within Langkawi, the subject land is in a good stead for the
realisation of developments related to tourism, such as medical tourism. The absence
of a medical tourism hospital in Langkawi at the moment presents an opportunity for
the development of a medical tourism hospital to attract tourists from neighbouring
countries such as Indonesia and Thailand.
Further, the subject land is located within a 10 kilometer radius from popular tourist
attractions in Langkawi such as Mahsuri Tomb and Malaysian Agricultural Research
and Development Institute (MARDI) Agro Technology Park. Hence, the
development of the subject land into a tourism development would allow our
Company to capitalise on the tourism industry in Langkawi by drawing tourists to
our development. This development will also act as catalysts for other activities such
as residential and commercial. Lastly, with the Northern Corridor Economic Region
(NCER) initiative by the Government, which inter-alia, aims to encourage tourism
activity in Kedah, the prospect of the subject land is expected to be favourable.
(ii)
Hosba, Kubang Pasu
Considering that the location of the subject land is located next to the North-South
Expressway and is sited between the towns of Jitra and Changlun, the area has the
potential to be developed into a mixed development. Although in general, the
property market in Kubang Pasu indicated a stable and consistent annual growth
pattern for residential and commercial properties in the last three years, our Company
views the prospects of the subject land favourably considering that the subject land is
strategically and conveniently located. The potential market catchment for the
development might come from educational institutions such as Universiti Utara
Malaysia, Kolej Matrikulasi Kubang Pasu and Institut Perguruan Darulaman, and
industrial areas like Bandar Darulaman Industrial Area and Bukit Kayu Hitam
Industrial Area.
(iii)
Sungai Petani, Kuala Muda
Under the National Housing Policy, the Government has introduced various
programmes which encourages private sector in providing affordable houses, will
have spillover effects in the economic growth and housing demand in Kuala Muda.
This will also be complemented further as Sungai Petani (located within the district
of Kuala Muda) will soon be upgraded from a town to a city by 2015.
Furthermore, the subject land is strategically located within the immediate Amanjaya
township and is accessible from the Sungai Lalang – Bukit Selambau road, hence the
subject land would be ideal for a mixed-development comprising residential and
commercial component. Its potential is further enhanced by being near to the exit of
North-South Highway (PLUS) about 4 km to the south. Further, the location of Kuala
Muda adjacent to Penang also provides the opportunity for additional demand from
Penang‘s residents.
As such, our Company believes that the subject land can still be successfully
developed with emphasis being placed on introducing building designs with unique
and improved development concepts, modern security and improved accessibility.
Combined with the immediate proximity to an existing township, the development
should be able to capture the market for our properties.
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25
(iv)
Pokok Sena
The subject land that is strategically located about 15 kilometers from Alor Setar city
centre is ideal for potential mixed-development comprising residential, commercial
and leisure components. With the new dual carriageway between Alor Setar and
Pokok Sena, accessibility to Alor Setar has improved and travelling time has been
shortened. Since the subject land is outside of the Malay Reservation Area, a wide
range of buyers will be attracted to our development projects as well.
In creating a market niche, a proposed mixed-development in Pokok Sena would be
strategically positioned to complement the existing market by offering products that
are rare in Pokok Sena and Alor Setar areas. By having a strategic location outside
the congested city centre of Alor Setar, the subject land is also suitable for medium to
medium-high end development targeted for population working in Alor Setar, Jitra
and even Kuala Nerang apart from Pokok Sena itself. The subject site is expected to
stand a good chance to become a niche for residential scheme and other economic
prospects such as potential competitive rentals.
(v)
Sungai Ular, Kulim
Due to the sizeable area of this landbank (374.13 acres), and its relatively low cost
per sq. ft. (RM2.30 per sq. ft.), our Company believes there is a suitable opportunity
for the initial development of the subject land to be catered towards low to medium
cost houses and potentially as part of a longer-term sustainable township
development. This will be a catalyst for creating a pool of residents in the area prior
to further developments. Once the residential community is established, it would be
easier to attract buyers for the properties to be developed in the subsequent phases,
which may include mixed/commercial/retail concepts.
Further, the opening of Sultan Abdul Muadzam Shah bridge (second‘s Penang
bridge) will act as a catalyst for further economic growth in Kulim, which will create
a spillover effect benefitting Kulim in general.
Our Company‘s management is of the view that the Proposed Acquisition coupled with the
overall prospects of a positive outlook of the Malaysian economy, and the property markets in
Malaysia and Kedah as set out in Sections 4.1, 4.2 and 4.3 of this Circular will enable our
Company to realise the potential arising from the highlighted features above. Thus, the
Proposed Acquisition is expected to contribute positively to our Company‘s future earnings.
Notwithstanding the above and given that the Landbank is seen to comprise lands with
favourable characteristics, the Landbank provide further opportunities for our Company to
explore new real estate concepts and solutions that may not have yet been introduced to the
Kedah property market. The size of the Landbank provides our Company with such an
opportunity, and it is envisaged that the Landbank will provide more flexible, versatile and
creative avenues in township and mixed development planning that our Company could
consider in the future.
Premised on the foregoing, and barring unforeseen circumstances, the Proposed Acquisition is
also expected to augur well for our Company‘s strategy and to support, and strengthen the
strategic development objectives and value enhancement of our Company.
(Source: Our management)
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5.
RISK FACTORS
The Proposed Acquisition will not materially change the risk profile of our Group‘s business as our
Group has always been involved in the property development business. Hence, our Group will be
exposed to similar business, operational and financial risks inherent in the property development sector
upon completion of the Proposed Acquisition. These risks include, but not limited to, competition,
political and economic conditions, volatility in the supply and price of raw materials, operational risks,
delay in completion of projects, fluctuations in interest rates and collections from customers.
In addition to the risks above, our Company may be subject to certain specific risks associated with the
Proposals. The specific risks are as follows:
(i)
Malay Reserved Land and approval from the Ministry of Finance Malaysia
The acquisition of the Malay Reserved Land is subject to provisions of the Malay Reservation
Enactments (Kedah) No. 63, where any sale or transfer of interest in Malay reserved land to a
non-Malay is subject to approval of the Kedah State Authority.
As such, there can be no guarantee that our Company and/or PKNK is able to obtain such
approvals required for the Proposed Acquisition of Malay Reserved Land although our
Company and PKNK will endeavour to obtain such required approvals.
(ii)
Approval from the Ministry of Finance Malaysia
The Proposed Acquisition is subject to PKNK obtaining the approval of the Ministry of
Finance Malaysia pursuant to Incorporation (State Legislatures Competency) Act 1962 and
the relevant treasury instruction (Arahan Menteri Kewangan Tahun 1993). This approval is a
condition precedent in the SPA, however there can be no guarantee that PKNK is able to
obtain such approval although PKNK, with our assistance will endeavour to obtain the
approval.
(iii)
Valuation of the Landbank
The valuation of the Landbank by the Valuer is based on certain assumptions, which, by their
nature, are subjective and uncertain and may differ materially from the actual measures of the
market. In addition, land valuations generally, and the valuation conducted by the Valuer in
particular, include a subjective determination of certain factors relating to the different lands
comprised in the Landbank, such as their location and physical condition. Accordingly, there
can be no assurance that the assumptions are accurate measures of the market or that the
Landbank were measured accurately. Further, the appraised value of the Landbank is not an
indication of, and does not guarantee, a sale price at that value at present time or in the future.
Should our Company decides to sell the Landbank or any portion thereof (partially or in full),
the price at which our Company may realise from the sale of the Landbank or any portion
thereof may be lower than the appraised value or the acquisition price of the Landbank.
(iv)
Investment risk
The issue price of the Rights Shares will be determined after taking into consideration, interalia, the then prevailing market conditions and market price of BDB Shares as well as the
TEAP of BDB Shares.
The market price of BDB Shares is dependent on or influenced by, inter-alia, the prevailing
stock market sentiments, the volatility of the stock market, movement in interest rates, our
Company‘s future profitability, the outlook of the industry in which our Company operates in
and our financial performance. In view of this, there can be no assurance that BDB Shares will
trade at or above the TEAP of BDB Shares upon or subsequent to the listing of quotation for
the Consideration Shares, Rights Shares and Bonus Shares on the Main Market of Bursa
Securities.
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27
Accordingly, there is no assurance that the market price of the Rights Shares and Bonus
Shares will be at a level that meets the specific investment objectives or targets of any
subscriber of the Rights Shares with attached Bonus Shares.
(v)
Delay in or abortion of the Proposed Rights Issue
The Proposed Rights Issue is exposed to the risk that it may be aborted or delayed on the
occurrence of, inter-alia, any or more of the following events:
(a)
There are material breach of representations, warranties and undertakings on the part
of our Company or in the event any conditions precedent to the underwriting
agreement have not been fulfilled; or
(b)
The occurrence of any force majeure events or circumstances beyond the control of
our Company and/or the underwriter, and including without limitation, acts of
Government, acts of God (including, without limitation, the occurrence of a tsunami,
flooding, landslide and/or earthquakes), acts of terrorism, strikes, national disorder,
declaration of a state of emergency, lock-outs, fire, explosion, civil commotion,
sabotage, acts of war, diseases or accidents, any change in law, regulation, policy or
ruling and others arising prior to the implementation of the Proposed Rights Issue.
In the event the Proposed Rights Issue is aborted, all the subscription/application monies
received pursuant to the Proposed Rights Issue will be refunded to the subscribing entitled
shareholders and/or their renouncee(s) (if applicable), without interest, or with interest if the
application monies are not refunded within 14 days after our Company becomes liable to
repay, in accordance with the provisions of Section 243(2) of the Capital Markets and
Services Act, 2007.
(vi)
Completion risk
The completion of the Proposed Acquisition of Non-Malay Reserved Land and Proposed
Acquisition of Malay Reserved Land are not inter-conditional upon each other. The Proposed
Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay Reserved
Land are conditional upon the conditions precedent being satisfied and/or waived, as the case
may be, including inter-alia the approvals from the relevant authorities, relevant parties and
shareholders of our Company. In the event any of the conditions precedent in the SPA is not
met or waived by the parties (as the case may be), this will result in the non-completion of the
respective acquisitions.
Further, there can be no assurance that the Proposed Acquisition of Non-Malay Reserved
Land and the Proposed Acquisition of Malay Reserved Land will not be exposed to risks such
as the inability to obtain the requisite approvals from the relevant authorities, parties and/or
shareholders of our Company.
Please refer to Section 8 of this Circular for the conditionality/inter-conditionality of the
Proposals.
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6.
EFFECTS OF THE PROPOSALS
The Proposed IASC and the Proposed M&A Amendment will not have any effect on the issued and
paid-up share capital, consolidated NA and gearing, NA per share of our Company, and shareholdings
of our Company‘s substantial shareholder.
For illustrative purposes only, the proforma effects of the Proposed Acquisition and the Proposed
Rights Issue are illustrated based on the following assumptions (―Assumptions‖):
Illustrative issue price of the Consideration Shares
:
RM1.53 (1)
Illustrative issue price of the Rights Shares
:
RM1.26
Illustrated based on the 5-day VWAP of BDB Shares
for the past five market days up to and including 7
October 2014
:
RM2.34
Illustrative number of Consideration Shares under the
Proposed Acquisition of Non-Malay Reserved Land
:
23,856,210 (1)
Illustrative number of Consideration Shares under the
:
51,503,268 (1)
Illustrative Entitlement Basis of the Rights Shares
:
One Rights Share for every one BDB Share held
Illustrative Entitlement Basis of the Bonus Shares
:
One Bonus Share for every two Rights Shares
subscribed
Note:
(1)
After taking into consideration the relevant adjustments as set out in the SPA to take into account the effects of the
6.1
Share capital
For illustrative purposes only, based on the Assumptions, the proforma effects of the
Proposed Acquisition and the Proposed Rights Issue on our issued and paid-up share capital
are set out below:
No. of BDB Shares
As at 27 October 2014
RM
72,815,856
72,815,856
109,223,784
109,223,784
- Proposed Acquisition of Non-Malay Reserved Land
23,856,210
23,856,210
- Proposed Acquisition of Malay Reserved Land
51,503,268
51,503,268
257,399,118
257,399,118
To be issued pursuant to the following:
- Proposed Rights Issue
Enlarged issued and paid-up share capital
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6.2
NA per share and gearing
You should read this section in conjunction with the Reporting Accountants‘ Letter on the
proforma consolidated statements of financial position of our Company as at 31 December
2013 as set out in Appendix IV of this Circular.
For illustrative purposes only, based on the Assumptions, the proforma effects of the
Proposed Acquisition and the Proposed Rights Issue on our consolidated NA and gearing, and
NA per BDB Share as at 31 December 2013 are set out below:
Proforma I
Audited as at
31 December
2013
RM’000
72,816
Share capital
Share premium
17,062
Exchange fluctuation reserves
10
Adjusting for
dividend
payment (1)
RM’000
72,816
17,062
10
After
Proposed
Rights Issue
RM’000
182,040
-
Proforma II
After Proforma
I and Proposed
Acquisition of
Non-Malay
Reserved Land
RM’000
205,896
10
12,644
10
Proforma III
After Proforma
II and Proposed
Acquisition of
Malay Reserved
Land
RM’000
257,399
39,941
10
Retained earnings
175,341
170,244
169,830
169,830
164,830(4)
Total equity
273,297
268,200
359,948
396,448
470,248
72,816
72,816
182,040
205,896
257,399
Non-controlling interest
8,068
No. of ordinary shares in issue (‗000)
NA per ordinary share (RM)
Total borrowings
Cash and bank balances
3.75
3.68
343,192
343,192
1.26
1.28
101,589
Gross gearing (times) (1)
8,068
Net gearing (times) (2)
0.88
8,068
1.98
343,192
8,068
1.93
343,192
8,068
1.83
343,192
96,492
188,240
124,238 (5)
96,540 (4) (5)
0.92
0.43
0.55
0.52
0.95
0.87
0.73
Notes:
6.3
(1)
On 20 May 2014, our Company has paid first and final single tier dividend of 7 sen per BDB Share.
(2)
Gross gearing is computed as total borrowings divided by total equity.
(3)
Net gearing is computed as net borrowings (total borrowings minus cash and bank balances) divided by
total equity.
(4)
After deducting the estimated expenses in relation to the Proposals of RM5.0 million.
(5)
After payment of consideration cash and Deposit by our Company in relation to the respective
acquisitions.
Earnings and EPS
The Proposed Acquisition and Proposed Rights Issue are not expected to have a material
effect on the consolidated earnings of our Company and EPS for the financial year ending 31
December 2014 as the Proposed Acquisition of Non-Malay Reserved Land and the Proposed
Rights Issue are expected to only be completed in the first quarter of 2015 whilst the Proposed
Acquisition of Malay Reserved Land is expected to be completed in the second quarter of
2015.
The EPS of our Company is expected to be proportionately reduced as a result of the increase
in the number of BDB Shares upon allotment and issuance of the Rights Shares, Bonus Shares
and Consideration Shares.
Nevertheless, the potential impact of the Proposed Acquisition and the Proposed Rights Issue
on the future earnings and EPS of our Company will depend upon, inter-alia, the future
development plans for the Landbank to be acquired and the level of returns from such
development.
30
30
6.4
^
Note:
PKNK
54.5
%
-
No. of BDB Shares
123,053,693
No. of BDB Shares
Direct
59.8
%
-
No. of BDB Shares
Direct
-
%
-
No. of %
Proforma II - After Proforma I
and Proposed Acquisition of Non-Malay Reserved Land
39,678,993
No. of BDB Shares
Indirect
31
54.5
%
-
No. of BDB Shares
Indirect
Direct
174,556,961
67.8
%
-
No. of BDB Shares
Direct
Proforma III - After Proforma II
and Proposed Acquisition of Malay Reserved Land
99,197,483
No. of BDB Shares
31
Direct
Proforma I - After Proposed Rights Issue^
No. of BDB Shares
Assuming all shareholders of our Company subscribe for their entitlements under the Proposed Rights Issue
Substantial
Shareholder
PKNK
Substantial
Shareholder
Direct
-
%
-
%
For illustrative purposes only, based on the Assumptions, the proforma effects of the Proposed Acquisition and the Proposed Rights Issue on the
shareholdings of our substantial shareholder are set out below:
Substantial shareholders’ shareholding
6.5
Existing convertible securities
Our Company does not have any convertible securities as at 27 October 2014.
7.
HISTORICAL PRICES OF OUR SHARES
The following table sets out the monthly highest and lowest prices of BDB Shares as traded on Bursa
Securities for the past 12 months preceding the date of this Circular:
Month
2013
October
November
December
2014
January
February
March
April
May
June
July
August
September
Highest
RM
Lowest
RM
1.70
1.72
1.75
1.55
1.64
1.64
1.85
1.85
1.84
2.19
2.02
2.13
2.34
2.51
2.48
1.69
1.73
1.76
1.78
1.80
1.81
2.06
2.28
2.28
Last transacted market price on 3 September 2014
(being the last Market Day prior to the announcement of the Proposals on 4 September 2014)
2.40
Last transacted market price on 27 October 2014
(being the latest practicable date prior to the printing of this Circular)
2.09
(Source: Bloomberg)
8.
CONDITIONS/APPROVALS REQUIRED AND INTER-CONDITIONALITY
The Proposals are subject to the following being obtained:
(i)
the approval of Bursa Securities, which was obtained vide its letter dated 27 October 2014 for
the following:
(a)
listing of and quotation for up to 93,739,838 Consideration Shares; and
(b)
listing of and quotation for up to 91,019,820 Rights Shares and 91,019,820 Bonus
Shares.
The approval by Bursa Securities for the Proposed Acquisition and Proposed Rights Issue is
subject to the following conditions:
(a)
our Company and RHB Investment Bank must fully comply with the relevant
provisions under the Listing Requirements pertaining to the implementation of the
Proposed Acquisition and Proposed Rights Issue;
(b)
our Company and RHB Investment Bank to inform Bursa Securities upon the
completion of the Proposed Acquisition and Proposed Rights Issue;
32
32
(c)
our Company to furnish Bursa Securities with a written confirmation of our
compliance with the terms and conditions of Bursa Securities‘ approval once the
Proposed Acquisition and Proposed Rights Issue are completed;
(d)
our Company and RHB Investment Bank to furnish Bursa Securities copy of all
letters of approval from the relevant authorities;
(e)
RHB Investment Bank to furnish Bursa Securities a letter confirming all approvals of
the relevant authorities has been obtained;
(f)
certified true copy of the resolution passed by the shareholders in EGM approving
the Proposed Acquisition and Proposed Rights Issue; and
(g)
our Company and RHB Investment Bank are required to make the relevant
announcement pursuant to Paragraphs 6.35(2)(a) and (b) and 6.35(3) of the Listing
Requirements.
(ii)
the approval of the shareholders of our Company at our forthcoming EGM; and
(iii)
the approvals from any other relevant authorities, if required, and the fulfilment of all
conditions attached to such approvals, if any.
The Proposed Acquisition of Non-Malay Reserved Land, Proposed Rights Issue, Proposed IASC and
Proposed M&A Amendment are inter-conditional upon each other.
The Proposed Acquisition of Malay Reserved Land is conditional upon the Proposed Rights Issue,
Proposed IASC and Proposed M&A Amendment. The Proposed Acquisition of Malay Reserved Land
is not conditional upon the Proposed Acquisition of Non-Malay Reserved Land.
The Proposed Rights Issue, the Proposed IASC and the Proposed M&A Amendment will not be
implemented if any of the conditions precedent under the SPA with respect to the Non-Malay Reserved
Land is not fulfilled, obtained or waived (as the case may be).
9.
PERCENTAGE RATIOS
Based on the Purchase Consideration, the highest percentage ratio of our Company pursuant to Chapter
10.02(g) of the Listing Requirements exceeds 100%.
Pursuant to Chapter 2 of the SC Equity Guidelines issued by the SC, as the highest percentage ratio for
the Proposed Acquisition exceeds 100%, the Proposed Acquisition may be deemed as an acquisition
resulting in a significant change in business direction or policy of our Group which would require the
approval of the SC.
On 15 August 2014, our Company has obtained the SC‘s concurrence that the Proposed Acquisition
would not result in a significant change in business direction or policy of our Group.
33
33
10.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
Save as disclosed below and their respective entitlements under the Proposed Rights Issue as
shareholders of our Company, which shall also be made available to all other shareholders of our
Company, none of the directors and/or major shareholders of our Company and/or any persons
connected to them have any interest, whether direct and/or indirect, in the Proposals.
Dato‘ Izham bin Yusoff and Dato‘ Abdul Rahman bin Ibrahim are both directors of our Company, and
are also the executive council member and Chief Executive Officer of PKNK, respectively. Hence,
Dato‘ Izham bin Yusoff and Dato‘ Abdul Rahman bin Ibrahim are deemed interested in the Proposals.
Accordingly, the Interested Directors have abstained and will continue to abstain from any deliberation
and voting in meetings of our Board to consider the Proposals.
PKNK is a major shareholder of our Company and the Vendor. Hence, PKNK is deemed interested in
the Proposals. Accordingly, PKNK shall abstain from voting in respect of its direct and/or indirect
interests in our Company on the resolutions pertaining to the Proposals at our forthcoming EGM.
In addition, the Interested Director and PKNK will also undertake that they will ensure that all persons
connected to them, if any, will abstain from voting in respect of their direct and/or indirect interests in
our Company (if any) on the resolutions pertaining to the Proposals at our forthcoming EGM.
As at 27 October 2014, none of the directors of our Company has any shareholdings in our Company.
The shareholding of PKNK in our Company is as set out in Section 6.4 of this Circular.
11.
STATEMENT BY AUDIT COMMITTEE
The Audit Committee of our Company, having considered all aspects of the Proposals (including but
not limited to the advice of PIVB (being the Independent Adviser for the Proposed Acquisition),
prospects of the Landbank, rationale and the proforma effects of the Proposals), is of the view that the
Proposals are:
12.
(i)
in the best interest of our Company;
(ii)
fair, reasonable and on normal commercial terms; and
(iii)
not detrimental to the interest of the minority shareholders.
DIRECTORS’ RECOMMENDATION
Our Board (save for the Interested Directors), having considered all aspects of the Proposals (including
but not limited to the advice of PIVB (being the Independent Adviser for the Proposed Acquisition),
prospects of the Landbank, rationale and the proforma effects of the Proposals), is of the view that the
Proposals are:
(i)
in the best interest of our Company;
(ii)
fair, reasonable and on normal commercial terms; and
(iii)
not detrimental to the interest of the minority shareholders.
Accordingly, our Board recommends that you vote in favour of the resolutions pertaining to the
Proposals at our forthcoming EGM.
34
34
13.
TRANSACTIONS WITH PKNK
Pursuant to Paragraph 10.08(11)(i) of the Listing Requirements, contracts awarded by PKNK (which is
100% owned by the State Government of Kedah) to our Group shall not be regarded as related party
transactions provided that the said contracts have been immediately announced and included all the
information set out in Appendix 10A and 10C of the Listing Requirements (―Exempted
Transactions‖). In the 12 months preceding the LPD, our Group‘s total transaction value (excluding
the Exempted Transactions) with PKNK and persons connected to them amounted to RM1,260,579.
14.
ESTIMATED TIME FRAME FOR COMPLETION
Barring any unforeseen circumstances, and subject to the receipt of all the approvals of the relevant
parties and authorities, the Proposed Acquisition of Non-Malay Reserved Land, Proposed Rights Issue,
Proposed IASC and Proposed M&A Amendment are expected to be completed by the first quarter of
2015. The Proposed Acquisition of Malay Reserved Land is expected to be completed by the second
quarter of 2015.
The tentative timeline for the Proposals is as follows:
Key Milestones
Tentative timeline
EGM for the Proposals and the announcement of the Entitlement Date
Entitlement Date and issuance of the Abridged Prospectus
End November 2014
Early December 2014
Trading of rights entitlement
Mid December 2014
Closing date of the acceptance of rights and excess application
End December 2014
Completion of the Proposed Acquisition of Non-Malay Reserved
Land, Proposed Rights Issue, Proposed IASC and Proposed M&A
Amendment
Early January 2015
Completion of the Proposed Acquisition of Malay Reserved Land
15.
End June 2015
OUTSTANDING PROPOSALS ANNOUNCED BUT PENDING COMPLETION
Save for the Proposals, as at the date of this Circular, there is no other outstanding corporate proposals
that have been announced but pending completion.
16.
EGM
Our forthcoming EGM will be held at Centre of Learning (COL), Level 4, Menara BDB, 88,
Lebuhraya Darulaman, 05100 Alor Setar, Kedah Darul Aman on Sunday, 23 November 2014 at 10.00
a.m. or any adjournment thereof. The Notice of EGM is enclosed in this Circular.
If you are unable to attend and vote in person at our forthcoming EGM, you are requested to complete,
sign and return the enclosed Form of Proxy in accordance with the instructions therein as soon as
possible and in any event so as to arrive at the Registered Office of our Company not less than 48 hours
before the time stipulated for holding our forthcoming EGM. The Form of Proxy should be completed
strictly in accordance with the instructions contained therein. The lodging of the Form of Proxy will not
preclude you from attending and voting in person at our forthcoming EGM should you subsequently
wish to do so, in which case the Form of Proxy deposited shall be deemed withdrawn and the proxy
shall not be entitled to be present or vote at our forthcoming EGM.
35
35
17.
FURTHER INFORMATION
You are advised to refer to the attached appendices for further information.
Yours faithfully,
For and on behalf of our Board
Datuk Mohd Nasir bin Ahmad
Senior Independent Non-Executive Director
36
36
PART B
INDEPENDENT ADVICE LETTER FROM PIVB TO NON-INTERESTED SHAREHOLDERS OF
OUR COMPANY IN RELATION TO THE PROPOSED ACQUISITION
EXECUTIVE SUMMARY
ALL DEFINITIONS USED IN THIS EXECUTIVE SUMMARY SHALL HAVE THE SAME MEANING
AS THE WORDS AND EXPRESSIONS PROVIDED IN THE “DEFINITIONS” SECTION AND
CONTEXT OF THE CIRCULAR, EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES OR
WHERE OTHERWISE DEFINED IN THIS INDEPENDENT ADVICE LETTER (“IAL”).
THIS EXECUTIVE SUMMARY HIGHLIGHTS ONLY THE PERTINENT INFORMATION OF THE
PROPOSED ACQUISITION. THE NON-INTERESTED SHAREHOLDERS OF BDB ARE ADVISED
TO READ CAREFULLY THE CONTENTS OF THE IAL FOR FURTHER INFORMATION AND THE
RECOMMENDATIONS FROM PIVB, BEING THE INDEPENDENT ADVISER IN RELATION TO
THE PROPOSED ACQUISITION. THE IAL SHOULD ALSO BE READ IN CONJUNCTION WITH
PART A OF THE CIRCULAR, INCLUDING THE APPENDICES THEREIN, OR ANY OTHER
RELEVANT INFORMATION BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE
PROPOSED ACQUISITION AT THE FORTHCOMING EGM OF BDB.
1.
INTRODUCTION
On 14 July 2014, BDB announced that the Company had on 13 July 2014, entered into the HOA with
PKNK in relation to the proposed acquisition of land owned by PKNK measuring approximately 1,200
acres (485 hectares) in aggregate for a total purchase consideration of approximately RM204,000,000.
Subsequently on 4 September 2014, RHB Investment Bank had, on behalf of the Board, announced
that the Company had on even date, entered into the SPA with PKNK for the Proposed Acquisition and
in conjunction with the Proposed Acquisition, RHB Investment Bank had, on behalf of the Board, also
announced the Proposed Rights Issue, Proposed IASC and Proposed M&A Amendment.
On 3 October 2014, RHB Investment Bank had, on behalf of the Board, announced that the Company
had on even date, entered into a supplemental agreement with PKNK for a variation to the Proposed
Acquisition and amendments to certain terms of the SPA after taking into consideration the timing that
may be required to complete the proposed acquisition of certain parcels of the Landbank, namely the
Malay Reserved Land.
In view of the interests of PKNK, being the major shareholder of BDB and the Interested Directors as
disclosed in Section 10, Part A of the Circular, the Proposed Acquisition is deemed as a related party
transaction pursuant to Paragraph 10.08 of the Listing Requirements and the Board had on 25 July
2014, appointed PIVB as the Independent Adviser to advise the non-interested directors of BDB and
non-interested shareholders of BDB in relation to the Proposed Acquisition.
2.
EVALUATION OF THE PROPOSALS
In arriving at our opinion and recommendation, we have taken into consideration the following factors
as discussed further in this IAL:
Consideration factors
PIVB’s comments
Rationale
for
the
The rationale for the Proposed Acquisition is reasonable and not detrimental to the
interest of the non-interested shareholders of the BDB due to the following:

Serves to cater for the future growth of the property development segment of
the Group by replenishing the landbank of the Group for future development,
given that its remaining landbank is approximately 800 acres.

In view that the Landbank is located throughout Kedah, the development of
the Landbank after the Proposed Acquisition would further enhance BDB’s
visibility and market presence as one of the main property developer in the
state.

With an enlarged landbank, the Group will have the necessary scale of land
area and flexibility to subsequently develop and provide a wider range of
properties in Kedah that can cater to various customers from middle-income
earners to high-income earners.

In line with the Company’s vision to further strengthen the partnership
between BDB and the Government.
-1-
37
EXECUTIVE SUMMARY (Cont’d)
PIVB’s comments
Rationale
for
the
The rationale for the Proposed Rights Issue is reasonable and not detrimental to the
interest of the non-interested shareholders of the BDB as it enables BDB to meet its
funding objectives without diluting the equity interest of its existing shareholders,
assuming all the Entitled Shareholders fully subscribe for their respective
entitlements.
Further, the Proposed Rights Issue would be a more efficient option for BDB to raise
the necessary funds as compared to obtaining bank borrowings due to the potential
cash outflow in respect of interest servicing.
It is pertinent to note that the payment for the subscription price of the Rights Shares
by the Vendor by way of set-off from the Consideration Cash would not result in any
adjustments to its subscription price of the Rights Shares or the Consideration Cash
as the subscription price of the Rights Shares will be the same for all Entitled
Shareholders, including the Vendor.
Financial evaluation of
the
Proposed
Acquisition

The valuation of the Landbank as conducted by the Valuer based solely on the
comparison method is reasonable as there are no proposed or approved
development plans on the Landbank.

Evaluation of the Purchase Consideration
The Purchase Consideration or the respective purchase consideration for the
Proposed Acquisition of Non-Malay Reserved Land and the Proposed
Acquisition of Malay Reserved Land are fair and reasonable due to the
following:

(i)
the premium of 1.88% and 1.87% to be paid for the Proposed
Acquisition of Non-Malay Reserved Land and the Proposed
Acquisition of Malay Reserved Land, respectively is within the
range of premiums transacted for the recent precedent transactions
for the past one (1) year up to the LTD of 1.11% to 14.85%; and
(ii)
the Proposed Acquisition of Non-Malay Reserved Land entails a
“basket” acquisition of three (3) parcels of land, whilst the Proposed
Acquisition of Malay Reserved Land entails a “basket” acquisition
of two (2) parcels of land, whereby all the respective lands are to be
acquired on a collective basis;
(iii)
the premium paid in respect of the purchase consideration for both
the Proposed Acquisition of Non-Malay Reserved Land and the
Proposed Acquisition of Malay Reserved Land are offset by the
premium received from the issuance of Consideration Shares
resulting in a net gain of approximately RM0.05 million and
RM2.23 million, respectively; and
(iv)
the rationale for the Proposed Acquisition and prospects of the
Landbank as set out in Sections 9.1 and 14.4 of this IAL,
respectively.
We are of the opinion that the mode of settlement of the Purchase
Consideration via the combination of cash and issuance of Consideration
Shares pursuant to the terms of the SPA is reasonable as the dilutive impact
based on the number of Consideration Shares to be issued is immaterial,
whilst the cash proceeds to be raised from the Proposed Rights Issue is
sufficient to finance the Consideration Cash, without the need to further
obtain bank borrowings.
-2-
38
Financial evaluation of
the
Proposed
Acquisition (Cont’d)
PIVB’s comments

Evaluation of the Consideration Shares
The Issue Price is fair and reasonable as the Issue Price is higher than the
closing market price of BDB Shares as at the LPD and LTD as well as higher
than the five (5)-day, one (1)-month, three (3)-month, six (6)-month and one
(1)-year VWAPs of BDB Shares up to the LTD and also resulted in a net gain
for the Company due to the lower number of new BDB Shares to be issued
pursuant to the Proposed Acquisition.
In addition, the total value of RM115,300,000 (i.e. the Consideration Shares)
is not affected by the relevant adjustments made in relation to the Issue Price
and number of Consideration Shares pursuant to the SPA as the illustrative
adjusted Issue Price of RM1.53 still represents a premium of approximately
5.5% over the illustrative TEAP of RM1.45, which is similar to the premium
received from the Issue Price of RM2.50 over the five (5)-day VWAP of BDB
Shares up to the LTD of RM2.37.
Further, the Issue Price is fair from the perspective of the PER, PBR and
EV/EBITDA multiple analysis of the selected comparable companies as the
PER and PBR based on the Issue Price are within the range of the PER and
PBR of the selected comparable companies to BDB while the EV/EBITDA
multiple based on the Issue Price is higher than the range of the EV/EBITDA
multiple of the selected comparable companies to BDB.

Evaluation of the issue price of the Rights Shares
The issue price of the Rights Shares will be fixed at a discount of at least 40%
to the TEAP immediately preceding the price-fixing date and this discount is
reasonable as it is within the range of 4.99% to 50.47% of the market
discount rates for rights issue exercises in Malaysia completed since 2013 up
to the LTD.
Evaluation of the
salient terms of the
SPA
The salient terms of the SPA are reasonable and are not detrimental to the interest
of the non-interested shareholders of BDB.
Effects
Proposals
The Proposed Rights Issue and the Proposed Acquisition will:
of
the
(i)
result in an increase in the issued and paid-up share capital from 72,815,856
to 257,399,118 BDB Shares;
(ii)
result in a dilution to the Group’s proforma NA per BDB Share from RM3.75
to RM1.83;
(iii)
not have a material impact on the consolidated earnings and EPS of BDB for
the financial year ending 31 December 2014. However, there will be a
proportionate reduction in the EPS of BDB as a result of an increase in the
number of BDB Shares upon allotment and issuance of the Rights Shares,
Bonus Shares and Consideration Shares; and
(iv)
result in an increase in substantial shareholders’ shareholding in BDB from
54.5% to 67.8%.
Risk factors
We are of the view that the risk factors highlighted in Section 13 of this IAL are
acceptable and the Board and management of BDB have taken and will continue to
take further steps to mitigate the risks to the extent possible.
Overview
and
prospects
of
the
Landbank and the
Group for the next
twelve (12) months

The prospects of the Landbank appear to be favourable. The Proposed
Acquisition will provide the opportunity for BDB to capitalise on the potential
and favourable characteristics of the lands for future developments.

The prospects of the Group in the medium to long-term are expected to be
favourable in view of the existing and upcoming projects of the Group. The
future development of the Landbank pursuant to the Proposed Acquisition is
also expected to contribute positively to the long-term earnings of the Group
given the prospects of the Landbank.
39
-3-
3.
CONCLUSION AND RECOMMENDATION
Premised on our overall assessment of the Proposed Acquisition, we are of the opinion that the
Proposed Acquisition is fair and reasonable and not detrimental to the interests of the non-interested
shareholders of BDB.
Accordingly, we recommend that the non-interested shareholders of BDB vote in favour of the
resolutions pertaining to the Proposed Acquisition to be tabled at the forthcoming EGM of BDB.
We have not taken into consideration any specific investment objective, financial situation or particular
need of any individual non-interested shareholders. We recommend that any non-interested
shareholders who require advice in relation to the Proposed Acquisition in the context of their
individual investment objectives, financial situation or particular needs, consult their respective
stockbrokers, bank managers, accountants, solicitors or other professional advisers.
THE NON-INTERESTED SHAREHOLDERS OF BDB ARE ADVISED TO READ BOTH
THIS IAL AND PART A OF THE CIRCULAR TOGETHER WITH THE ACCOMPANYING
APPENDICES AND TO CAREFULLY CONSIDER THE RECOMMENDATION
CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE
PROPOSED ACQUISITION TO BE TABLED AT THE FORTHCOMING EGM OF BDB.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
40
-4-
Registered Office:
27th Floor, Menara Public Bank
146 Jalan Ampang
50450 Kuala Lumpur
31 October 2014
To:
The Non-Interested Shareholders of Bina Darulaman Berhad
Dear Sir/Madam,
INDEPENDENT ADVICE LETTER TO THE NON-INTERESTED SHAREHOLDERS OF BINA
DARULAMAN BERHAD IN RELATION TO THE PROPOSED ACQUISITION
1.
PREAMBLE
This IAL is prepared for inclusion in the Circular and should be read in conjunction with the same. All
definitions used in this IAL shall have the same meaning as the words and expressions provided in the
“Definitions” section of the Circular, except where the context otherwise requires or where otherwise
defined herein.
2.
INTRODUCTION
2.1
On 14 July 2014, BDB announced that the Company had on 13 July 2014, entered into the
HOA with PKNK in relation to the proposed acquisition of land owned by PKNK measuring
approximately 1,200 acres (485 hectares) in aggregate for a total purchase consideration of
approximately RM204,000,000.
2.2
On 4 September 2014, RHB Investment Bank had, on behalf of the Board, announced that the
Company had on even date, entered into the SPA with PKNK for the Proposed Acquisition for
a total purchase consideration of RM202,000,000, which was revised from the initial purchase
consideration of RM204,000,000 as a result of the decision of PKNK and BDB to exclude a
plot of land located in Mukim of Jabi, District of Pokok Sena from the transaction, subsequent
to the signing of the HOA.
In conjunction with the Proposed Acquisition, RHB Investment Bank had, on behalf of the
Board, also announced the Proposed Rights Issue, Proposed IASC and Proposed M&A
Amendment.
2.3
On 3 October 2014, RHB Investment Bank had, on behalf of the Board, announced that the
Company had on even date, entered into a supplemental agreement with PKNK for a variation
to the Proposed Acquisition and amendments to certain terms of the SPA after taking into
consideration the timing that may be required to complete the proposed acquisition of certain
parcels of the Landbank, namely the Malay Reserved Land.
In view of the interests of PKNK, being the major shareholder of BDB and the Interested Directors as
disclosed in Section 10, Part A of the Circular, the Proposed Acquisition is deemed as a related party
transaction pursuant to Paragraph 10.08 of the Listing Requirements.
Pursuant thereto, the Board had on 25 July 2014, appointed PIVB as the Independent Adviser to advise
the non-interested directors of BDB and non-interested shareholders of BDB in relation to the Proposed
Acquisition.
-5-
41
The purpose of this IAL is to provide the non-interested shareholders of BDB with an independent
evaluation on the fairness and reasonableness of the Proposed Acquisition together with our
recommendation thereon, subject to the scope and limitations of our role and evaluation specified
herein, in relation to the Proposed Acquisition. The non-interested shareholders of BDB should
nonetheless rely on their own evaluation of the merits of the Proposed Acquisition before making a
decision on the course of action to be taken.
NON-INTERESTED SHAREHOLDERS OF BDB ARE ADVISED TO READ BOTH THIS IAL
AND PART A OF THE CIRCULAR TOGETHER WITH THE ACCOMPANYING
APPENDICES AND TO CAREFULLY CONSIDER THE RECOMMENDATION
CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE
PROPOSED ACQUISITION TO BE TABLED AT THE FORTHCOMING EGM OF BDB.
IF YOU ARE IN ANY DOUBT AS TO THE COURSE OF ACTION TO BE TAKEN, YOU
SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, ACCOUNTANT,
SOLICITOR OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY.
3.
DETAILS OF THE PROPOSALS
3.1
Based on the SPA, the Proposed Acquisition comprising of the Proposed Acquisition of NonMalay Reserved Land and the Proposed Acquisition of Malay Reserved Land, shall be
implemented in the following manner:
Proposed
Acquisition of
Non-Malay
Reserved Land
(RM)
Proposed
Acquisition of
Malay Reserved
Land
Total
(RM)
(RM)
Mode of settlement:

Deposit paid via internally
generated funds

Consideration Cash

5,025,100
Value of the Consideration
Shares
58,976,900
17,623,100
5,074,900
10,100,000
36,500,000
78,800,000
115,300,000
100,502,000
Total Purchase Consideration
101,498,000
76,600,000
202,000,000
The details of the mode of settlement for the Purchase Consideration are as follows:
(i)
a total of RM10,100,000, being the total deposit for the Proposed Acquisition that has
been paid within five (5) business days upon execution of the SPA;
(ii)
a total cash of RM76,600,000 will be satisfied via the proceeds received from the
Proposed Rights Issue;
(iii)
a fixed sum of RM115,300,000 to be satisfied via the issuance of Consideration
Shares at the Issue Price to the Vendor, comprising of the following:
(a)
14,600,000 new BDB Shares at the Issue Price to the Vendor, which is
equivalent to a value of RM36,500,000 in respect of the Proposed
Acquisition of Non-Malay Reserved Land; and
(b)
31,520,000 new BDB Shares at the Issue Price to the Vendor, which is
equivalent to a value of RM78,800,000 in respect of the Proposed
Acquisition of Malay Reserved Land.
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It should be noted that the Issue Price and the number of Consideration Shares shall be subject
to any adjustments made in accordance with the SPA to take into account the effects of the
It is pertinent to note that the Proposed Acquisition of Non-Malay Reserved Land and the
Proposed Acquisition of Malay Reserved Land are not inter-conditional upon each other.
For further details on the Proposed Acquisition, please refer to Section 2.1, Part A of the
Circular.
3.2
The Proposed Rights Issue entails the undertaking of a renounceable rights issue of Rights
Shares by BDB to the Entitled Shareholders to raise the Intended Gross Proceeds, together
with the issuance of Bonus Shares.
The Entitlement Basis and the issue price for the Rights Shares have not been determined by
the Board at this juncture as it will be determined upon receipt of the necessary approvals as
stated in Section 8, Part A of the Circular.
Notwithstanding that, the effective issue price of each Right Share (after taking into
consideration of the Bonus Shares) is expected to be fixed at a discount of at least 40% to the
TEAP immediately preceding the price-fixing date, but the issue price of the Rights Shares
shall in no event be lower than the par value of BDB Shares of RM1.00 each.
Further, the issuance of the Bonus Shares shall be wholly capitalised from firstly the entire
share premium account with the remainder to be capitalised from the retained earnings of
BDB.
For further details on the Proposed Rights Issue, please refer to Section 2.2, Part A of the
Circular.
3.3
Proposed IASC
The Proposed IASC entails the proposed increase in the authorised share capital of BDB from
RM100,000,000 comprising 100,000,000 BDB Shares to RM400,000,000 comprising
400,000,000 BDB Shares pursuant to the Proposed Acquisition and the Proposed Rights Issue.
3.4
The Proposed M&A Amendment entails the proposed amendment to Clause 5 of the
Memorandum and Articles of Association of BDB to accommodate the Proposed IASC.
4.
CONDITIONALITY
The Proposed Acquisition of Non-Malay Reserved Land, the Proposed Rights Issue, the Proposed
IASC and the Proposed M&A Amendment are inter-conditional upon each other.
The Proposed Acquisition of Malay Reserved Land is conditional upon the Proposed Rights Issue, the
Proposed IASC and the Proposed M&A Amendment
The Proposed Rights Issue, the Proposed IASC and the Proposed M&A Amendment will not be
implemented if any of the conditions precedent under the SPA in respect of the Non-Malay Reserved
Land is not fulfilled, obtained or waived (as the case may be).
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5.
SOURCES OF INFORMATION
In preparing this IAL, PIVB has relied upon the following sources of information and documents:
6.
(i)
information contained in Part A of the Circular and the accompanying appendices;
(ii)
the SPA;
(iii)
the Valuation Certificate and the valuation reports prepared by Rahim & Co for the Landbank;
(iv)
discussions with the management of BDB;
(v)
other relevant information, documents, confirmations and representation furnished to us by the
management of BDB; and
(vi)
other publicly available information.
LIMITATIONS TO THE EVALUATION OF THE PROPOSED ACQUISITION
We have not been involved in any formulation of the Proposed Acquisition and/or any negotiations
pertaining to the terms and conditions of the Proposed Acquisition. Our terms of reference pursuant to
our appointment as the Independent Adviser to advise the non-interested directors of BDB and noninterested shareholders of BDB in relation to the Proposed Acquisition are in accordance with the
requirements relating to independent advisers as contained in the Listing Requirements. Our scope is
limited to expressing an independent evaluation of the Proposed Acquisition which is based on the
sources of information highlighted in Section 5 of this IAL.
We have made all reasonable enquiries to the Board and management of BDB and have relied upon the
information and/or documents as mentioned in Section 5 of this IAL and all relevant facts and
information and/or representations necessary for our evaluation of the Proposed Acquisition have been
disclosed to us and that such information is accurate, valid and there is no omission of material facts,
which would make any information provided to us incomplete, misleading or inaccurate. We express
no opinion on any such information and have not undertaken any independent investigation into the
business and affairs of BDB and all relevant parties involved in the Proposed Acquisition. Based on the
above, we are satisfied with the disclosures from the Board and management of BDB and have no
reason to believe that any of the information is unreliable.
In rendering our advice, PIVB had taken note of pertinent issues, which we believe are necessary and
of importance to an assessment of the implications of the Proposed Acquisition, and therefore of
general concern to the non-interested shareholders of BDB. As such:
(i)
the scope of PIVB’s responsibility regarding the evaluation and recommendation contained
herein is confined to the assessment of the fairness and reasonableness of the terms and
conditions of the Proposed Acquisition, and other implications of the Proposed Acquisition
only. Comments or points of consideration which may be commercially oriented such as the
rationale and potential benefits of the Proposed Acquisition are included in our overall
evaluation as we deem it necessary for disclosure purposes to enable the non-interested
shareholders of BDB to consider and form their views thereon. We do not express an opinion
on legal, accounting and taxation issues relating to the Proposed Acquisition;
(ii)
PIVB’s views and advice as contained in this IAL only cater to the non-interested
shareholders of BDB at large and not to any non-interested shareholder individually. Hence, in
carrying out our evaluation, we have not given consideration to the specific investment
objectives, risk profiles, financial and tax situations, or the particular needs of any individual
non-interested shareholder or any specific group of non-interested shareholders; and
(iii)
we recommend that any individual non-interested shareholder or group of non-interested
shareholders of BDB who is in doubt as to the action to be taken or require advice in relation
to the Proposed Acquisition in the context of their individual objectives, risk profiles, financial
and tax situations or particular needs, shall consult their respective stockbrokers, bankers,
solicitors, accountants or other professional advisers immediately.
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Our evaluation and recommendation expressed herein are based on prevailing economic, market and
other conditions, and the information and/or documents made available to us, as at the LPD. Such
conditions may change over a short period of time. Accordingly, our evaluation and recommendation
expressed herein do not take into account of the information, events and conditions arising after the
LPD.
PIVB will notify the non-interested shareholders of BDB if, after despatching this IAL, we:
(i)
become aware of a significant change affecting the information in this IAL;
(ii)
have reasonable grounds to believe that a material statement in this IAL is misleading or
deceptive; or
(iii)
have reasonable grounds to believe that there is a material omission in this IAL.
If circumstances require, a supplementary IAL will be sent to the non-interested shareholders of BDB.
We shall immediately notify the non-interested shareholders of BDB of any material change in
circumstances that would affect the consideration or the accuracy or the completeness of the
information contained in this IAL.
PIVB confirms that it is not aware of any circumstances which exist or are likely to give rise to a
possible conflict of interest situation for PIVB to carry out the role as the independent adviser in
connection to the Proposed Acquisition. PIVB also confirms that it has not had any professional
relationship with BDB in the past two (2) years.
PIVB is an approved corporate finance adviser within the meaning of the SC’s Principal Adviser
Guidelines. PIVB has undertaken the role as an independent adviser for numerous proposals ranging
from related party transactions to general offers for listed issuers who are involved in different
industries. Premised on the foregoing, PIVB is capable and competent in carrying out its role and
responsibilities as the Independent Adviser to advise the non-interested directors of BDB and noninterested shareholders of BDB in relation to the Proposed Acquisition.
7.
INTERESTS OF DIRECTORS,
CONNECTED TO THEM
MAJOR
SHAREHOLDERS
AND/OR
PERSONS
Save as disclosed below, none of the directors or major shareholders of BDB and/or persons connected
to them has any interest, direct or indirect in the Proposed Acquisition.
7.1
Interested major shareholder
PKNK, being a major shareholder of BDB with an equity interest of 54.49% as at 27 October
2014 is also the Vendor for the Proposed Acquisition. As such, PKNK is deemed interested in
the Proposed Acquisition.
Accordingly, PKNK will abstain from voting in respect of its direct and/or indirect
shareholding in BDB on the resolutions pertaining to the Proposed Acquisition at the
forthcoming EGM of BDB. PKNK has also undertaken to ensure that persons connected to it
will abstain from voting, in respect of their direct and/or indirect shareholdings in BDB, if
any, on the resolutions pertaining to the Proposed Acquisition at the forthcoming EGM of
BDB.
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7.2
Interested Directors
(i)
Dato’ Izham bin Yusoff is the Group Managing Director and the Executive Director
of BDB, as well as the executive council member of PKNK; and
(ii)
Dato’ Abdul Rahman bin Ibrahim is a Non-Independent Non-Executive Director of
BDB and the Chief Executive Officer of PKNK.
As such, the above Interested Directors are deemed interested in the Proposed Acquisition.
Accordingly, the Interested Directors have abstained and will continue to abstain from all
deliberations and voting in respect of the Proposed Acquisition at the relevant Board meetings
of BDB. The Interested Directors will also abstain from voting in respect of their direct and/or
indirect shareholdings on the resolutions pertaining to the Proposed Acquisition at the
forthcoming EGM of BDB.
The Interested Directors have also undertaken to ensure that persons connected to them will
abstain from voting, in respect of their direct and/or indirect shareholdings in BDB, if any, on
the resolutions pertaining to the Proposed Acquisition at the forthcoming EGM of BDB.
8.
EVALUATION OF THE PROPOSED ACQUISITION
PIVB’s scope in arriving at our opinion and recommendation as the Independent Adviser to the noninterested shareholders of BDB in relation to the Proposed Acquisition is limited to the following bases
and analyses:
(i)
Rationale for the Proposals
Section 9
(ii)
Financial evaluation of the Proposed Acquisition
Section 10
(iii)
Evaluation of the salient terms of the SPA
Section 11
(iv)
Effects of the Proposals
Section 12
(v)
Risk factors
Section 13
(vi)
Overview and prospects of the Malaysian economy, the Malaysian
property and construction sector, the Kedah property and construction
sector, the Landbank and the Group for the next twelve (12) months
Section 14
The views expressed by PIVB in this IAL are, amongst others, based on current economic, market and
political conditions prevailing as at the LPD. In this respect, the non-interested shareholders of BDB
should take further note of any announcements relevant to their consideration of the Proposed
Acquisition which may be released after the LPD.
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9.
RATIONALE FOR THE PROPOSALS
We have taken cognisance of the rationale of the Proposals as stated in Section 3, Part A of the Circular
and set out below are our comments on the rationale for the Proposals:
9.1
Rationale for the Proposed Acquisition
9.1.1
To further strengthen BDB’s position in the property development industry
Based on BDB’s audited consolidated financial statements for the financial years
ended (“FYEs”) 31 December 2011 to 2013, the Group is principally involved in five
(5) main business segments:
(i)
Property development (development of residential and commercial
properties);
(ii)
Quarry and road paving (granite quarry operator and civil engineering
contractor);
(iii)
Construction (building and general contractor);
(iv)
Operation of golf resort and hotel (golf resort owner and operator and hotel
operation); and
(v)
Trading (trading of consumables).
We have noted from BDB’s audited consolidated financial statements for the FYE 31
December 2013 that the property development segment had contributed RM105.24
million, representing approximately 37.45% to the total revenue of the Group
(excluding inter-segment transactions), making it the largest revenue contributor for
the FYE 31 December 2013. This business segment had also contributed RM18.16
million, representing approximately 41.47% to the total segment results of the Group
for the same financial year.
In addition, we have noted that both the revenue and segments results from the
property development segment has grown steadily with the highest compounded
annual growth rate (“CAGR”) of 27.80% and 17.29%, respectively for the FYE 31
December 2011 to the FYE 31 December 2013 as compared to the other business
segments. These positive financial results were attributable mainly to the favourable
response from the launch of the properties developed by the Group throughout the
years such as Darulaman Utama, Taman Insaniah and Desa Bidara in Kuala Ketil,
Bandar Darulaman in Jitra and Taman Nusantara in Kuala Kedah.
Based on the above and our discussions with the management of BDB, we
understand that it is the intention of the Company to further grow its property
development segment moving forward and thus, the Proposed Acquisition serves to
cater for the future growth of this segment by replenishing the landbank of the Group
for future development, given that its remaining landbank is approximately 800
acres.
Further, we note that the Proposed Acquisition is intended to further strengthen the
Company’s position in the property development industry. In view that the Landbank
is located throughout Kedah, the development of the Landbank after the Proposed
Acquisition would further enhance BDB’s visibility as one of the main property
developer in the state.
It also represents an opportunity for BDB to further enhance its market presence in
Kedah by having landbanks in strategic locations for future development, which
would add credence to its existing line of projects such as Darulaman Perdana in
Sungai Petani, Darulaman Utama, Taman Insaniah and Desa Bidara in Kuala Ketil,
Bandar Darulaman in Jitra and Taman Nusantara in Kuala Kedah.
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9.1.2
To facilitate BDB to reach out to a broader range of customers
The Company, being one of the largest township developers in Kedah, has
historically developed a broad range of residential properties that cater to wide
market segments. This strategy allows the Company to mitigate against any
slowdown in the property market as it is able to cater to the demand of each market
segment for their respective types of residential properties.
We note that upon completion of the Proposed Acquisition, the Group’s landbank
will increase to approximately 2,000 acres. With this enlarged landbank, the Group
will have the necessary scale of land area and flexibility to subsequently develop and
provide a wider range of properties in Kedah.
The Landbank, which comprises five (5) parcels of land located in five (5) different
areas in Kedah, will enable the Group to target different market segments or
customers.
Subject
Location of the
Target market segment
property
Landbank
Land 1
Sungai Ular
Suitable for the development of affordable housing
scheme, targeting the medium income earners.
Land 2
Pokok Sena
Suitable for medium to medium-high end mixeddevelopment, targeting the working population in the
neighbouring city.
Land 3
Sungai Petani
Suitable for a mixed-development, targeting the growing
population in Sungai Petani.
Land 4
Hosba
Land 5
Ulu Melaka
Suitable for an integrated mixed-development scheme,
targeting the medium to high income earners.
Suitable for tourism related development, such as
development of villas, hotels, chalets and medical
tourism.
Based on the above, the Proposed Acquisition is in line with the Company’s
objectives to acquire landbank for future development of quality and contemporary
lifestyle-themed properties located at prime locations that can cater to various
customers from middle-income earners to high-income earners.
Further, with the increased landbank, the Group would be able to offer various
township developments that not only include residential but also commercial and/or
mixed development, which are expected to further enhance the revenue and earnings
of the Group.
For further details on the prospects of the Landbank, please refer to Section 14.4 of
this IAL.
9.1.3
To assist BDB in realising its vision
We have noted that prior to this, BDB had been in partnership with the Government
in several projects such as the redevelopment of the Langkawi International Airport,
the development of Bandar Darulaman, Darulaman Utama in Kuala Ketil and
Darulaman Perdana in Sungai Petani.
We have also noted from BDB’s Annual Report 2013, that it is the Company’s vision
to be a partner of the Government in its efforts towards realising developed status by
contributing through township developments, infrastructure, construction and
tourism. As such, the Proposed Acquisition would not only expand BDB’s future
property development activities but at the same time, enable the Company to realise
its vision and further strengthen the partnership between BDB and the Government.
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In essence, the Proposed Acquisition will increase the landbank of the Group (increase
approximately 731.3 acres or 296.0 hectares through the Proposed Acquisition of Non-Malay
Reserved Land and approximately 423.5 acres or 171.4 hectares through the Proposed
Acquisition of Malay Reserved Land), which is in line with the Company’s strategy to attain
sustainable long-term growth via the future development of the Landbank. Further, the future
development of the Landbank is expected to contribute to the long-term earnings of the Group
following the positive historical segmental results as discussed on Section 9.1.1 above.
Premised on the above, we are of the view that the rationale for the Proposed Acquisition
is reasonable and not detrimental to the interest of the non-interested shareholders of
BDB.
9.2
Rationale for the Proposed Rights Issue
We note that the Proposed Rights Issue is undertaken by the Company primarily to raise funds
to finance part of the Purchase Consideration and the Bonus Shares (attached to the Rights
Shares) are added incentive for the Entitled Shareholders to subscribe for their respective
entitled Rights Shares.
The Proposed Rights Issue will enable BDB to meet its funding objectives without diluting the
equity interest of its existing shareholders, assuming all the Entitled Shareholders fully
subscribe for their respective entitlements under the Proposed Rights Issue and at the same
time represents an avenue for the Entitled Shareholders to acquire new BDB Shares at a
discount to its prevailing market price. Further, the Proposed Rights Issue would be a more
efficient option for BDB to raise the necessary funds as compared to obtaining bank
borrowings due to the potential cash outflow in respect of interest servicing.
We have also noted that the Vendor undertakes to subscribe in full its entitlements of the
Rights Shares based on its shareholding in the Company on the Entitlement Date and the
subscription price of the Rights Shares to be paid by the Vendor will be set-off from the
Consideration Cash to be paid by the Company. It is pertinent to note that the subscription
price of the Rights Shares will be the same for all Entitled Shareholders, including the Vendor.
Thus, the payment for the subscription price of the Rights Shares by the Vendor by way of setoff from the Consideration Cash would not result in any adjustments to its subscription price
of the Rights Shares or the Consideration Cash.
Based on the above, we are of the opinion that the rationale for the Proposed Rights
Issue is reasonable and not detrimental to the interest of the non-interested shareholders
of BDB.
10.
FINANCIAL EVALUATION OF THE PROPOSED ACQUISITION
In evaluating the fairness and reasonableness of the consideration for the Proposed Acquisition, we
have taken into consideration the following:
(i)
Valuation of the Landbank;
(ii)
Evaluation of the Purchase Consideration;
(iii)
Mode of settlement of the Purchase Consideration;
(iv)
Evaluation of the Consideration Shares; and
(v)
Evaluation of the issue price of the Rights Shares.
10.1
The Board had on 18 May 2014 appointed Rahim & Co to appraise the market value of the
Landbank. The Valuation Certificate is attached in Appendix II of the Circular, while the
valuation reports for each of the Landbank are available for inspection at the Registered Office
of BDB during the stipulated date and time as set out in Section 7, Appendix V of the
Circular.
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In arriving at the market value of the Landbank, the Valuer had adopted the comparison
method of valuation as the only method of valuation for the Landbank as there are no
proposed or approved development plans on the Landbank. Hence, alternative methods of
valuation, such as the residual method and the investment method are not suitable for the
valuation of vacant land with development potential.
The basis of valuation adopted by the Valuer is the market value which is defined as “the
estimated amount for which a property should exchange on the date of valuation between a
willing-seller and a willing-buyer in an arm’s length transaction after proper marketing
wherein the parties had each acted knowledgeably, prudently and without compulsion”.
The comparison method of valuation entails analysing recent transactions of similar property
in and around the locality for comparison purposes with adjustments made for differences in
locality, visibility/exposure, size, tenure, shape/terrain, planning approval, title restrictions, if
any and other relevant characteristics to arrive at the market value.
We note that the valuation reports were prepared in accordance with the Asset Valuation
Guidelines issued by the SC and the Malaysian Valuation Standards issued by the Board of
Valuers, Appraisers and Estate Agents Malaysia.
We are of the view that the adoption of the comparison method as the only method of
valuation is appropriate given that:
(i)
there are no proposed or approved development plans on the Landbank;
(ii)
the property development plans of BDB for the Landbank are still at a preliminary
stage where development phase is at conceptual stage;
(iii)
the comparison method provides a snapshot of market demand and supply conditions
for similar types of properties which have been transacted; and
(iv)
while no exact comparable exists, the Valuer had made adjustments to the market
values of the comparable transactions and selected what it considered the most
applicable.
As extracted from the Valuation Certificate enclosed in Appendix II of the Circular, the
market value of the Landbank as arrived at using the comparison method of valuation is set
out in the table below:
Subject
property
Location of
the Landbank
Date of
valuation
Land 1
Land 2
Land 3
Sungai Ular
Pokok Sena
Sungai Petani
3 August 2014
1 August 2014
3 August 2014
Approximate
land size
(hectares)
Total
Land 4
Land 5
Total
Hosba
Ulu Melaka
1 August 2014
2 August 2014
Grand total
Market
value
(RM)
Purchase
consideration
(RM)
151.4
51.5
93.1
37,500,000
16,050,000
45,100,000
38,204,000
16,351,000
45,947,000
79.8
91.6
55,000,000
44,630,000
56,030,000
45,468,000
*467.4
198,280,000
296.0
171.4
98,650,000
99,630,000
100,502,00
101,498,000
202,000,000
Note:
*
Equivalent to approximately 1,154.8 acres.
The Valuer has identified and analysed certain comparable transactions (of which the details
of the comparable transactions are extracted by the Valuer from the Valuation and Property
Services Department (“JPPH”)) with adjustments being made to arrive at the adjusted market
rates for the comparable transactions of each subject property listed in the table above. The
details and justifications on the adjustments are set out in the ensuing sections. Based on the
justifications on the adjustments, we are of the view that the adjustments applied by the Valuer
are reasonable.
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10.1.1
Fronts onto Jalan Terap – Serdang,
09000 Kulim
Agricultural use
Freehold
Location
Zoning
Tenure
Adopted market value per sq. ft. (RM)
Adjusted market value per sq. ft. (RM)
Adjustments
(a)
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2.35
51
Upward adjustments were made for
time and zoning. Downward
adjustments were made for general
location, main frontage/accessibility
and land area.
2.55
2,950,000
Consideration (RM)
Consideration per sq. ft. (RM)
8 March 2012
Date of transaction
10.73 hectares
(1,155,394 sq. ft.)
Lot 5, GM 914, Mukim of Terap,
District of Kulim, State of Kedah
Title and lot no.
Land area
A plot of agricultural land
(Outside the Malay Reserved Area)
Comparable 1
Property type
Details
2.30
2.02
time and zoning. Downward
adjustments were made for general
location, main road
frontage/accessibility and land area.
2.10
2,223,916
10 June 2011
9.84 hectares
(1,058,952 sq. ft.)
Freehold
Agricultural use
Fronts onto Jalan Terap – Serdang,
09000 Kulim
Lot 370, GM 1155, Mukim of
Terap, District of Kulim, State of
Kedah
Comparable 2
2.48
time, main road frontage/
accessibility and terrain and
zoning. Downward adjustments
were made for general location and
land area.
1.61
3,313,430
27 December 2011
19.07 hectares
(2,052,783 sq. ft.)
Freehold
Agricultural use
Second layer off Jalan Terap –
Serdang, 09000 Kulim
Lain-lain 982, GM 36243, Mukim
of Terap, District of Kulim, State
of Kedah
Comparable 3
The Valuer had identified and analysed the following comparable transactions in the Kulim area to determine the market value of Land 1 (Sungai Ular):
Land 1 (Sungai Ular) comprises ten (10) adjoining plots of agriculture land with residential development potential and held under freehold tenure. This
subject property encompasses a total land area of approximately 151.4 hectares (16,297,298 sq. ft.) and is irregular in shape. The subject property is
located approximately 10.6 kilometers South-East of Kulim town and is designated for agriculture use as noted in the title deeds. However, based on the
enquiries made by the Valuer at the Planning Department of Majlis Perbandaran Kulim on the date of inspection, it was revealed that this land is zoned
for residential use.
Land 1 (Sungai Ular)
Details of the comparable transactions which had been extracted from the Valuation Certificate are as follows:
Note:
(a)
The justifications on the adjustments are as follows:
Time
Upward adjustments were made on all comparables as all three
(3) comparables were transacted between 2011 and 2012.
General location
Downward adjustments were made on all comparables as all
three (3) comparables were located in a more developed area as
compared to the subject property.
Main road
frontage/accessibility
Downward adjustments were made on Comparables 1 and 2 and
an upward adjustment was made on Comparable 3 due to the
following:
(i)
The subject property is located off Jalan Serdang and on
a second layer site but with a legal access;
(ii)
Comparables 1 and 2 are located fronting Jalan Terap –
Serdang; and
(iii)
Comparable 3 is located on a second layer lot off Jalan
Terap – Serdang and without a legal access.
Land area
Downward adjustments were made for all the comparables as
the total land area of the subject property is larger than all three
(3) comparables.
Zoning
Upward adjustments were made on all comparables. Although
all three (3) comparables are zoned for agriculture use whilst
the subject property is zoned for residential use, all the
comparables have good potential for residential development
zoning as these comparables are located in a more developed
area. However, there is a risk that the application for the change
of zoning may not be approved. Hence, the upward adjustments
were made to reflect this risk.
Tenure
No adjustments were made as the subject property and all three
(3) comparables are held under freehold tenure.
Terrain
Upward adjustment was made on Comparable 3 due to hilly
terrain. No adjustments were made to Comparables 1 and 2
because the terrain is similar to the subject property.
Based on the comparison above and the information set out in the Valuation
Certificate, the adjusted values of the comparables range from RM2.02 to RM2.48
per sq. ft. The Valuer was of the view that Comparable 1 and 2 are the best
comparables whilst Comparable 3 is quite similar to the subject property as it is
located at the second layer lot.
Hence, the Valuer had rounded up the average adjusted values of all three (3)
comparables to RM2.30 per sq. ft. and adopted this as the market value for Land 1
(Sungai Ular), translating it to a total market value of RM37,500,000 for this subject
property.
10.1.2
Land 2 (Pokok Sena)
Land 2 (Pokok Sena) comprises a plot of agriculture land with potential for
residential development, held under freehold tenure and is irregular in shape. The
subject property has a total land area of approximately 51.5 hectares (5,538,123 sq.
ft.) and is designated for agricultural use as noted in the title deed. However, based
on the enquiries made by the Valuer at the Planning Department of Majlis Bandaraya
Alor Setar on the date of inspection, it was revealed that this land is zoned for
residential use.
52- 16
Jalan Kampung Panchor, 06400
Pokok Sena
Residential use
Freehold
Location
Zoning
Tenure
Adjustments
(a)
- 17 -
2.13
53
time, terrain and size of the land.
1.42
12,500,000
Consideration (RM)
11 June 2011
Date of transaction
81.65 hectares
(8,788,186 sq. ft.)
PT 165, HSD 2811, Town and
District of Pokok Sena, State of
Kedah
Title and lot no.
Land area
A plot of development land
Comparable 1
Property type
Details
2.90
2.84
time, general location, main road
frontage/accessibility and zoning of
the land. Downward adjustment was
made for the size of the land.
1.90
2,339,520
7 September 2011
11.44 hectares
(1,231,283 sq. ft.)
Freehold
Agriculture use
Off Jalan Nawa – Kebun 500, 06400
Pokok Sena
PT 2779, HSD 2680, Mukim of
Jabi, District of Pokok Sena, State of
Kedah
Comparable 2
3.03
time, general location, main road
frontage/accessibility and zoning for
the land. Downward adjustment was
made for the size of the land.
1.97
2,791,295
29 July 2012
13.17 hectares
(1,417,390 sq. ft.)
Freehold
Agriculture use
Off Jalan Jitra – Wang Tepus, Jitra
Lot 948, Geran 2369, Mukim of
Malau, District of Kubang Pasu, State
of Kedah
Comparable 3
In view of the scarcity of transactions of similar property in the Pokok Sena area, the Valuer had identified and analysed the following comparable
transactions in the Pokok Sena and Kubang Pasu area to determine the market value of Land 2 (Pokok Sena):
Note:
(a)
Time
General location
Upward adjustment was made on Comparables 2 and 3 while no
adjustment was made on Comparable 1 due to the following:
(i)
The subject property is located within the same area as
Comparable 1; and
(ii)
The subject property is in a better locality as compared
to Comparables 2 and 3.
Main road
(i)
The subject property is located off the main road;
(ii)
Comparable 1 is located adjacent to a housing area;
(iii)
Comparable 2 is located off the main road but facing a
laterite access road; and
(iv)
Comparable 3 is located off the main road and without
legal access.
Land size
Upward adjustment was made on Comparable 1 as the land area
is larger than the subject property. Downward adjustment was
made on Comparables 2 and 3 as the land area is smaller than
the subject property.
Terrain
Upward adjustment was made on Comparable 1 while no
adjustment was made on Comparables 2 and 3 due to the
following:
(i)
The subject property is undulating in terrain;
(ii)
Comparable 1 is undulating to hilly in terrain; and
(iii)
Comparables 2 and 3 have similar topography as the
subject property.
Tenure
No adjustment was made as the subject property and all three (3)
comparables are under freehold tenure.
Zoning
The subject property and Comparable 1 are zoned for
(i)
residential use; and
(ii)
Comparables 2 and 3 are located away from the
residential areas and are zoned for agriculture use.
per sq. ft.
The Valuer is of the view that Comparable 1 is the best comparable transactions
among all three (3) comparables as it has the same zoning, similar in size and located
nearest to Land 2 (Pokok Sena). However, the transacted price for Comparable 1 is
not in line with the market value when compared with the transacted price for
Comparable 2 and 3. Hence, Comparable 2 is considered the next best comparable.
The Valuer had adopted a market value of RM2.90 per sq. ft. for Land 2 (Pokok
Sena), translating it to a total market value of RM16,050,000 for this subject
property.
54- 18
Freehold
Tenure
Adjustments(a)
4.48
Upward adjustments were made
for time and frontage on the
North-South Highway.
3.70
22,383,729
Consideration (RM)
15 June 2013
Date of transaction
Approximately 56.20 hectares
(6,049,646 sq. ft)
Residential
Zoning
Land area
Jalan SP Saujana, Bandar
Amanjaya (Zon Mawar)
PT 2415, HSD 126042, Town of
Amanjaya, District of Kuala
Muda, State of Kedah
Title and lot no.
Location
A plot of vacant residential land
Comparable 1
- 19 -
55
4.62
4.50
Upward adjustments were
made for time, general location,
main road
frontage/accessibility and
frontage on the North-South
Highway.
3.50
13,038,989
3 April 2013
(3,725,440 sq. ft.)
Freehold
Commercial
Jalan Lencongan Timur,
Bandar Amanjaya (Zon Melor)
PT 48863, HSD 90459, Town
of Sungai Petani, District of
Kuala Muda, State of Kedah
A plot of vacant commercial
land
Comparable 2
4.43
made for time, general location
and main road
frontage/accessibility.
2.88
11,642,717
3 April 2013
(4,043,520 sq. ft.)
Freehold
Commercial
Jalan Hospital – SP Saujana,
Bandar Amanjaya (Zon
Mawar)
PT 48857, HSD 90454, Town
of Sungai Petani, District of
land
Comparable 3
4.79
made for time and frontage on
the North-South Highway.
Downward adjustments were
made for general location and
main road
frontage/accessibility.
6.70
36,472,944
15 June 2013
(5,443,723 sq.ft.)
Freehold
Commercial
Persiaran Amanjaya 5, Bandar
Amanjaya (Zon Pusat)
PT 2268, HSD 120607, Town
of Amanjaya, District of
land
Comparable 4
The Valuer had identified and analysed the following comparable transactions in the Sungai Petani area to determine the market value of Land 3 (Sungai
Petani):
Land 3 (Sungai Petani) comprises five (5) adjoining plots of vacant commercial and residential lands held under freehold tenure. The subject property is
located alongside the North-South Expressway and has a total land area of approximately 93.1 hectares (10,018,128 sq. ft.). Based on the enquiries made
by the Valuer at the Planning Department of Majlis Perbandaran Sungai Petani, it was revealed that this subject property is zoned for commercial and
residential use.
Land 3 (Sungai Petani)
Property type
Details
10.1.3
Note:
(a)
Time
(3) comparables were transacted between April 2013 and June
2013.
General location
Downward adjustment was made on Comparable 4, upward
adjustment was made on Comparables 2 and 3 whilst no
The subject property is located within the same area as
(i)
Comparable 1;
(ii)
Comparables 2 and 3 are located in a less developed
area; and
(iii)
Comparable 4 is located within a more developed area.
Main road
Upward adjustment was made on Comparables 2 and 3,
downward adjustment was made on Comparables 4 whilst no
(i)
The subject property is located off the main road but has
access road;
(ii)
Comparable 1 is located first layer onto the main road;
(iii)
Comparables 2 and 3 do not have access road; and
(iv)
Comparable 4 is located first layer onto a road within
the government premises area.
North-South highway
exposure
Upward adjustment was made on Comparable 1, 2 and 4 and no
adjustment was made on Comparable 3 as only Comparable 3
has the same highway exposure as the subject property.
Land size
No adjustment was made on any of the comparables. The subject
property comprises five (5) lots that has similar land area as the
comparables and the Valuer is of the view that these lots can be
sold separately.
Tenure
No adjustment was made as the subject property and all four (4)
comparables are under freehold tenure.
Category of land use
No adjustment was made on any of the comparables. Although
Comparables 2, 3 and 4 are commercial land while Comparable
1 is zoned as residential land, it is not feasible for Comparables
2, 3 and 4 to be developed into commercial buildings as the
demand for such buildings in Sungai Petani is lacking. The
Valuer is of the view that Comparables 2, 3 and 4 will be
developed into a mixed development.
per sq. ft. The Valuer is of the view that Comparables 2 and 3 are the best
comparables as both these lands are located nearest to the subject property.
Hence, the average value of the adjusted values of Comparable 2 and 3 of RM4.50
per sq. ft. were adopted as the market value for Land 3 (Sungai Petani) by the Valuer,
translating it to a total market value of RM45,100,000 for this subject property.
56- 20
10.1.4
Adjustments
(a)
- 21 -
6.22
57
Upward adjustments made for time,
location and the shape of the land.
Downward adjustments made for size of
the land and Malay Reservation Land.
5.53
8,400,000
Consideration (RM)
24 October 2011
Date of transaction
Freehold
Tenure
14.11 hectares
(1,518,786 sq. ft.)
Residential
Zoning
Land area
Asun, Jalan Jitra - Changloon
Lot 1693, GM 473, Mukim of Gelong,
District of Kubang Pasu, State of Kedah
Title and lot no.
Location
A parcel of vacant agricultural land with
development potential (Outside the
Malay Reserved Area)
Comparable 1
Property type
Details
6.40
4.82
Upward adjustments made for time of
transaction and shape of land.
Downward adjustment made for the
location, size of the land and Malay
Reservation Land.
5.51
6,000,000
1 February 2011
10.12 hectares
(1,089,307 sq. ft.)
Freehold
Residential
Durian Burung, Jalan Jitra Changloon
Lot 2888, GM 757, Mukim of Temin,
District of Kubang Pasu, State of
Kedah
A plot of vacant agricultural land
with development potential (Outside
the Malay Reserved Area)
Comparable 2
6.47
Upward adjustments made for time
of transaction and shape of the land.
Downward adjustments made for
location, size of the land and Malay
Reservation Land.
8.30
11,158,624
11 February 2012
12.49 hectares
(1,344,411 sq. ft.)
Freehold
Residential
Padang Perang, Changloon – Bukit
Kayu Hitam
Lot 2900, GM 323, Town of
Changloon, District of Kubang Pasu,
State of Kedah
A plot of vacant agriculture land
with development potential (Outside
the Malay Reserved Area)
Comparable 3
The Valuer had identified and analysed the following comparable transactions in the District of Kubang Pasu to determine the market value of Land 4
(Hosba):
Land 4 (Hosba) comprises a plot of freehold agriculture land located along the western side of the North-South Expressway and is zoned for residential
use. This subject property is located within the Malay Reservation Area and has a total net land area of approximately 79.8 hectares (8,594,714 sq. ft.).
Land 4 (Hosba)
Note:
(a)
Time
General location
Upward adjustment was made on Comparable 1 and downward
adjustment was made on Comparables 2 and 3 due to the
following:
(i)
Comparable 1 is located further from Pekan Napoh as
compared to the subject property; and
(ii)
Comparables 2 and 3 have better development potential
as compared to the subject property.
Main road
comparables are located along the North-South Expressway.
Shape
Upward adjustment was made on all three (3) comparables due
to the following:
(i)
The subject property has a regular rectangular shape;
(ii)
Comparable 1 has a long rectangular shape; and
(iii)
Comparables 2 and 3 are irregular in shape.
Ownership/Reserve
Downward adjustments were made on all comparables as all
three (3) comparables as the lands are all located outside the
Malay Reserved Land area.
Land size
Downward adjustments were made on all comparables as the
land size for all three (3) comparables are smaller than the
subject property.
per sq. ft. The average of the adjusted value of Comparables 1 and 3 was adopted by
the Valuer as the market value of Land 4 (Hosba) due to the following:
(i)
Comparable 1 is the best comparable transaction as the land is located
nearest to the subject property and the land area is the largest as compared to
the other two (2) comparables; and
(ii)
Comparable 3 is similar to the subject property as it has wide frontage onto
the highway.
Hence, the Valuer had rounded up the average of the adjusted value of Comparables
1 and 3 to RM6.40 per sq. ft. and had adopted this as the market value for Land 4
(Hosba), translating it to a total market value of RM55,000,000 for this subject
property.
10.1.5
Land 5 (Ulu Melaka)
Land 5 (Ulu Melaka) comprises two (2) parcels of vacant agricultural land and a
parcel of commercial land located within the Malay Reservation Area, held under 99year leasehold tenure with an unexpired term of about 97-years and are irregular in
shape. The subject property has a combined land area of approximately 91.6 hectares
(9,856,073 sq. ft.).
Based on the enquiries made by the Valuer at the Planning Department of Majlis
Perbandaran Langkawi Bandaraya Pelancongan, it was revealed that this subject
property is zoned for green area use (kawasan lapang dan rekreasi).
The Valuer had identified and analysed the following comparable transactions of
vacant agriculture lands with development potential and vacant commercial lands in
Langkawi to determine the market value of Land 5 (Ulu Melaka):
58- 22
Freehold
Tenure
Adjustments(a)
3.45
- 23 -
Upward adjustment was made for time.
Downward adjustments were made for
size and tenure.
4.00
6,587,375
Consideration (RM)
6 December 2012
Date of transaction
(1,646,855 sq. ft.)
Tourism related
Zoning
Land area
Telok Chengai off Jalan Teluk Baru
Lot Nos. 2488 – 2492, 2536, 2539,
2824, 2846 & 2847, GM 1351 - 1355,
GM 1364, GM 1365, GM 1439 – 1441,
Town of Padang Mat Sirat, District of
Langkawi, State of Kedah
Title and lot no.
Location
Ten (10) plots of agriculture land
(Within the Malay Reservation Area)
Comparable 1
Property Type
Details
59
3.45
3.43
general location, size, zoning, location
outside Malay Reservation Area and tenure.
9.95
8,345,107
15 October 2012
(838,788 sq. ft.)
Freehold
Residential
Sg Tarom, Lebuhraya Langkawi
Lot Nos. 1556, 1558 & 1560, HSM 6195,
HSM 6197 & HSM 6199, Town of Kuah,
District of Langkawi, State of Kedah
Three (3) plots of vacant development land
(Outside the Malay Reservation Area)
Comparable 2
6.30
location, size and tenure.
7.77
8,000,000
17 November 2009
(1,029,104 sq. ft.)
Freehold
Tourism related
Tanjung Limbung off Jalan Bukit Malut
PT 1530 & PT 1531, HSM 260 & HSM
66, Mukim of Ulu Melaka, District of
Two (2) plots of vacant development land
Comparable 3
The agriculture land portion of Land 5 (Ulu Melaka) has a total land area of approximately 79.3 hectares (8,536,204 sq. ft.). The Valuer had identified and analysed
the following comparable transactions to determine the market value of the agriculture land portion of Land 5 (Ulu Melaka):
Agriculture land
Note:
(a)
Time
General location
Downward adjustment was made on Comparable 2 and 3 as
these lands are located at a more developed area as compared to
Main road
comparables have proper access.
Land area
Downward adjustments were made for all the comparables as
the total land area of agriculture land portion of the subject
property is larger than all three (3) comparables.
Zoning
Downward adjustment was made on Comparable 2 as it is zoned
for residential development. The subject property and
Comparables 1 and 3 are zoned for tourism use (green area).
Ownership/reserve
Downward adjustment was made on Comparable 2 as it is held
outside the Malay Reservation Area. The subject property and
Comparables 1 and 3 are located within the Malay Reservation
Area.
Tenure
Downward adjustment was made on all comparables as all three
(3) comparables are held under freehold tenure whilst the
subject property is held under a 99-year leasehold tenure with
an unexpired tenure of 97 years.
per sq. ft. The Valuer is of the view that the best comparable transaction is
Comparable 1 due to the following:
(i)
Comparable 1 is located nearest to the subject property;
(ii)
The date of transaction for Comparable 1 is most recent; and
(iii)
Comparable 1 is a Malay Reservation Land.
Hence, the Valuer had adopted a market value of RM3.45 per sq. ft. for the
agriculture land portion of Land 5 (Ulu Melaka).
60- 24
Tanjung Limbung off Jalan Bukit Malut
Tourism related
Location
Zoning
Adjustments
(a)
11.54
- 25 -
Upward adjustments were made for time
and category of land use. Downward
adjustments were made for size and tenure.
7.77
8,000,000
Consideration (RM)
17 November 2009
(1,029,104 sq. ft.)
Freehold
Date of transaction
Land area
Tenure
Agriculture
PT 1530 & PT 1531, HSM 260 & HSM
66, Mukim of Ulu Melaka, District of
Title and lot no.
Two (2) plots of vacant development land
Comparable 1
Property type
Details
61
11.50
18.06
time, size and category of land use.
Downward adjustments were made
for general location, main road
frontage/accessibility, terrain,
location outside Malay Reservation
Area and tenure.
28.89
56,628,000
29 September 2011
(1,960,106 sq. ft.)
Freehold
Agriculture
Tourism related
Jalan Teluk Burau
PT 374, HSD 103, Mukim of Padang
Mat Sirat, District of Langkawi, State
of Kedah
A parcel of vacant development land
zoned for tourism related use
(Outside the Malay Reservation Area)
Comparable 2
10.41
Upward adjustments were made for time and category
of land use. Downward adjustments were made for
general location, terrain, size, tenure and zoning.
13.87
3,400,000
30 November 2011
(245,062 sq. ft.)
Freehold
Agriculture
Mixed development
Sg Menghulu, off Jalan Padang Gaong
Lot 409, GM 2901, Town of Kuah, District of
A parcel of vacant development land zoned for mixed
development use (Within the Malay Reservation Area)
Comparable 3
The commercial land portion of Land 5 (Ulu Melaka) has a total land area of approximately 12.3 hectares (1,319,869 sq. ft.). The Valuer had identified and analysed the
following comparable transactions to determine the market value of the commercial land portion of Land 5 (Ulu Melaka):
Commercial land
Note:
(a)
Time
Upward adjustment was made on all comparables as all three
General location
Downward adjustment was made on Comparable 2 and 3 as the
subject property is located in a less developed area as compared
to these two (2) comparables.
Main road
Downward adjustment was made on Comparable 2 as it is sited
along the main road. The subject property is sited off Jalan
Lubuk Semilang but with access and is similar to Comparables 1
and 3.
Terrain
Downward adjustment was made on Comparables 2 and 3 as the
terrain is undulating and flat, respectively. The terrain of
Comparable 1 is similar to the subject property.
Land area
Upward adjustment was made on Comparable 2 as the land area
is larger than the subject property. Downward adjustment was
made on Comparables 1 and 3 as the land area is smaller than
Upward adjustment was made on all comparables as the
category of land use for all three (3) comparables is agriculture
whilst the category of land use for the subject property is
building (commercial).
Zoning
Downward adjustment was made on Comparable 3 as it is zoned
for mixed development. The zoning of the subject property as
well as Comparables 1 and 2 is related to tourism use.
Ownership/reserve
Downward adjustment was made on Comparable 2 as it is held
outside the Malay Reservation Area. The subject property and
Comparables 1 and 3 are located within the Malay Reservation
Area.
Tenure
Downward adjustment was made on all comparables as all three
(3) comparables are held under freehold tenure whilst the
subject property is held under a 99-year leasehold tenure with
an unexpired tenure of 97 years.
per sq. ft. The Valuer is of the view that the best comparable transaction is
Comparable 1 due to the following:
(i)
Comparable 1 is within the Malay Reservation Area and has similar terrain
as the subject property;
(ii)
Comparable 1 is located nearer to the subject property as compared to
Comparable 2; and
(iii)
the total land size of Comparable 1 is larger in size as compared to
Comparable 3.
Hence, the Valuer had adopted a market value of RM11.50 per sq. ft. for the
commercial land portion of Land 5 (Ulu Melaka).
In summary, the Valuer had adopted a market value of RM3.45 per sq. ft. and
RM11.50 per sq. ft. for the agriculture portion and commercial portion of Land 5
(Ulu Melaka), respectively. This translates to a total market value of RM44,630,000
for this subject property.
Premised on the above, we are of the view that the valuation of the Landbank using the
comparison method of valuation is reasonable and the market value of Landbank
derived therefrom is fair.
62- 26
10.2
As set out in Section 2.1.2, Part A of the Circular, the Purchase Consideration was arrived at
on a willing-buyer willing-seller basis after taking into consideration the following:
(i)
the aggregate market value of the Landbank of RM198,280,000 as appraised by the
Valuer;
(ii)
the net book value of the Landbank as stated in Appendix I of the Circular; and
(iii)
the prospects of the Landbank as stated in Section 4.4, Part A of the Circular.
The Purchase Consideration for the Landbank of RM202,000,000 represents a premium of
RM3,720,000 or 1.88% over the market value of the Landbank as appraised by the Valuer.
The following table sets out the breakdown of the respective purchase consideration and
market value of the Proposed Acquisition of Non-Malay Reserved Land and the Proposed
Acquisition of Malay Reserved Land:
Purchase
consideration
Market value
(RM)
(RM)
Premium
(RM)
(%)
Proposed Acquisition of NonMalay Reserved Land
100,502,000
98,650,000
1,852,000
1.88
Reserved Land
101,498,000
99,630,000
1,868,000
1.87
Total
202,000,000
198,280,000
3,720,000
1.88
We note that the purchase consideration for the Proposed Acquisition of Non-Malay Reserved
Land and the Proposed Acquisition of Malay Reserved Land is at a premium of 1.88% and
1.87% over their respective market value. Notwithstanding that, we are of the view that the
respective purchase consideration is fair and reasonable in view of the following:
(i)
the premium of 1.88% and 1.87% is within the range of premiums transacted for the
recent precedent transactions for the past one (1) year up to 3 September 2014, being
the last trading date prior to the date of the announcement of the Proposals (“LTD”)
of 1.11% to 14.85% as set out in Section 10.2.1 of this IAL;
(ii)
the Proposed Acquisition of Non-Malay Reserved Land entails a “basket” acquisition
of three (3) parcels of land, whilst the Proposed Acquisition of Malay Reserved Land
entails a “basket” acquisition of two (2) parcels of land, whereby all the respective
lands are to be acquired on a collective basis;
(iii)
the premium paid in respect of the purchase consideration for both the Proposed
Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay
Reserved Land are offset by the premium received from the issuance of
Consideration Shares resulting in a net gain of approximately RM0.05 million and
RM2.23 million, respectively. Please refer to Section 10.4.1 of this IAL for further
details;
(iv)
the rationale for the Proposed Acquisition as set out in Section 9.1 of this IAL; and
(v)
the prospects of the Landbank as set out in Section 14.4 of this IAL.
- 63
27 -
04.09.2014 /
03.10.2014
BDB
99,630,000
Malay
Reserved Land
of
98,650,000
26,300,000
Proposed Acquisition of Non-Malay
Reserved Land
Acquisition of 100% equity interest
in a company that owns a piece of
vacant freehold land from a major
shareholder of Malayan United
Industries Berhad.
Subject matter
Acquisition of 100% equity interest
in a company that owns a piece of
leasehold land from the major
shareholders of TASCO Berhad.
Purchase
consideration
(RM)
7,280,000
101,498,000
100,502,000
22,900,000
Market
value
(RM)
7,200,000
1,868,000
1,852,000
3,400,000
Premium
(RM)
80,000
1.87
1.88
14.85
(%)
1.11
Based on the table above, the premium of 1.88% and 1.87% for the Proposed Acquisition of Non-Malay Reserved Land and the Proposed
Acquisition of Malay Reserved Land, respectively is within the range of premiums transacted for the recent precedent transactions for the past
one (1) year up to the LTD of 1.11% to 14.85%.
30.06.2014
Malayan United Industries Berhad
Company
TASCO Berhad
Date of
announcement
07.08.2014
We have compared the premium represented by the respective purchase consideration for the Proposed Acquisition of Non-Malay Reserved
Land and the Proposed Acquisition of Malay Reserved Land with recent corporate exercises involving the acquisition of land and/or equity
interest in a company that owns land as announced through Bursa Securities for the past one (1) year up to the LTD. The details of the precedent
transactions are as follows:
Precedent transactions
- 28 -
64
Premised on our analysis above, we are of the view that the Purchase Consideration or the respective purchase consideration for the Proposed
Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay Reserved Land are fair and reasonable.
10.2.1
10.3
As extracted from Section 2.1.3, Part A of the Circular, the Purchase Consideration would be
fully settled via a combination of internally generated funds (a total of RM10,100,000, being
the total deposit for the Proposed Acquisition) and proceeds received from the Proposed
Rights Issue (a total cash of RM76,600,000). The remaining sum of RM115,300,000 would be
fully settled via the issuance of Consideration Shares as follows:
(a)
14,600,000 new BDB Shares at the Issue Price of RM2.50 per new BDB Share to the
Vendor, which is equivalent to a fixed sum of RM36,500,000 in respect of the
Proposed Acquisition of Non-Malay Reserved Land; and
(b)
31,520,000 new BDB Shares at the Issue Price of RM2.50 per new BDB Share to the
Vendor, which is equivalent to a fixed sum of RM78,800,000 in respect of the
Proposed Acquisition of Malay Reserved Land.
Based on BDB’s audited consolidated financial statements for the FYE 31 December 2013
and unaudited quarterly results for the six (6) months financial period ended 30 June 2014, the
Group’s cash and cash equivalents stood at RM83.89 million and RM74.32 million,
respectively, which are insufficient to finance the Purchase Consideration. Thus, BDB may
either rely on bank borrowings or issuance of new BDB Shares or equity-linked instruments
such as rights issue of ordinary shares/convertible securities for the settlement of the Purchase
Consideration.
As mentioned above, the Purchase Consideration will be fully settled via a combination of
cash (internally generated funds and proceeds received from the Proposed Rights Issue) and
issuance of Consideration Shares. The issuance of Consideration Shares to finance the
remaining Purchase Consideration would be beneficial to the Company as BDB would be able
to avoid incurring finance expenses as compared to if the remaining Purchase Consideration is
settled via bank borrowings.
For illustration purposes only, the following table depicts the interest expenses to be incurred
via bank borrowings as well as the corresponding impact on the profit after tax (“PAT”) of the
Company:
Reserved Land
of
Non-Malay
Proposed Acquisition of Malay Reserved
Land
Total
Interest expenses(a)
(RM)
2,190,000
Impact on BDB’s PAT(b)
(%)
10.36
4,728,000
22.36
6,918,000
32.72
Notes:
(a)
Computed based on BDB’s average cost of borrowings of 6.00%.
(b)
Based on the PAT as extracted from BDB’s audited consolidated financial statements for the FYE 31
December 2013 of RM21,143,267.
Pursuant to the analysis above, BDB would be able to have an interest savings of
approximately RM2.19 million and RM4.73 million, respectively for the Proposed
Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay Reserved
Land as compared to obtaining bank borrowings which may reduce the Company’s
consolidated PAT by approximately 32.72%.
- 65
29 -
Whilst the issuance of Consideration Shares as a mode of settlement for the remaining
Purchase Consideration would derive interest savings, it should be noted that the issuance of
Consideration Shares would have a dilutive impact on the NA, EPS as well as the
shareholdings of the non-interested shareholders.
For illustrative purposes only, the dilutive impact of the issuance of Consideration Shares on a
non-interested shareholder holding 3,000,000 BDB Shares is set out in the table below:
As at
31 December 2013
Shareholder A
Total issued and paid-up
share capital^
Shareholder A
Total issued and paid-up
share capital^
After the
No. of
BDB Shares
(%)
3,000,000
4.12
No. of
BDB Shares
7,500,000*
(%)
4.12
72,815,856
182,039,640
After the Proposed Acquisition
of Non-Malay Reserved Land
No. of
BDB Shares
After the Proposed Acquisition
of Malay Reserved Land
(%)
(%)
7,500,000
3.64
205,895,850
No. of
BDB Shares
7,500,000
2.91
257,399,118
Notes:
^
Computed based on the proforma effects of the Proposed Rights Issue and Proposed Acquisition on the
issued and paid-up share capital of BDB as illustrated in Section 6, Part A of the Circular.
*
Assuming Shareholder A fully subscribes for his/her entitlement under the Proposed Rights Issue.
Notwithstanding that the issuance of Consideration Shares will have an immaterial dilutive
impact of less than two percent (2%) on the shareholdings of a non-interested shareholder
(who holds the next largest BDB Shares after PKNK), the non-interested shareholders should
consider the interest savings to be derived from the issuance of Consideration Shares as
opposed to obtaining bank borrowings which could mitigate the decline in the consolidated
PAT of the Company of approximately 32.72%.
Premised on the foregoing analysis, we are of the opinion that the mode of settlement of the
Purchase Consideration via the combination of cash and issuance of Consideration Shares
pursuant to the terms of the SPA is reasonable as the dilutive impact based on the number of
Consideration Shares to be issued is immaterial as illustrated above, whilst the cash proceeds
to be raised from the Proposed Rights Issue is sufficient to finance the Consideration Cash,
without the need to further obtain bank borrowings.
66- 30
10.4
10.4.1
Closing market price as at
the LPD = RM2.04
Closing market price as at
the LTD = RM2.40
- 31 -
67
Based on the graph above, it should be noted that the BDB Shares has never traded above the Issue Price for the past twelve (12) months up to the LPD,
save for 18 August 2014 and 19 August 2014, where the BDB Shares traded RM0.01 above the Issue Price at RM2.51.
(Source: Bloomberg)
Lowest traded market
price = RM1.55
Highest traded market
price = RM2.51
Issue price = RM2.50
The movement of the historical market prices of BDB Shares for the past twelve (12) months up to the LPD is depicted below:
Analysis of the historical market prices of BDB Shares
A comparison of the Issue Price against the historical closing market prices and the
respective VWAPs of BDB Shares up to the LTD are as follows:
Market price
Closing market price as at the LPD
(RM)
Premium to the market price
2.04
(RM)
%
0.46
22.55
Closing market price as at the LTD
2.40
0.10
4.17
5-day VWAP up to the LTD
2.37
0.13
5.49
1-month VWAP up to the LTD
2.39
0.11
4.60
2.15
0.35
2.25
1-year VWAP up to the LTD
2.09
0.25
11.11
0.41
19.62
16.28
(Source: Bloomberg)
Premised on the above, the Issue Price represents:
(i)
a premium of RM0.46 or 22.55% over the closing market price of BDB
Shares as at the LPD;
(ii)
a premium of RM0.10 or 4.17% over the closing market price of BDB
Shares as at the LTD; and
(iii)
a premium ranging from RM0.11 to RM0.41 or 4.60% to 19.62% over the
five (5)-day, one (1)-month, three (3)-month, six (6)-month and one (1)-year
VWAPs of BDB Shares up to the LTD.
As the Issue Price represents a premium of approximately 5.5% over the five (5)-day
VWAP up to the LTD, we have noted that the amount of BDB Shares to be issued at
RM2.50 pursuant to the Consideration Shares is lower as compared to the amount of
BDB Shares to be issued based on the five (5)-day VWAP up to the LTD of RM2.37.
The following table is an illustration of the number of new BDB Shares to be issued
based on the Issue Price and the five (5)-day VWAP up to the LTD of RM2.37:
Number of new BDB Shares to be issued
Proposed Acquisition of
RM2.50
14,600,000
Malay Reserved Land
RM2.37
15,400,843
33,248,945
800,843
1,728,945
1,897,998
4,097,600
Issue price
Difference
*
Premium received (RM)
31,520,000
Note:
*
The premium received was a result of lesser new BDB Shares to be issued at the Issue Price as
compared to the five (5)-day VWAP up to the LTD of RM2.37. The premium received is
computed based on the difference in the amount of new BDB Shares to be issued multiplied by
the five (5)-day VWAP of BDB Shares up to the LTD of RM2.37.
68- 32
Based on the table above, it is pertinent to note that the premium received of
approximately RM1.90 million and RM4.10 million, respectively from the issuance
of new BDB Shares at the Issue Price as compared to the five (5)-day VWAP up to
the LTD of RM2.37 is higher than the premium paid of approximately RM1.85
million and RM1.87 million for the Proposed Acquisition of Non-Malay Reserved
Land and Proposed Acquisition of Malay Reserved Land, respectively.
The following table illustrates the net gain effect on the Company:
of Non-Malay
Reserved Land
of Malay Reserved
Land
1,897,998
4,097,600
(1,852,000)
(1,868,000)
45,998
2,229,600
(RM)
Premium received from the issuance of
Consideration Shares at the Issue Price
Less: Premium paid for the Landbank
Net gain
(RM)
Based on the above, we noted that the Issue Price is higher than the closing market
price of BDB Shares as at the LPD and LTD as well as higher than the five (5)-day,
one (1)-month, three (3)-month, six (6)-month and one (1)-year VWAPs of BDB
Shares up to the LTD, and also resulted in a net gain for the Company due to the
lower number of new BDB Shares to be issued pursuant to the Proposed Acquisition.
Notwithstanding the above, it should be noted that the Proposed Rights Issue will be
implemented prior to the Proposed Acquisitions. Thus, the Issue Price and
Consideration Shares in respect of the Proposed Acquisition of Non-Malay Reserved
Land and Proposed Acquisition of Malay Reserved Land are subject to adjustments
made in accordance with the SPA as stipulated in Section 2.1.8.2 of the Circular to
take into account the effects of the Proposed Rights Issue.
For illustrative purposes only, we have assumed the following:
Illustrative issue price of the Rights
Shares
:
RM1.26
Illustrated based on the 5-day VWAP
of BDB Shares up to the LTD
:
RM2.37
Illustrative number of Consideration
Shares under the Proposed Acquisition
:
23,856,210*
Illustrative number of Consideration
Shares under the Proposed Acquisition
:
51,503,268*
Illustrative Entitlement Basis of the
Rights Shares
:
One Rights Share for every one BDB
Share held
Illustrative Entitlement Basis of the
Bonus Shares
:
One Bonus Share for every two Rights
Shares subscribed
Note:
*
After taking into consideration the relevant adjustments as set out in the SPA to take into account
the effects of the Proposed Rights Issue.
69- 33
Based on the above assumptions, the illustrative TEAP would be RM1.45 and the
relevant adjustments to be made in relation to the Issue Price and number of
Consideration Shares pursuant to the SPA as stipulated in Section 2.1.8.2 of the
Circular are as follows:
Based on the SPA:
 Proposed Acquisition of Non-Malay
Reserved Land
 Proposed Acquisition of Malay
Reserved Land
Adjusted pursuant to the Proposed Rights
Issue:
 Proposed Acquisition of Non-Malay
Reserved Land
 Proposed Acquisition of Malay
Reserved Land
Issue
Price
(RM)
No. of
Consideration
Shares
(RM)
2.50
14,6000,000
36,500,000
2.50
31,520,000
78,800,000
46,120,000
115,300,000
1.53
23,856,210
36,500,000
1.53
51,503,268
78,800,000
75,359,478
115,300,000
Based on the table above, the total value of RM115,300,000 (i.e. the Consideration
Shares) is not affected by the relevant adjustments made in relation to the Issue Price
and number of Consideration Shares pursuant to the SPA as the illustrative adjusted
Issue Price of RM1.53 still represents a premium of approximately 5.5% over the
illustrative TEAP of RM1.45, which is similar to the premium received from the
Issue Price of RM2.50 over the five (5)-day VWAP of BDB Shares up to the LTD of
RM2.37.
Premised on the foregoing, we are of the view that the Issue Price is fair and
reasonable.
10.4.2
Selected comparable companies analysis
In addition to the analysis of the historical market prices of BDB Shares, we have
reviewed the following multiples of selected comparable companies, which are listed
on Bursa Securities, to give an indication of the current market expectation with
regards to the valuation of companies similar to BDB:
Valuation metric
Price-to-earnings
ratio (“PER”)
Price-to-book
ratio (“PBR”)
Enterprise value
(“EV”)
over
earnings before
interest, taxation,
depreciation and
amortisation
(“EV/EBITDA”)
Definition
PER is a valuation metric which compares a company’s share price
against its earnings per share. It can be used to compare the PER to that
of its peers to gauge how richly the company is valued relative to its
peers.
PBR is a method used to compare the stock’s market value to its
historical book value. A lower PBR could mean that the market value
accorded to the company is less than the NA attributable to the
shareholders of the company and may therefore indicate that the
company is undervalued.
EV is the sum of the company’s market capitalisation preferred equity,
minority interests, short and long-term debt less its cash and cash
equivalents. EBITDA stands for historical earnings before interest, tax,
depreciation and amortisation expenses, inclusive of share of
associates’ and joint ventures’ income and excluding exceptional items.
EV/EBITDA multiple is a comparison of a company’s EV and its
EBITDA. The advantage of this multiple is that it is capital structureneutral, as such, this multiple can be used to directly compare
companies with different levels of debt as well as different depreciation
and amortisation policies. Hence, the EV/EBITDA multiple compares
the total value of a company relative to its cash profits. A lower
EV/EBITDA multiple can be indicative of an under valuation of a
company.
70- 34
The comparable companies were selected based on the following criteria:
(i)
market capitalisation of between RM100.00 million to RM250.00 million as
BDB has a market capitalisation of approximately RM174.76 million as at
the LTD;
(ii)
companies which generated more than 40.00% of their revenue and/or
operating profits from property development activities; and
(iii)
listed on Main Market of Bursa Securities.
It should be noted that the selected comparable companies have been selected on a
best efforts basis and professional judgment provides the most appropriate
similarities to BDB based on the criteria set out above. However, the selected
comparable companies may not be exact comparison to BDB due to various factors
which include amongst others marketability and liquidity of share, scale of business,
profit and management track record, asset base, accounting and tax policies, risk and
shareholders’ profile and future prospects.
- 71
35 -
185.93
131.45
122.88
101.45
Gromutual
Berhad
PLB Engineering
Berhad
Eupe Corporation
Berhad
Dolomite Berhad
(a)
31 December
28 February
31 August
31 December
31 December
31 December
31 December
Financial year
Principal activities
- 36 -
72
The company is principally engaged in investment holding whilst its subsidiaries are engaged in quarry
operations, construction, property investment, property development, manufacturing and sale of hotmixes
and readymixed concrete and transportation services.
The company is principally engaged in investment holding whilst its subsidiaries are engaged in property
development, property constructions, operations and management of chalet and golf club operations,
property rental, management of complex, fruit cultivation and operations and management of a kindergarten.
The company is principally engaged in investment holding and the provision of management services whilst
its subsidiaries are engaged in construction (including construction of industrial, residential and commercial
building and renovation works), housing development, property development, trading of construction
materials, property letting, provision of waste management services and manufacturing.
The company is principally involved in investment holdings and the provision of management services to
the subsidiary companies whilst its subsidiaries are involved in general and property construction, property
holdings and property development.
The company is principally engaged in investment holding and the provision of management services whilst
the subsidiaries are engaged in construction (including specialist engineering services, turnkey contracts,
building and civil engineering works, land reclamation and dredging), housing development and property
development.
The company is principally engaged in realty development and investment holding whilst its subsidiaries are
involved in housing development, property development, land development and construction.
The company is principally involved in investment holding, provision of management services, oil palm
plantation and property development. Through its subsidiaries, the company is involved in project
management services, building and general contractor, granite quarry operator, golf resort owner and
operator and the supply of construction materials.
Market capitalisation as at the LTD, as extracted from Bloomberg.
194.81
Ken
Holdings
Berhad
Note:
215.06
174.76
Ibraco Berhad
Comparable
companies
BDB
Company
Market
capitalisation(a)
(RM’million)
The profiles of the selected comparable companies are as follows:
1.050
1.600
PLB Engineering Berhad
2.50
0.385
0.960
0.495
0.2949
0.0135
0.0946
0.1343
0.0551
0.1298
0.3159
(RM)
Earnings per
share(b)
0.5945
0.67(c)
73
Denotes an outlier and has been excluded from the computation of the simple average set out above. An outlier is determined based on extreme deviation from the mean.
^
- 37 -
Computed based on the Issue Price.
(c)
13.17(c)
7.54
11.42
5.12
22.82^
7.26
11.42
8.20
5.72
5.12
(times)
EV/ EBITDA
multiple
Based on the trailing twelve (12) months unaudited consolidated financial statements of up to 30 June 2014 (consisting of four (4) quarters’ financial results up to 30 June 2014).
33.70
16.42
23.20
21.56
28.73
32.99
59.72
(RM’million)
EBITDA(b)
(b)
443.89(c)
374.73
168.52
246.11
235.53
188.74
305.56
(RM’million)
EV(a)(b)
Extracted from Bloomberg as at the LTD.
3.7238
0.79
8.48(c)
8.90
1.02
0.45
0.65
0.45
0.99
0.64
1.02
0.97
(times)
PBR
11.91
5.38
28.52
2.1398
^
10.15
1.6140
0.7704
1.0247
1.7520
(RM)
NA per
share(b)
11.91
8.98
8.09
5.38
(times)
PER
(a)
Notes:
(Source: Bloomberg and the financial results of the respective comparable companies)
BDB
Simple average
High
Low
Dolomite Berhad
Eupe Corporation Berhad
Gromutual Berhad
1.700
Ken Holdings Berhad
Ibraco Berhad
(RM)
Comparable companies
Price(a)
The table below provides a comparison of the PER, PBR and EV/EBITDA multiples between BDB and the comparable companies:
(i)
PER analysis
The PER of BDB based on the Issue Price of 8.48 times is within the range
of 5.38 times and 11.91 times of the selected comparable companies and is
slightly below the simple average PER of the selected comparable
companies of 8.90 times.
(ii)
PBR analysis
The PBR of BDB based on the Issue Price of 0.67 times is within the range
of 0.45 times and 1.02 times of the selected comparable companies and is
below the simple average PBR of the selected comparable companies of
0.79 times.
(iii)
EV/EBITDA multiple analysis
The EV/EBITDA multiple of BDB based on the Issue Price of 13.17 times
is above the range of 5.12 times and 11.42 times of the selected comparable
companies.
The higher EV/EBITDA multiple of BDB based on the Issue Price indicates
that the Issue Price is higher than the Company’s value relative to its cash
profits.
Based on the above, we are of the opinion that the Issue Price is fair from the
perspective of the PER, PBR and EV/EBITDA multiple analysis of the selected
comparable companies.
10.5
As set out in Section 2.2.3, Part A of the Circular, the effective issue price of each Rights
Share (after taking into consideration of the Bonus Share) is expected to be fixed at a discount
of at least 40% to the TEAP immediately preceding the price-fixing date but in no event lower
than the par value of BDB Shares of RM1.00 each.
In evaluating the fairness of the issue price of the Rights Shares, we have compared the TEAP
represented by the issue price of the Rights Shares vis-à-vis the TEAP represented by the
rights shares in corporate exercises undertaken by other listed companies as announced on
Bursa Securities for the past one (1) year. We have noted that the issue price of the Rights
Share of at least 40% discount to the TEAP is within the range of market discount rates for
rights issue exercises in Malaysia completed since 2013 up to the LTD of 4.99% to 50.47%, as
depicted in the table below:
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Company
Date
SBC Corporation Berhad
31 October 2013*
Tiger Synergy Berhad
Discount to TEAP@
2 December 2013*
KPJ Healthcare Berhad
Ewein Berhad
Ideal Sun City Holdings Berhad
Ekovest Berhad
AHB Holdings Berhad
30.17%
31 March 2014*
32.61%
7 April 2014*
30 May 2014*
7 August 2014*
I-Berhad
27 August 2014^
Bumi Armada Berhad
9.58%
26 December 2013*
14 March 2014*
Ahmad Zaki Resources Berhad
23.08%
27 August 2014^
27.54%
50.47%
17.90%
4.99%
36.10%
32.00%
Notes:
*
Date of the abridged prospectus in relation to the corporate exercise of the respective companies.
^
Date of the announcement of the corporate exercise of the respective companies.
@
Extracted from the abridged prospectus or announcement of the respective companies.
- 74
38 -
11.
11.
EVALUATION OF THE SALIENT TERMS OF THE SPA
EVALUATION OF THE SALIENT TERMS OF THE SPA
Our comments on the salient terms of the SPA as extracted from Section 2.1.8, Part A of the Circular
Our
comments
are as
follows: on the salient terms of the SPA as extracted from Section 2.1.8, Part A of the Circular
are as follows:
PIVB’s comments
PIVB’s comments
Terms and Mode of Payment of the Purchase Consideration
Terms and Mode of Payment of the Purchase Consideration
The Purchase Consideration shall be satisfied by the Purchaser in the These terms are reasonable as it is a
The
Purchase
Consideration shall be satisfied by the Purchaser in the These
terms
are reasonable
as it is a
following
manner:
common
practice
in the transaction
following manner:
common
practice
in
the
transaction
of this nature.
of this nature.
(a)
Deposit
(a)
Deposit
The Proposed Acquisition is to be
Proposed
is to beof
Within five Business Days from the date of the execution of the SPA, The
satisfied
partlyAcquisition
via the issuance
satisfied
partly
via
the
issuance
Within
five
Business
Days
from
the
date
of
the
execution
of
the
SPA,
the Deposit, being five per cent (5%) of the Purchase Consideration, new BDB Shares. Kindly refer ofto
Shares.
to
the
Deposit,
being
cent (5%)toofthe
the Purchase
shall
be paid
by five
theper
Purchaser
Vendor inConsideration,
the following new
our BDB
comment
on Kindly
this in refer
Section
shall
be paid by the Purchaser to the Vendor in the following our
on this in Section
manner:
10.3comment
of this IAL.
manner:
10.3 of this IAL.
(i)
(i)
(ii)
(ii)
(b)
(b)
a sum of RM4,040,000.00 only equivalent to two per cent
a(2%)
sum of
of the
RM4,040,000.00
only equivalent
to two
per cent
Purchase Consideration,
being
the Retention
(2%)
Purchase accordingly
Consideration,
being the
the Non-Malay
Retention
Sum of
(asthe
apportioned
between
Sum
(as apportioned
accordingly
between
Reserved
Land and Malay
Reserved
Land), the
shallNon-Malay
be paid by
Reserved
Land
and
Malay
Reserved
Land),
shall
be paid by
the Purchaser to the Purchaser’s Solicitors as stakeholders
the
Purchaser
to the
Purchaser’swith
Solicitors
as stakeholders
to be
dealt with
in accordance
the provisions
of Real
toProperty
be dealtGains
with Tax
in accordance
with
the
provisions
of Real
Act 1976; and
Property Gains Tax Act 1976; and
a sum of RM6,060,000.00 only, equivalent to three per cent
a(3%)
sum of
only, equivalent
three
pertocent
of RM6,060,000.00
the Purchase Consideration
shallto be
paid
the
(3%)
of the
Purchase
Consideration
shall (as
be paid
to the
Vendor,
being
the Balance
Deposit
apportioned
(as apportioned
Vendor,
being
the Balance
DepositReserved
accordingly
between
the Non-Malay
Land and
accordingly
between
the Non-Malay Reserved Land and
Malay Reserved
Land).
Malay Reserved Land).
In the event the conditions precedent in relation to the Proposed
InAcquisition
the event the
precedent
relationnot
to the
Proposed
are conditions
not satisfied
or areindeemed
to have
been
Acquisition
are
not
satisfied
or
are
deemed
not
to
have
been
satisfied or waived by the expiry of the conditional period or
the
satisfied
waived by period,
the expiry
of the
conditional
period
the
extendedorconditional
as the
case
may be, the
SPAorshall
extended
period,
as the shall,
case may
SPA shall
lapse andconditional
terminate and
the Vendor
withinbe,
30the
Business
Days
lapse
shall, within
Days
from and
the terminate
expirationand
of the
theVendor
conditional
period30orBusiness
the extended
from
the expiration
of thetheconditional
period
or the extended
conditional
period, refund
Deposit to the
Purchaser.
conditional period, refund the Deposit to the Purchaser.
(i)
(i)
In respect of the Non-Malay Reserved Land, the remaining
Inconsideration
respect of the
Reserved
Land,
remaining
of Non-Malay
Ringgit Malaysia
Ninety
FivetheMillion
Four
consideration
of
Ringgit
Malaysia
Ninety
Five
Million
Four
Hundred Seventy Six Thousand and Nine Hundred
Hundred
Seventy shall
Six be
Thousand
and Nine Hundred
(RM95,476,900.00)
satisfied by:
(aa)
(aa)
(bb)
(bb)
1
2
3
1
2
3
the allotment and issuance of 14,600,000 new BDB
issuance
of Ringgit
14,600,000
new BDB
the
allotment
Shares
at anand
issue
price of
Malaysia
Two
Shares
at an
issue
of Ringgit
Two2 ,
and Sen
Fifty
onlyprice
(RM2.50)
per Malaysia
BDB Share
2
,
and
Sen Fifty
onlyvalue
(RM2.50)
per Malaysia
BDB Share
constituting
a total
of Ringgit
Thirty
constituting
a
total
value
of
Ringgit
Malaysia
Thirty
Six Million and Five Hundred Thousand
Six
Million and Five Hundred Thousand
(RM36,500,000.00);
(RM36,500,000.00);
the allotment and issuance of Rights Shares together
the
allotment
and issuance
of Rights
togetherin
with
Bonus Shares
to the Vendor
(orShares
its nominees)
3 nominees) in
with
Bonus
Shares
to
the
Vendor
(or
its
accordance with clause 6.2 of the SPA ;
accordance with clause 6.2 of the SPA3;
For the avoidance of doubt, the balance purchase price in respect of the Non-Malay Reserved Land (i.e. RM RM95,476,900) and
For
avoidance
of Land
doubt,(i.e.
theRM96,423,100)
balance purchase
priceand
in respect
of thetoNon-Malay
Reserved Land (i.e. RM RM95,476,900) and
the the
Malay
Reserved
is fixed
not subject
any adjustment.
the Malay Reserved Land (i.e. RM96,423,100) is fixed and not subject to any adjustment.
To be adjusted in accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of the
To
be adjusted
in Issue.
accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of the
Proposed
Rights
As stipulated in Sections 2.1.8.3 and 2.2.7 of this Circular, the subscription price of the Rights Shares to be paid by the PKNK
As
stipulated
in from
Sections
2.1.8.3 and 2.2.7
of to
thisbeCircular,
the Company.
subscription
price of thethe
Rights
Shares of
to balance
be paid purchase
by the PKNK
shall
be set-off
the Consideration
Cash
paid by our
Accordingly,
satisfaction
price
shall
be set-off
from theand
Consideration
to be paid
by our
Accordingly, the satisfaction of balance purchase price
includes
the allotment
issuance of Cash
such Rights
Shares
and Company.
Bonus Shares.
includes the allotment and issuance of such Rights Shares and Bonus Shares.
- 75
39 - 39
-
PIVB’s comments
PIVB’s comments
(cc) the payment of Ringgit Malaysia Fifty Eight Million These terms are reasonable as it is a
the payment
of Ringgit
MillionandThese
are reasonable
is transaction
a
Nine
HundredMalaysia
SeventyFifty
Six Eight
Thousand
Nineterms
common
practice as
in itthe
Nine Hundred
Seventy
Six Thousand being
and Nine
common
in the transaction
Hundred
(RM58,976,900.00)
part of
the practice
of this nature.
Hundred proceeds
(RM58,976,900.00)
being via
part
the of
this nature.
of the funds raised
the of
Proposed
Rights
proceeds Issue;
of the funds
and raised via the Proposed Rights
The Proposed Acquisition is to be
The Proposed
Acquisition
to be
Issue; and
satisfied
partly viais the
issuance of
satisfied
partly
via
the
issuance
of refer to
(ii)
In respect of the Malay Reserved Lands, the remaining new BDB Shares. Kindly
In respectconsideration
of the Malay
ReservedMalaysia
Lands, Ninety
the remaining
Shares.
Kindly
of Ringgit
Six Millionnew
FourBDBour
comment
on refer
this to
in Section
consideration
of Ringgit
Malaysia
Six Million
Four Hundred
our comment
Hundred
Twenty
Three Ninety
Thousand
and One
10.3 ofonthisthis
IAL.in Section
Hundred (RM96,423,100.00)
Twenty Three Thousand
and One
shall be satisfied
by: Hundred 10.3 of this IAL.
(aa) the allotment and issuance of 31,520,000 new BDB
andatissuance
31,520,000
new Malaysia
BDB
(aa) the allotment
Shares
an issueofprice
of Ringgit
Two
Shares atand
an issue
price only
of Ringgit
Malaysia
Two Share 4 ,
Sen Fifty
(RM2.50)
per BDB
and Sen constituting
Fifty only (RM2.50)
per BDB
Share 4 , Malaysia
a total value
of Ringgit
constituting
a
total
value
of
Ringgit
Malaysia
Seventy Eight Million and Eight Hundred Thousand
Seventy Eight
Million and Eight Hundred Thousand
(RM78,800,000.00);
(RM78,800,000.00);
(cc)
(ii)
(bb)
(bb) the payment of Ringgit Malaysia Seventeen Million
the payment
Ringgit Malaysia
Seventeen
Millionand One
Six ofHundred
Twenty Three
Thousand
Six Hundred
Twenty
Three Thousand being
and One
Hundred
(RM17,623,100.00)
part of the
Hundred proceeds
(RM17,623,100.00)
being via
part
the Rights
of the funds raised
the of
Proposed
proceeds Issue.
of the funds raised via the Proposed Rights
Issue.
Adjustment to Consideration Shares
Adjustment to Consideration Shares
Pursuant to the Proposed Rights Issue, the Issue Price and the number of This term is necessary as the
Pursuant Consideration
to the Proposed
Rightsshall
Issue,
IssuetoPrice
and the number
of Thisasterm
is necessary
as to
thethe Issue
Shares
be the
subject
an adjustment
and determined
adjustment
is made
made into
to consideration
the Issue
Consideration
Shares shall be subject to an adjustment and determined as adjustmentPrice
is takes
follows:
of the
Price takes
into consideration
of the
follows:
capital
changes of BDB.
(a)
The Issue Price shall be adjusted in the following manner: capital changes of BDB.
(a)
The Issue Price shall be adjusted in the following manner:
New Issue Price
New Issue Price
= A
(b)
=
x
A
x
(B x C) + (D x E)
(B x C) + (D
x E)
(B +
D + F) x C
(B + D + F) x C
(b)
Upon adjustment to the Issue Price pursuant to Section 2.1.8.2 (a)
Upon adjustment
to the
Issue Price
pursuant
to Section 2.1.8.2
(a) shall be
above, the
Revised
Number
of Consideration
Shares
above, the
Revised inNumber
of Consideration
Shares shall be
calculated
the following
manner:
calculated in the following manner:
Revised Number of Consideration = Value of Consideration Shares
Revised Number
Shares of Consideration = Value of Consideration
New IssueShares
Price
Shares
New Issue Price
(c)
4
(c)
In relation to Section 2.1.8.2 (a) and (b) above, the letters used
In relation
to have
Section
(a)meaning:
and (b) above, the letters used
shall
the 2.1.8.2
following
shall have the following meaning:
A
=
B
=
C
=
D
=
A
B
C
D
=
=
The aggregate number of issued and fully paid up BDB
The aggregate
number
issued andDate;
fully paid up BDB
Shares
on the of
Entitlement
Shares on the Entitlement Date;
=
the 5-day weighted average market price of each BDB
the 5-day Share
weighted
average
market
of each BDB
up to
the market
dayprice
immediately
preceding the
Share up date
to theonmarket
preceding
the Rights
which day
the immediately
issue price for
the Proposed
date on which
issue price
for the Proposed
Issue the
is publicly
announced
on BursaRights
Securities or
Issue is publicly
Bursa Securities immediately
or
(failing announced
any such on announcement),
any suchthe date
announcement),
immediately of the
(failing preceding
of the announcement
precedingProposed
the date Rights
of theIssue;
announcement of the
Proposed Rights Issue;
=
To be adjusted in accordance with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of the
To be adjusted
in accordance
with the SPA, as set out in Section 2.1.8.2 of this Circular, to take into account the effects of the
Proposed
Rights Issue.
4
- 40 -
- 40
76-
(d)
PIVB’s comments
E
=
The issue price for the Rights Shares; and
F
=
The aggregate number of Bonus Shares.
This term is necessary as the
adjustment is made to the issue
price takes into consideration of the
capital changes of BDB.
Such adjustment will be effective (if appropriate, retroactively) from
the commencement of the market day next following the Entitlement
Date.
Subscription of Rights Shares by the Vendor
The Vendor undertakes to subscribe in full its entitlement of the Rights
Shares based on its shareholding in our Company on the Entitlement Date.
The subscription price of the Rights Shares to be paid by the Vendor shall
be set-off from the Consideration Cash to be paid by the Purchaser. The
Consideration Shares to be issued to the Vendor are not entitled to
participate in the Proposed Rights Issue.
This term is reasonable as the
purpose of the proceeds to be raised
from the Proposed Rights Issue is
for the partial settlement of the
Purchase Consideration.
Conditions Precedent
The Proposed Acquisition is conditional and subject to the following
conditions precedent:
(a)
Conditions precedent in relation to the Landbank
(i)
clearance from Bursa Securities to issue the Circular in
relation to the Proposals;
(ii)
approval from its shareholders in matters relating to the
sale and purchase of the Landbank;
(iii)
in relation to the Malay Reserved Land –
(aa)
The Purchaser or its nominee, at its own costs and
expense, obtaining the necessary Approval and/or
declaration from the Authority pursuant to the Malay
Reserves Enactment (Kedah) No. 63 for the purpose
of purchasing the Malay Reserved Land; or
(bb)
The Vendor obtaining Approval from the Authority
to enable the Malay Reserved Land to be transferred
to the Purchaser as not being categorized as Malay
Reserved Land status (―Change of Status‖) and
having completed the Change of Status. For the
avoidance of doubt, any condition imposed by the
Authority to be fulfilled in respect of the Change of
Status shall be the obligation of the Vendor other
than the payment of any fees and/or rates that may
be imposed by the Authority in respect of the Change
of Status which shall be borne by the Purchaser,
including any other fees and/or rates incidental to
and for the purpose of the Change of Status under
the SPA;
77
- 41 -
These conditions precedent are
reasonable as the terms are common
regulatory requirements required to
facilitate the Proposed Acquisition
of Non-Malay Reserved Land,
Reserved Land and the Proposed
Rights Issue.
Pursuant to Paragraph 10.08 of the
Listing Requirements, the approval
of the shareholders of BDB has to
be sought for the Proposed
Acquisition as it is a related party
transaction.
We note that in respect of the
Reserved Land, BDB will have to,
at its own costs and expense, obtain
the necessary approval pursuant to
the Malay Reservations Enactment
(Kedah) No. 63 for the purpose of
purchasing the Malay Reserved
Land. This is common regulatory
expenses applicable to a purchaser.
(i)
(i)
(ii)
(ii)
the approval from the relevant authority for the transfer, if
the
from theinrelevant
forleasehold
the transfer,
if
any approval
may be required,
respect authority
of the three
lands
any
may
be
required,
in
respect
of
the
three
leasehold
lands
situated at Mukim Ulu Melaka, district of Langkawi, Kedah
situated
Mukim
Melaka, described
district of Langkawi,
Kedah
and eachat land
is Ulu
particularly
and identified
in
and
each land
particularly
described
and identified
in
Schedule
4 of isthe
SPA, subject
to terms
reasonably
Schedule
4
of
the
SPA,
subject
to
terms
reasonably
acceptable to the Purchaser;
acceptable to the Purchaser;
satisfactory documentary proof that all restriction in
satisfactory
documentary
proof
that inallSchedule
restriction
in
interests in respects
of the land
set forth
5 of the
interests
respects
the landtosetenable
forth inthe
Schedule
of the
the
SPA haveinbeen
dulyofsatisfied
transfer5 of
SPA
have from
been the
dulyVendor
satisfied
the transfer
of the
Landbank
to to
theenable
Purchaser.
The lands
in
Landbank
the Vendor
to the out
Purchaser.
The lands in
Schedule 5 from
are summarily
detailed
as follows:
Schedule 5 are summarily detailed out as follows:
(aa)
(aa)
(bb)
(bb)
(iii)
(iii)
(b)
(b)
five freehold lands situated at the district of Kuala
five freehold
the district
of Kuala
Muda,
Kedah,lands
whichsituated
are heldatunder
their respective
Muda, namely,
Kedah, which
are 126043
held under
titles,
H.S. (D)
PT their
2416,respective
H.S.(D)
titles,
H.S.
H.S.(D)
126045namely,
PT 2418,
H.S.(D)
(D)126043
126050PT
PT 2416,
2423, H.S.(D)
126045
PT
2418,
H.S.
(D)
126050
PT
2423,
H.S.(D)
34392 PT 65003, and H.S.(D) 90453 PT 48856; and
34392 PT 65003, and H.S.(D) 90453 PT 48856; and
one freehold land situated at the district of Pokok
one
at the title
district
of Pokok
Sena,freehold
Kedah, land
whichsituated
is held under
H.S.(D)
2979
Sena,
Kedah, which is held under title H.S.(D) 2979
PT 2516,
PT 2516,
PIVB’s comments
PIVB’s comments
PKNK will have to obtain the
PKNK
have to obtain
the
necessarywillapprovals
from the
necessary
approvals
from
the
relevant authorities in relation to the
relevant
authorities
in relation
to the
application
for conversion
of Malay
application
for
conversion
of
Malay
Reserved Land status to non-Malay
Reserved
non-Malay
Reserved Land
Land status
statustoand
having
Reserved
status andof having
completed Land
the conversion
status.
completed
thepayment
conversion
of status.
Any fees or
imposed
by
payment in
imposed
Any
fees orauthorities
the relevant
respect by
of
the
relevant authorities
of
the conversion
will haveintorespect
be borne
the
conversion
havevalue
to befor
borne
by BDB
as the will
market
the
by
BDBReserved
as the market
fortake
the
Malay
Land value
did not
Malay
Reserved
Land
did
not
take
into consideration of any upside in
into
consideration
of any upside
in
the value
of the Malay
Reserved
the
value
of
the
Malay
Reserved
Land if it is converted to NonLand
it is converted
NonMalay ifReserved
Land. Thistoterm
is
Malay
Reserved
Land.
This
term
is
also to safeguard the interests of
also
of
BDB toas safeguard
it ensuresthe
theinterests
successful
BDB
as it ensures
implementation
of the
the successful
Proposed
implementation
of
the Reserved
Proposed
Acquisition of Malay
Acquisition
of Malay Reserved
Land.
Land.
the approval from the Minister of Finance pursuant to the
the approval from
theLegislatures
Minister of Finance
pursuant
the
Incorporation
(State
Competency)
Act to
1962,
Incorporation
(State Legislatures
1962,
and any other approval
as may be Competency)
required to beAct
obtained
and
anyVendor
other approval
may laws
be required
to be obtained
by the
pursuant as
to any
or regulations,
for the
by
the
Vendor
pursuant
to
any
laws
or
regulations,
the
purpose of selling and disposing of the Landbank for
to the
purpose
of and
selling
disposing receipt
of the of
Landbank
Purchaser,
theand
Purchaser’s
a copy to
of the
the
Purchaser,
and the
letters containing
suchPurchaser’s
approval. receipt of a copy of the
letters containing such approval.
Conditions in relation to the issuance of the Consideration Shares,
Conditions
in and
relation
to Shares
the issuance
of the Issuance‖)
Consideration Shares,
Rights Shares
Bonus
(―Proposed
Rights Shares and Bonus Shares (―Proposed Issuance‖)
(i)
(i)
(ii)
(ii)
the approval from its shareholders in matters pertaining and
theconnection
approval from
shareholders
in matters
in
to theitsProposed
Issuance;
and pertaining and
in connection to the Proposed Issuance; and
the approval of Bursa Securities for the listing of and
the
approval
for theShares,
listing and
of and
quotation
for of
the Bursa
RightsSecurities
Shares, Bonus
the
quotation
for
the
Rights
Shares,
Bonus
Shares,
and
the
Consideration Shares on the Main Market of Bursa
Consideration
Shares on the Main Market of Bursa
Securities.
Securities.
Conditional period and unconditional date
Conditional period and unconditional date
(a)
(a)
(b)
(b)
(c)
(c)
The Purchaser and the Vendor (―Parties‖) shall fulfill the
The
Purchaser
and within
the Vendor
(―Parties‖)
shalli.e.,fulfill
conditions
precedent
the conditional
period,
withinthe
a
conditions
precedent
the conditional
a
period of 12
months within
commencing
from the period,
date of i.e.,
the within
SPA, or
period
of
12
months
commencing
from
the
date
of
the
SPA,
or
within the extended conditional period for a period of three months
within
theexpiry
extended
conditional
period for
a period of
three or
months
from the
of the
aforementioned
conditional
period
such
from
expiry
thebeaforementioned
conditional
period
or such
other the
period
as of
may
mutually agreed
in writing
between
the
other
as may be mutually agreed in writing between the
partiesperiod
to the SPA;
parties to the SPA;
The Proposed Acquisition of Non-Malay Reserved Land shall
shall
The
Proposed
Acquisition
become
unconditional
on of
the Non-Malay
date whereReserved
all the Land
conditions
become
date where
all satisfied
the conditions
precedentunconditional
in the SPA onarethesatisfied,
deemed
or (if
precedent
are save
satisfied,
deemed
satisfied
or (if
permissible inby the
law)SPA
waived,
for the
conditions
relating
to
permissible
law) waived,
save Reserved
for the conditions
relating
to
approvals inby
relation
to the Malay
Land and the
consent
approvals
in
relation
to
the
Malay
Reserved
Land
and
the
consent
to transfer being obtained (if any may be required); and
to transfer being obtained (if any may be required); and
The Proposed Acquisition of Malay Reserved Land shall become
of Malay
Reserved
Land
shall become
The Proposed on
Acquisition
unconditional
the date where
all the
conditions
precedent
in the
unconditional
on thedeemed
date where
all theorconditions
precedent
the
SPA are satisfied,
satisfied
(if permissible
by inlaw)
SPA
are
satisfied,
deemed
satisfied
or
(if
permissible
by
law)
waived.
waived.
- 42 - 42 -
78
The time period of twelve (12)
The
timeto period
(12)
months
fulfill ofthetwelve
conditions
months
fulfillwhich,
the conditions
precedent,tofailing
the period
precedent,
failing which,
period
shall be extended
for the
a further
shall
extended
for a orfurther
period be
of three
(3) months
such
period
of threeas(3)
months
or such
other period
maybe
agreed,
is
other
periodas asit maybe
is
reasonable
allows agreed,
sufficient
reasonable
as parties
it allows
time for the
to sufficient
meet the
time
for the
parties to meet the
Conditions
Precedent.
Conditions Precedent.
PIVB’s comments
Non-fulfillment of Conditions Precedent
Parties may mutually modify or waive (if permissible by law) any of the
conditions precedent in respect of the Proposed Acquisition. In the event
that the conditions precedent are not satisfied or are deemed not to have
been satisfied or waived (to the extent as may be permitted under the
applicable laws and regulations) by the expiry of the conditional period or
the extended conditional period, as the case may be, the SPA shall lapse
and terminate and be of no further effect whatsoever whereupon the
Parties, within 30 Business Days from the expiration of the conditional
period or the extended conditional period, as the case may be, shall attend
to the following:
(a)
the Vendor shall refund to the Purchaser the Deposit paid to the
Vendor towards the settlement of the Purchase Consideration;
(b)
if the Purchaser has lodged any caveat over the Landbank pursuant
to Clause 3.1 of the SPA, the Purchaser’s solicitors shall deliver to
the Vendor the official receipt issued by the relevant land registry
as evidence that the withdrawal of private caveat have been duly
presented for registration; and
(c)
all documents which the party to the SPA or its solicitors have
delivered to the other party to the SPA or its solicitors pursuant to
the terms of the SPA shall be redelivered to the party to the SPA or
its solicitors.
These terms are common and
reasonable as it gives the rights to
both parties to terminate the SPA as
well as safeguard the interest of
both parties in the event that any of
the Conditions Precedent cannot be
satisfied or waived.
Upon complete satisfaction and fulfillment of the abovementioned
obligations, neither party to the SPA shall have any further claim against
the other party to the SPA on any matter in respect of or arising from the
SPA save and except for any antecedent breach that has been committed
thereon.
Completion of the SPA
Subject to the satisfaction of the conditions precedent or the waiver of any
such conditions precedent in accordance to the terms of the SPA, the
completion of the Proposed Acquisition of Non-Malay Reserved Land or
the Proposed Acquisition of Malay Reserved Land shall respectively take
place at the office of the Purchaser or such other location as may be
mutually agreed by the parties no later than 5.00 p.m. on the respective
Completion Date whereupon which the following actions shall be taken by
the Parties:
(a)
the Vendor shall deliver to the Purchaser’s solicitors in respect of
the Non-Malay Reserved Land or the Malay Reserved Land (as the
case may be), the original issue document of title, the certified true
copy of quit rent and assessment receipts for the current year, the
original authorities’ approval (if applicable), an extract of the
Vendor’s board resolution approving the sale to the Purchaser
including the requisite registration fees and any other documents
and the relevant land office or registry may reasonably require for
the registration of the Transfer. Similarly, the Purchaser shall
deliver to the Purchaser’s solicitors its latest certified true copy of
memorandum & article of association, its board resolution
approving the Proposed Acquisition, certified true copy of Form 9,
24, 44 and 49 and the state authority’s approval for the Malay
status declaration (if applicable);
(b)
(i)
in respect of the Proposed Acquisition of Non-Malay
Reserved Land, the Purchaser shall confirm to have already
allotted and issued the Consideration Shares, Rights Shares,
and Bonus Shares to the Vendor (or its nominees) and
credited the Consideration Shares to the Vendor’s (or its
nominee’s) securities account; and
(ii)
in respect of the Proposed Acquisition of Malay Reserved
Land, the Purchaser shall confirm to have already allotted
and issued the Consideration Shares and credited the
Consideration Shares to the Vendor’s (or its nominees’)
securities account;
79- 43
There terms are reasonable as they
are common terms of completion
applicable to transactions of this
nature.
(c)
PIVB’s comments
the Purchaser shall pay the respective balance of the Consideration
Cash to the Vendor’s appointed stakeholder who shall be
authorised to hold and place the same in an interest bearing
account or fixed deposit account pending the registration of the
transfer form in respect of the Landbank in the Form14A prescribed
under the National Land Code 1965 in favour of the Purchaser or
its nominee.
There terms are reasonable as they
are common terms of completion
applicable to transactions of this
nature.
Default by Purchaser
(a)
If the Purchaser—
(i)
breaches any warranty or undertaking or any other term or
condition of the SPA and fails to rectify such breach in
accordance with the SPA;
(ii)
commences a petition for voluntary winding-up of itself;
(iii)
becomes the subject of winding-up proceedings in a court of
law; or
(iv)
applies for or consent to the appointment of or taking of
possession by a receiver and/or manager over all of or
substantially all of its properties,
These terms are reasonable as they
are common terms for transactions
of such nature, where in the event
that BDB breaches any material
provisions of the SPA, PKNK is
entitled to terminate the SPA to
safeguard its position.
These terms also govern the
processes for termination of the
SPA in the event of a default by
BDB and are common and
reasonable.
the Vendor shall be entitled to terminate the SPA by giving a notice
in writing and served on the Purchaser or the Purchaser’s
solicitors.
(b)
In the event that the Vendor terminates the SPA for the above
reasons, the Parties shall, within 30 Business Days or any extended
period agreed upon by the Parties from the date of receipt by the
Purchaser of the termination notice, attend to the following:
(i)
the Vendor shall:
(aa)
refund or cause to be refunded to the Purchaser the
Deposit and/or the Consideration Cash which has
already been paid by the Purchaser towards the
settlement of Purchase Consideration; and
(bb)
pay to the Purchaser in cash the amount equivalent
to the value of the Consideration Shares if such
Consideration Shares have already been credited by
the Purchaser to the Vendor towards the settlement
of Purchase Consideration,
compensation on such amount abovementioned calculated at
the rate of eight per cent (8%) per annum from the expiry of
30 Business Days or any extended period agreed upon by
the Parties from the Vendor’s receipt of the termination
notice until the date of actual payment and refund,
(ii)
all documents which the party to the SPA or its solicitor has
delivered to the other party to the SPA or its solicitors
(iii)
possession;
- 44 -
80
The prescribed rate of eight percent
(8%) per annum is in line with
common compensation terms of
property
transactions
for
opportunity cost.
(iv)
PIVB’s comments
if the Purchaser has lodged any caveat over the Landbank
pursuant to Clause 3.1 of the SPA, the Purchaser’s
Solicitors shall withdraw the caveat and deliver to the
Vendor the official receipt issued by the relevant land
registry as evidence that the withdrawal of private caveat
has been duly presented for registration,
null and void and of no further effect and neither the Vendor nor the
Purchaser shall have any claim against each other, save and except
for any antecedent breach of the SPA.
that BDB breaches any material
provisions of the SPA, PKNK is
entitled to terminate the SPA to
safeguard its position.
BDB and are common and
reasonable.
Default by Vendor
(a)
(b)
In the event that the Vendor shall be in breach of the
representations, warranties and/or undertaking given or default in
the observance or performance of any of its obligations in the SPA
for any reason whatsoever, the Purchaser shall be entitled at the
Purchaser’s option to either:
(i)
apply for the remedy of specific performance of the sale of
the Landbank pursuant to the provisions of the SPA and to
all other relief flowing therefrom; or
(ii)
terminate the SPA by notice in writing and served on the
Vendor.
in the event that the Purchaser terminates the SPA, the Parties
shall, within 30 Business Days or any extended period agreed upon
by the Parties from the date of receipt by the Vendor of the notice,
attend to the following:
(i)
PKNK breaches any material
provisions of the SPA, BDB is
entitled to either apply for the
remedy of specific performance or
to terminate the SPA.
PKNK.
the Vendor shall:
(aa)
refund or cause to be refunded to the Purchaser the
Deposit and/or the Consideration Cash which has
already been paid by the Purchaser towards the
settlement of Purchase Consideration; and
(bb)
the Vendor shall pay to the Purchaser in cash the
amount equivalent to the value of the Consideration
Shares if such Consideration Shares have already
been credited by the Purchaser to the Vendor
towards the settlement of Purchase Consideration,
compensation on such amount above calculated at the rate
of eight per cent (8%) per annum from the expiry of 30
business days or any extended period agreed upon by the
Parties from the Vendor’s receipt of the notice until the date
of actual payment and refund;
(ii)
all documents which the party to the SPA or its solicitor has
delivered to the other party to the SPA or its solicitors
(iii)
possession; and
81- 45
The prescribed rate of eight percent
(8%) per annum is in line with
common compensation terms of
property
transactions
for
opportunity cost.
(iv)
PIVB’s comments
if the Purchaser has lodged any caveat over the Landbank,
the Purchaser’s Solicitors shall withdraw the caveat and
deliver to the Vendor the official receipt issued by the
relevant land registry as evidence that the withdrawal of
private caveat has been duly presented for registration,
null and void and of no further effect and neither the Vendor nor the
Purchaser shall have any claim against each other, save and except
for any antecedent breach of the SPA.
PKNK breaches any material
provisions of the SPA, BDB is
entitled to either apply for the
remedy of specific performance or
to terminate the SPA.
PKNK.
Premised on the above, we are of the opinion that the terms contained in the SPA are reasonable
as far as the interests of BDB are concerned and that the salient terms are not detrimental to the
interests of the non-interested shareholders of BDB.
82- 46
12.
EFFECTS OF THE PROPOSALS
We take cognisance of the effects of the Proposals as detailed in Section 6, Part A of the Circular and
set out below our comments on the proforma effects thereon.
The Proposed IASC and the Proposed M&A Amendment will not have any impact on the issued and
paid-up share capital, consolidated NA, NA per share, earnings, EPS and gearing of the Group and
BDB’s substantial shareholders’ shareholdings.
For illustrative purposes only, the proforma effects of the Proposed Rights Issue and the Proposed
Acquisition are illustrated based on the following assumptions as detailed in Section 6, Part A of the
Circular (“Assumptions”):
Illustrative issue price of the Consideration Shares
RM1.53(a)
Illustrative number of Consideration Shares to be issued
pursuant to the Proposed Acquisition of Non-Malay
Reserved Land
23,856,210(a)
Illustrative issue price of the Rights Shares
RM1.26
Illustrative number of Consideration Shares to be issued
pursuant to the Proposed Acquisition of Malay Reserved
Land
51,503,268(a)
Illustrative Entitlement Basis of the Bonus Shares
One (1) Bonus Share for every two (2) Rights
Shares subscribed
Illustrative Entitlement Basis of the Rights Shares
One (1) Rights Share for every one (1) BDB
Share held
Note:
(a)
After taking into consideration the relevant adjustments as set out in the SPA to take into account the effects of the
12.1
Issued and paid-up share capital
For illustrative purposes only, based on the Assumptions, the proforma effects of the Proposed
Rights Issue and the Proposed Acquisition on the issued and paid-up share capital of BDB are
as follows:
To be issued pursuant to the Proposed Rights Issue
To be issued pursuant to the Proposed Acquisition
To be issued pursuant to the Proposed Acquisition
Total enlarged issued and paid-up share capital
83- 47
No. of BDB Shares
RM
72,815,856
72,815,856
109,223,784
109,223,784
23,856,210
23,856,210
205,895,850
205,895,850
51,503,268
51,503,268
257,399,118
257,399,118
12.2
After deducting the estimated expenses in relation to the Proposals of RM5.00 million.
After payment of consideration cash and Deposit by BDB in relation to the respective acquisitions.
(d)
(e)
84
Net gearing is computed as net borrowings (total borrowings minus cash and bank balances) divided by total equity.
(c)
- 48 -
Gross gearing is computed as total borrowings divided by total equity.
0.43
0.95
188,240
343,192
(b)
0.92
1.28
96,492
343,192
1.98
182,040
359,948
8,068
169,830
10
-
182,040
RM’000
A first and final single tier dividend of RM0.07 per BDB Share was paid by BDB on 20 May 2014.
0.88
1.26
101,589
343,192
3.68
72,816
72,816
3.75
268,200
8,068
170,244
10
17,062
72,816
273,297
8,068
175,341
10
17,062
72,816
RM’000
RM’000
0.55
0.87
0.52
0.73
343,192
96,540(d)(e)
124,238(e)
343,192
1.83
257,399
470,248
8,068
164,830(d)
10
39,941
257,399
RM’000
1.93
205,896
396,448
8,068
169,830
10
12,644
205,896
RM’000
After (II) and the
Malay Reserved Land
After (I) and the Proposed
Acquisition of Non-Malay
Reserved Land
After Proposed
Rights Issue
(a)
Notes:
Net gearing (times)
(c)
Gross gearing (times)(b)
Cash and bank balances
Total borrowings
NA per BDB Share (RM)
No. of BDB Shares (’000)
Total equity
Non-controlling interest
Retained earnings
Exchange fluctuation reserves
Share premium
Share capital
After the dividend
payment(a)
As at
31 December 2013
(III)
(II)
(I)
For illustrative purposes only, based on the Assumptions, the proforma effects of the Proposed Rights Issue, Proposed Acquisition of Non-Malay Reserved Land
and the Proposed Acquisition of Malay Reserved Land on the consolidated NA, NA per BDB Share and gearing of the Group based on the audited consolidated
financial statement of BDB as at the FYE 31 December 2013 are as follows:
NA per BDB Share and gearing
The consolidated NA per BDB Share decreased from RM3.75 to RM1.83 due to the dividend
paid out by the Company on 20 May 2014 and the issuance of new BDB Shares pursuant to
the Proposed Rights Issue and the Proposed Acquisition. In addition, the net gearing of the
Group is expected to reduce proportionately, by 0.36 times from 0.88 times to 0.52 times, as a
result of an increase in the NA of the Group pursuant to the issuance of new BDB Shares.
12.3
Earnings and EPS
The Proposed Rights Issue and the Proposed Acquisition are not expected to have a material
impact on the consolidated earnings and EPS of BDB for the financial year ending 31
December 2014 as the Proposed Rights Issue and the Proposed Acquisition of Non-Malay
Reserved Land are expected to be completed in the first (1st) quarter of 2015 whilst the
Proposed Acquisition of Malay Reserved Land is expected to be completed in the second (2 nd)
quarter of 2015.
The EPS of BDB is expected to reduce proportionately as a result of an increase in the number
of BDB Shares upon allotment and issuance of the Rights Shares, Bonus Shares and
Consideration Shares.
Nevertheless, the potential impact of the Proposed Rights Issue and the Proposed Acquisition
on the future earnings and EPS of BDB will depend upon, inter-alia, the future development
plans for the Landbank and the level of returns from such development.
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49 -
-
No. of BDB Shares
(II)
-
%
59.8
%
-
No. of BDB Shares
Indirect
-
%
After (I) and the Proposed Acquisition of
54.5
%
Indirect
Based on the assumption that PKNK fully subscribes for its entitlement of the Rights Shares.
123,053,693
No. of BDB Shares
Direct
39,678,993
No. of BDB Shares
Direct
174,556,961
No. of BDB Shares
Direct
99,197,483
No. of BDB Shares
Direct
67.8
%
-
No. of BDB Shares
Indirect
-
No. of BDB Shares
-
%
(III)
-
%
After (II) and the Proposed Acquisition of
Malay Reserved Land
54.5
%
Indirect
After the Proposed Rights Issue(a)
(I)
BDB does not have any convertible securities as at 27 October 2014.
Existing convertible securities
The shareholdings of PKNK in BDB will increase from 54.5% to 59.8% due to the issuance of new BDB Shares pursuant to the Proposed Rights Issue and the
Proposed Acquisition of Non-Malay Reserved Land. The shareholdings of PKNK in BDB will further increase to 67.8% due to the issuance of new BDB Shares
pursuant to the Proposed Acquisition of Malay Reserved Land.
(a)
Note:
PKNK
Substantial shareholder
PKNK
Substantial shareholder
Substantial shareholder’s shareholdings
- 50 -
86
Premised on the above, we are of the opinion that the proforma effects of the Proposals are not detrimental to the interests of the non-interested shareholders of
BDB.
12.5
12.4
13.
RISK FACTORS
In Section 5, Part A of the Circular, the Board had identified various risk factors (which may not be
exhaustive) relating to the Proposals which may have an impact on the Group in the future.
The risk factors identified and summarised together with our views are as follows:
(i)
Malay Reserved Land
Land 4 (Hosba) and Land 5 (Ulu Melaka) of the Landbank are categorised as Malay Reserved
Land. The sale of Malay Reserved Land is subject to the approval of Kedah State Authority
pursuant to the Malay Reservation Enactments (Kedah) No. 63.
We have also noted that the supplemental agreement has a provision for PKNK to obtain the
approval from the relevant authorities in relation to the application for transfer of the Malay
Reserved Land to Non-Malay Reserved Land status as an alternative in the event that BDB
failed to obtain the approval from the Kedah State Authority pursuant to the Kedah
Reservation Enactments (Kedah) No. 63.
Notwithstanding that BDB and PKNK will ensure that every effort is made to obtain all the
necessary approvals, there can be no assurance that BDB and/or PKNK is able to obtain the
necessary approvals required for the Proposed Acquisition of Malay Reserved Land.
(ii)
Approval from the Ministry of Finance Malaysia
The Proposed Acquisition is subject to PKNK obtaining the approval of the Ministry of
Finance Malaysia pursuant to the Incorporation (State Legislatures Competency) Act 1962
and the relevant treasury instruction (Arahan Menteri Kewangan Tahun 1993).
As the procurement of this approval is a condition precedent as stipulated in the SPA, the
failure of obtaining this approval can lead to the failure of the Proposed Acquisition.
Notwithstanding that PKNK will use its best endeavours to ensure the fulfillment of the
condition precedent, there can be no assurance that PKNK is able to obtain the necessary
approval required for the Proposed Acquisition.
(iii)
The valuation of the Landbank by the Valuer is based on certain assumptions which may be
subjective, uncertain and may differ materially from the actual measures of the market. There
can be no assurance that the assumptions made by the Valuer are accurate measures of the
market or that the Landbank were measured accurately. Further, the valuation of the Landbank
by the Valuer was based on the market conditions as at the date of valuation. There can be no
assurance that the market conditions as at the date of the valuation will be reflective of future
market conditions.
The appraised value of the Landbank is not an indication of, and does not guarantee, a sale
price at the value at present or in the future. There can be no assurance that the price of which
BDB may realise from the sale of the Landbank or any portion thereof will be equal or higher
than the appraised value or the Purchase Consideration of the Landbank.
(iv)
Investment risk
The price of BDB Shares as traded on Bursa Securities may fluctuate, like all other listed
securities. A variety of factors could cause the price of BDB Shares to fluctuate including
trades of substantial amounts of BDB Shares in the open market, announcements of
developments relating to the business of BDB, fluctuations in the Group’s operating results,
BDB’s future profitability, the outlook of the industry in which BDB operates in and its
financial performance.
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51 -
In view that the issue price of the Rights Shares will be determined after taking into
consideration, inter-alia, the then prevailing market conditions and market price of BDB
Shares as well as the TEAP of BDB Shares, there can be no assurance that BDB Shares will
trade at or above the issue price of the Rights Shares and the TEAP of BDB Shares upon or
subsequent to the listing of quotation for the Consideration Shares, Rights Shares and Bonus
Shares on the Main Market of Bursa Securities.
There can be no assurance that the market price of Consideration Shares, Rights Shares and
Bonus Shares will be at a level that meets the specific investment objectives or targets of any
subscriber of the Proposed Rights Issue.
(v)
Delay in or abortion of the Proposed Rights Issue
As stated in Section 5, Part A of the Circular, the Proposed Rights Issue is exposed to the risk
that it may be aborted or delayed.
In the event of failure in the implementation of the Proposed Rights Issue, the
subscription/application monies received pursuant to the Proposed Rights Issue will be
refunded in full to the subscribing Entitled Shareholders and/or their renouncee(s) (if
applicable), without interest, or with interest if the application monies are not refunded within
fourteen (14) days after BDB becomes liable to repay, in accordance with the provisions of
Section 243(2) of the Capital Markets and Services Act, 2007.
As the Proposed Acquisition is partially funded by the proceeds from the Proposed Rights
Issue, the delay in or the failure in the implementation of the Proposed Rights Issue will
adversely affect the completion of the Proposed Acquisition. BDB will not be able to achieve
the objectives and benefits of the Proposed Acquisition.
Whilst BDB will exercise its best endeavor to ensure the successful implementation of the
Proposed Rights Issue, there can be no assurance that there will be no delay in or abortion of
the Proposed Rights Issue.
(vi)
Completion risk
The completion of the Proposed Acquisition of Non-Malay Reserved Land and the Proposed
Acquisition of Malay Reserved Land is not inter-conditional upon each other and the
respective proposed acquisition is subject to, amongst others, the fulfillment and/or waiver of
the conditions precedent, as the case may be as elaborated in Section 11 of this IAL.
In the event that the conditions precedent are not met or waived, the SPA will lapse, the
Proposed Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay
Reserved Land will not be completed. Hence, the potential benefits to be derived from the
Proposed Acquisition of Non-Malay Reserved Land and the Proposed Acquisition of Malay
Reserved Land will not be realised.
Notwithstanding that BDB will take reasonable steps to ensure that the conditions precedent
as stipulated in the SPA are met within the stipulated timeframe and that every effort is made
to obtain all the necessary approvals, there can be no assurance that the Proposed Acquisition
of Non-Malay Reserved Land and the Proposed Acquisition of Malay Reserved Land would
be completed on time and as contemplated by BDB.
In evaluating the Proposed Acquisition, the non-interested shareholders of BDB are advised to
carefully consider the above risk factors and to note that these risk factors are not meant to be
exhaustive before voting on the resolutions pertaining to the Proposed Acquisition of Non-Malay
Reserved Land and the Proposed Acquisition of Malay Reserved Land to be tabled at the
forthcoming EGM of BDB.
However, we are of the view that the risks above are acceptable and mitigated to the extent
possible by the management of BDB.
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52 -
14.
OVERVIEW AND PROSPECTS OF THE MALAYSIAN ECONOMY, THE MALAYSIAN
PROPERTY AND CONSTRUCTION SECTOR, THE KEDAH PROPERTY AND
CONSTRUCTION SECTOR, THE LANDBANK AND THE GROUP FOR THE NEXT
TWELVE (12) MONTHS
14.1
Outlook and prospects of the Malaysian economy
The Malaysian economy registered a strong growth of 6.4% in the second quarter of 2014
(1Q 2014: 6.2%), underpinned by higher exports and continued strength in private domestic
demand. On the supply side, growth in the major economic sectors remained firm, supported
by trade and domestic activity. On a quarter-on-quarter seasonally adjusted basis, the economy
grew by 1.8% (1Q 2014: 0.8%).
Exports and private sector activity remained the key drivers of growth during the quarter.
Private investment continued to register double-digit growth, expanding by 12.1% (1Q 2014:
14.1%), reflecting investments in the services and manufacturing sectors. Private consumption
increased by 6.5% (1Q 2014: 7.1%), supported by stable employment conditions and
continued wage growth. In contrast, public sector expenditure declined by 2.1% (1Q 2014:
2.7%).
Public consumption declined marginally by 1.3% (1Q 2014: 11.2%), reflecting lower
Government spending on emoluments, and supplies and services. Public investment declined
by 3.3% (1Q 2014: -6.4%), due to lower spending on fixed assets by both the Federal
Government and public enterprises.
On the supply side, growth in the major economic sectors remained strong. The services sector
recorded sustained growth, supported mainly by the trade-related sub-sectors. The
manufacturing sector expanded at a faster pace, underpinned by the electronics and electrical
cluster, particularly semiconductors. The construction sector expanded at a more moderate
pace, driven mainly by the residential and non-residential sub-sectors. Meanwhile, the
agriculture sector registered strong growth, reflecting higher production of palm oil. The
mining sector turned around to record positive growth, due mainly to higher production of
both natural gas and crude oil.
The Malaysian economy is expected to remain on a steady growth path in 2014, expanding by
4.5%-5.5%. Domestic demand will remain the key driver of growth, albeit at a more moderate
pace. Private investment is forecast to register robust growth for the fifth consecutive year,
driven by the ongoing implementation of multi-year projects and the improvement in external
demand. Public investment is projected to register a higher growth, supported by both
Government and public enterprise capital spending. Private consumption will be underpinned
by healthy labour market conditions and sustained income growth. Public consumption is
anticipated to record a lower growth due to the ongoing fiscal consolidation.
On the supply side, all economic sectors are expected to register positive growth in 2014. The
services and manufacturing sectors will be the key drivers to the overall growth, benefiting
from the improvement in the global economic environment. The construction sector is
expected to continue recording high growth, albeit at a more moderate pace, as the completion
of several large civil engineering projects will more than offset the progress in existing
projects in the transport, utility, and oil and gas sectors. The growth in the agriculture sector is
expected to improve on account of higher production of palm oil as both yields and the
number of matured palm trees increase. In the mining sector, better performance is projected
due to higher crude oil and natural gas production from deepwater and marginal fields; and
enhanced oil recovery.
(Source: Annual Report 2013, Bank Negara Malaysia)
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53 -
Premised on the foregoing, it appears that the prospects of the Malaysian economy is
expected to be satisfactory for the next twelve (12) months, underpinned by strong
domestic demand and economic activities generated by the on-going initiatives
undertaken by the Government to support the Malaysian economy. Major economic
sectors remained strong supported by stable employment conditions and higher export
and private sector activities.
14.2
Overview and prospects of the Malaysian property and construction sector
Property sector
Backed by improved global economic activity and supported by domestic demand, Malaysia’s
economy continued to record positive growth, though at a slower pace. Efforts by the
government through various initiatives and interventions consolidated the Malaysian property
market. In consonant with moderate economy growth, the Malaysian property market moved
on similar low tone for the year 2013.
The Malaysian property market recorded a moderate growth which saw a contraction of
10.9% in volume but with a marginal increase of 6.7% in value. The market moved by -8.1%
(Q1); 4.4% (Q2); 0.3% (Q3) and 4.1% (Q4) against gross domestic product (GDP) growth of
4.1% (Q1), 4.4% (Q2), 5.0% (Q3) and 5.1% (Q4). The year registered 381,130 transactions
worth RM152.37 billion against 2012 which recorded 427,520 transactions and RM142.84
billion in volume and worth respectively.
(Source: Property Market Report 2013, Valuation and Property Services Department, Ministry of
Finance Malaysia)
The residential subsector expanded strongly by 22.1% during the first (1st) half of 2014
(January – June 2013: 15.7%) supported by higher growth in incoming supply at 9.5%
(January – June 2013: 15.3%). Despite the decline in housing starts at 5.3% to 70,346 units
(January – June 2013: 21.1%; 74,270 units), residential activity is expected to remain stable.
Meanwhile, the value of total property transactions increased to RM82 billion (January – June
2013: RM68.8 billion), with volume expanding 3.3% to 193,405 transactions during the first
six (6) months of 2014. Residential property transactions formed the bulk with a share of
63.5%. However, following several cooling measures imposed to curb speculative activity in
the property sector, the number of residential property transactions decreased 2.7% in the first
(1st) half of 2014 (July – December 2013: 5.1%). Residential overhang declined 11.5% to
12,105 units during the first (1st) half of 2014 (January – June 2013: -15.1%; 13,673 units),
with a total value of RM4.5 billion (January – June 2013: RM5 billion).
House prices in Malaysia continue to rise, albeit at a slower pace, amid several measures to
curb rising house prices since 2010. The increase in house prices was driven by strong demand
following favourable labour market conditions and growing household income. The
Malaysian House Price Index, which measures the change in prices paid for an average house,
increased moderately by 6.6% in the second (2nd) quarter of 2014, compared with 11.3% in the
corresponding period in 2013.
(Source: Economic Report 2014/2015, Ministry of Finance Malaysia)
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54 -
Construction sector
On the supply side, growth in the major economic sectors remained strong. The construction
sector expanded at a more moderate pace, driven mainly by the residential and non-residential
sub-sectors.
After the exceptionally strong growth in the first (1st) quarter, the construction sector recorded
a more moderate pace of expansion during in the second (2nd) quarter of 2014 of 9.9% (1Q
2014: 18.9%). However, the value of construction work done for the construction sector
increased by 15.7% in the first (1st) half of 2014 as compared to the first (1st) half of 2013 (1H
2013: 13.8%). Growth was driven mainly by the residential sub-sector, underpinned by the
construction activity of high-end properties in Johor and Klang Valley. The non-residential
sub-sector remained supported by construction activity related to offices and retail buildings,
factories and institutions of higher learning. Meanwhile, growth in the civil engineering subsector was supported by rail and utility projects such as the Mass Rapid Transit, Light Rail
Transit extension and Tanjung Bin power plant.
Growth in the construction sector continued to register a double-digit growth of 14.3% during
the first (1st) half of 2014 (January – June 2013: 12%). The higher construction activity was
led by the residential and non-residential subsectors, while growth in the civil engineering
subsector moderated following the completion of some major projects, including KLIA2,
Second Penang Bridge and Manjung coal-power plant. Moving forward, the sector is expected
to grow 12.7% in 2014 (2013: 10.9%) and contribute 4% to GDP, supported by ongoing
residential, oil and gas and transportation projects,
(Source: Economic Report 2014/2015, Ministry of Finance Malaysia)
Premised on the above, we are of the view that the prospects of the Malaysian property
and construction sector is expected to remain stable. Although the tightening of the
RPGT rate and the increase in the base lending rate may affect the property sector
temporarily, the overall performance of the property sector is expected to be sustained
amidst demands by genuine buyers for affordable properties as well as properties
strategically located in prime locations. This is coupled with the fact of growing scarcity
of prime land available for future development. Growth in the construction sector will
continue to expand, supported by on-going activities in the residential and
transportation segments.
14.3
Overview and outlook of the property and construction sector in Kedah
The performance of the Kedah property market softened in 2013 as evidenced by a slight drop
in both volume and value of transactions. A total of 25,389 transactions worth RM4.40 billion
was recorded in 2013 as compared to a total of 27,775 transactions worth RM4.44 billion. As
compared to 2012, both volume and value of transactions dropped by 8.6% and 0.6%,
respectively. The residential property continued to be the catalyst of the market performance,
with 58.5% of the total market share, followed by the agricultural, development land and
commercial sub-sectors with 23.0%, 9.0% and 7.4% market share, respectively.
Market activity by sub-sectors registered positive movement with exception to the agricultural
sub-sectors. Development land, residential and commercial sub-sectors grew by 5.2%, 4.8%
and 2.2%, respectively. Meanwhile, value of commercial sub-sector reduced by 23.7%
contradicted with the number of transactions. Industrial and development land-subsectors saw
significant increases by 26.7% and 21.6%, respectively, while the residential sub-sector grew
marginally by 5.6%.
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The number of units launched in the residential primary market softened in 2013. The number
decreased to 2,611 units (2012: 3,804 units) with higher sales performance of 51.1% (2012:
28.0%). Terraced houses formed the bulk of these new units, accounting for 48.4% (1,263
units) of the total new launches. Residential overhang improved as the unsold units declined
slightly from 1,384 units in 2012 to 1,184 units in 2013. The value of the overhang units
decreased from RM128.47 million in 2012 to RM127.62 million in 2013, representing a
decrease of 0.7%. The number of unsold and under construction units increased by 0.8% to
4,293 units in 2013 (2012: 4,261 units).
The property market outlook for Kedah is expected to be encouraging through various
initiatives by the Kedah State Government. These include the strengthening of industrial
sectors and the redevelopment of existing townships such as the Bukit Kayu Hitam town. The
proposed Kulim International Airport, the Pulau Bunting seaport and the Sungai Petani-Kulim
Expressway are among critical infrastructure projects that will support Kedah’s
industrialisation process over the next few years.
The construction activities in Kedah were generally less encouraging across the sub-sectors in
2013. Residential and shop sub-sector drop in completions, commencement and new planned
supply. Similarly, industrial sub-sector recorded fewer commencements of new projects and
new planned supply, while completions noted otherwise. The retail and office sub-sectors
were silent without any completions, starts and new planned supply. The construction sector
in Kedah is largely driven by the construction of residential and non-residential buildings.
According to the Department of Statistics Malaysia, the value of construction work done
arising from residential and non-residential buildings in Kedah for the second (2 nd) quarter of
2014 was recorded at RM162.63 million and RM143.24 million, respectively, contributing to
71.97% of the total value of construction work done in Kedah of RM425.03 million.
The NCER initiative by the Government is expected to accelerate economic growth and
elevate income levels in the northern states of Peninsular Malaysia with the objective of
becoming a world-class economic region by the year 2025.
(Source: Property Market Report 2013, Valuation and Property Services Department, Ministry of
Finance Malaysia)
Premised on the above, we are of the view that the prospects of the property and
construction sector in Malaysia and Kedah are expected to be satisfactory underpinned
by demand for residential units which continues to be the market catalyst to the
property market performance.
14.4
Prospects of the Landbank
(i)
Land 1 (Sungai Ular)
The subject property has a total land area of approximately 374.1 acres or 151.4
hectares and is located in Sungai Ular, approximately 10.6 kilometers from the town
centre of Kulim. This subject property is strategically located near to the Kulim HiTech Parks and is accessible from the Butterworth Kulim Expressway. The fast
growing development in city centres located within close proximity to Sungai Ular
such as Kulim, Seberang Perai and Penang has resulted in a spillover effect in the
residential property market of Sungai Ular. Further, the proposed development of an
international airport in Kulim, the Pulau Bunting seaport and the Sungai PetaniKulim Expressway are among critical infrastructure projects that is likely to further
boost the economy of Kedah.
The subject site is suitable for the development of affordable residential scheme
targeting at the medium income earners. In addition, the freehold interest of this
subject property is more attractive to potential buyers as compared to leasehold
interest. The Company can team up with government bodies such as Perbadanan
PR1MA Malaysia as well as Syarikat Perumahan Negara Berhad in the development
of high-quality affordable residential properties for the medium income earners.
- 92
56 -
(ii)
Land 2 (Pokok Sena)
Residential properties remain the most popular sector in the property market in the
district of Pokok Sena. The spillover effects from the development in the city centre
of Alor Setar have significantly impacted the property market in the surrounding
areas. Homebuyers are likely to prefer to live outside the city centre as it offers a
better living environment at a more affordable price.
This subject property is strategically located about fifteen (15) kilometers from the
city centre of Alor Setar and is ideal for mixed development scheme comprising
residential, commercial and leisure components. Although this subject property is
located slightly away from the congested city centre, this subject property is suitable
for medium to medium-high end development targeted for the working population
working in Alor Setar city center, Jitra and Kuala Nerang. With the new dual
carriageway between Alor Setar and Pokok Sena, accessibility to Alor Setar has
improved and travelling time has been shortened. Further, as the subject property is
located outside of the Malay Reservation Area, the development on this subject
property is set to attract a wide range of potential buyers.
(iii)
Land 3 (Sungai Petani)
The subject property is located in the district of Kuala Muda and is approximately ten
(10) kilometers to the North-East of the town centre of Sungai Petani. The site is
located within an area known as Bandar Amanjaya and is accessible from the Sungai
Lalang – Bukit Selambau road and is near to the exit of the North-South Highway
(PLUS Highway).
Although the subject property is located slightly away from Sungai Petani, the
growing population in Sungai Petani and the fact the Sungai Petani is expected to be
upgraded into a city in 2015 is likely to create spillover effects on the subject
property. In addition, the location of this subject property is located adjacent to
Penang and is accessible via the PLUS highway, this creates an additional pool of
potential investors for the development on the subject property.
The subject property is ideal for a mixed-development comprising of residential and
commercial components and is expected to stand a good chance of becoming a
prominent housing scheme considering the surroundings and amenities provided.
However we note that Kuala Muda is currently experiencing an oversupply of
residential properties. Nevertheless, as BDB has a long history of operations in
Kedah as well as the development of numerous townships, residential and
commercial properties in Kedah, the Company believes that the subject property can
still be successfully developed with greater emphasis being placed in the building
designs, development concepts, modern security and improved accessibility. The
strong reputation of BDB in the Kedah property market is likely to play a pivotal role
in the marketing of future developments.
(iv)
Land 4 (Hosba)
This subject property is located in the district of Kubang Pasu, strategically located
between the towns of Jitra and Changlun and is easily accessible as it is located along
the open highway section of the North-South Highway. With a total population of
214,479 (based on the census carried out in 2010) in the district of Kubang Pasu, any
development on this subject property has the potential to capture the growing demand
for housing. The potential market catchment for the development might come from
educational institutions such as Universiti Utara Malaysia, Kolej Matrikulasi Kubang
Pasu and Institut Perguruan Darulaman, and industrial areas such as Bandar
Darulaman Industrial Area and Bukit Kayu Hitam Industrial Area.
- 93
57 -
Further, being located about fifteen (15) kilometers south from the border of
Thailand, the subject property can be developed into a logistic hub of the northern
region under the Border Economic Transformation Programme under the Northern
Corridor Economic Region (NCER) Logistic focus.
Land 4 (Hosba) is suitable for the development of an integrated mixed-development
scheme positioned to target medium to high income groups and businesses around
the district of Kubang Pasu and Kota Setar.
(v)
Land 5 (Ulu Melaka)
The subject property is located near Kampong Buku/Kawasan Rekreasi Lubuk
Semilang and is approximately nine (9) kilometers to the North-West of Kuah Town
and nine (9) kilometers to the east of Padang Matsirat town. Land 5 (Ulu Melaka) can
be accessible through the Langkawi Highway and the Jalan Padang Matsirat.
Surrounding developments within a ten (10) kilometers radius to the subject property
includes amongst others, the Lubuk Sembilang waterfall, Mardi Langkawi Agro
Technologi Park, Panorama Country Resort, Gunung Raya Golf Club, Mount Raya
and Sekolah Menegah Kebangsaan Kelibang.
The entire Langkawi Island is being promoted for tourism development and is one of
the UNESCO-recognised Geoparks in the world. Tourists’ arrivals in Langkawi have
been on an increasing trend. According to the Langkawi Tourism Blueprint issued by
the Economic Planning Unit of the Prime Minister’s Department, Langkawi’s
tourism and tourism-related gross national income is expected to double from RM0.8
billion in 2010 to RM1.9 billion in 2015 on the back of a doubling of tourism receipts
over the same period from RM1.9 billion to RM3.8 billion.
Due to its location, the subject property has huge potential for tourism development,
which may include amongst others, development of villas, hotels, chalets as well as
the development of the medical tourism in Langkawi. Medical tourism in Malaysia
offers patients the unique opportunity to recuperate in a relaxing and serene tropical
paradise. Developments relating to the medical tourism may include amongst others,
the establishment of health resorts, medical spa and wellness programs.
Premised on the foregoing, the prospects of the Landbank appear to be favourable. The
Proposed Acquisition is in line with BDB’s strategy to increase its existing landbank by
approximately 467.4 hectares or 1,154.8 acres. In addition, the Proposed Acquisition
provides the opportunity for BDB to capitalise on the potential and favourable
characteristics of the respective lands for future developments. Nevertheless, it should be
noted that there are currently no proposed development for the Landbank. Hence, any
potential benefits arising from the Proposed Acquisition are expected to only be realised
in the medium to long-term and are subject to certain risk factors as disclosed in Section
13 of this IAL.
14.5
Prospects of BDB
As previously mentioned in Section 9.1.1 of this IAL, the Group is principally involved in five
(5) main business segments which include property development, quarry and road paving,
construction, operation of golf resort and hotel and trading.
Based on the audited consolidated financial statements of BDB for the FYE 31 December
2013, the Group recorded a revenue of RM281.00 million, representing a decrease of 9.91%
as compared to the revenue generated for the FYE 31 December 2012 of RM311.91 million.
The decrease in the revenue of BDB was due mainly to the lower revenue contributed by the
construction division as progress of the on-going construction projects was lower in 2013 as
compared to the previous year.
- 94
58 -
BDB intends to focus on delivering quality and lifestyle homes at strategic locations through a
strong pipeline of launches in 2014. Moving forward, the Company will continue to embark
on strengthening its position as a developer of choice among house buyers through innovative
and contemporary lifestyle-themed development at prime locations. BDB also intends to work
closely with PKNK, PR1MA, Syarikat Perumahan Negara Berhad and the Ministry of Urban
Wellbeing, Housing and Local Government of Malaysia to partner with the Kedah State
Government in developing affordable housing schemes for the people of Kedah.
In arriving at our view in relation to the future prospects of the Group, we have taken note of
the outlook and prospects of the Malaysian economy, the property and construction sector in
Malaysia and Kedah as well as the prospects of the Landbank as set out in Sections 14.1 to
14.4 of this IAL. However, as set out in Section 14.3 of this IAL, due to the softening of the
property market in Kedah as well as the residential overhang situation in Kedah, we are of the
view that the Group will be cautious and prudent in their business dealings and approach.
Further, the ongoing implementation of various initiatives by the government of Malaysia
such as the proposed development of an international airport in Kulim, the Kedah Urban
Transformation Centre launched in August 2013 and the NCER initiative are expected to be
favourable to the business operations of the Group.
Premised on the foregoing, we are of the view that the prospects of the Group are
expected to be favourable in the medium to long-term, in view of the existing and
upcoming property development and construction projects, coupled with the future
development of the Landbank pursuant to the Proposed Acquisition, which is expected
to contribute positively to the long-term earnings of the Group.
15.
FURTHER INFORMATION
We advise you to refer to Part A of the Circular and its accompanying appendices for further
information.
16.
CONCLUSION AND RECOMMENDATION
In arriving at our opinion and recommendation, we have taken into consideration various factors, which
include amongst others:
PIVB’s comments
Rationale for the Proposed
Acquisition
The rationale for the Proposed Acquisition is reasonable and not
detrimental to the interest of the non-interested shareholders of the BDB due
to the following:

Serves to cater for the future growth of the property development
segment of the Group by replenishing the landbank of the Group for
future development, given that its remaining landbank is
approximately 800 acres.

In view that the Landbank is located throughout Kedah, the
development of the Landbank after the Proposed Acquisition would
further enhance BDB’s visibility and market presence as one of the
main property developer in the state.

With an enlarged landbank, the Group will have the necessary scale of
land area and flexibility to subsequently develop and provide a wider
range of properties in Kedah that can cater to various customers from
middle-income earners to high-income earners.

In line with the Company’s vision to further strengthen the partnership
between BDB and the Government.
95- 59
PIVB’s comments
Rationale for the Proposed
Rights Issue
The rationale for the Proposed Rights Issue is reasonable and not
detrimental to the interest of the non-interested shareholders of the BDB as it
enables BDB to meet its funding objectives without diluting the equity
interest of its existing shareholders, assuming all the Entitled Shareholders
fully subscribe for their respective entitlements.
Further, the Proposed Rights Issue would be a more efficient option for BDB
to raise the necessary funds as compared to obtaining bank borrowings due to
the potential cash outflow in respect of interest servicing.
It is pertinent to note that the payment for the subscription price of the Rights
Shares by the Vendor by way of set-off from the Consideration Cash would
not result in any adjustments to its subscription price of the Rights Shares or
the Consideration Cash as the subscription price of the Rights Shares will be
the same for all Entitled Shareholders, including the Vendor.
Financial evaluation of the

The Valuer had adopted the comparison method of valuation as the
only method of valuation for the Landbank as there are no proposed or
approved development plans on the Landbank.
We are of the view that the market value of Landbank derived
therefrom is fair and reasonable.

The Purchase Consideration or the respective purchase consideration
for the Proposed Acquisition of Non-Malay Reserved Land and the
Proposed Acquisition of Malay Reserved Land are fair and
reasonable due to the following:

(i)
the premium of 1.88% and 1.87% to be paid for the
Proposed Acquisition of Non-Malay Reserved Land and the
Proposed Acquisition of Malay Reserved Land, respectively
is within the range of premiums transacted for the recent
precedent transactions for the past one (1) year up to the
LTD of 1.11% to 14.85%; and
(ii)
the premium paid in respect of the purchase consideration
for both the Proposed Acquisition of Non-Malay Reserved
Land and the Proposed Acquisition of Malay Reserved Land
are offset by the premium received from the issuance of
Consideration Shares resulting in a net gain of RM0.05
million and RM2.23 million, respectively.
We are of the opinion that the mode of settlement of the Purchase
Consideration via the combination of cash and issuance of
Consideration Shares pursuant to the terms of the SPA is reasonable as
the dilutive impact based on the number of Consideration Shares to be
issued is immaterial, whilst the cash proceeds to be raised from the
Proposed Rights Issue is sufficient to finance the Consideration Cash,
without the need to further obtain bank borrowings.

The Issue Price is fair and reasonable as the Issue Price is higher than
the closing market price of BDB Shares as at the LPD and LTD as
well as higher than the five (5)-day, one (1)-month, three (3)-month,
six (6)-month and one (1)-year VWAPs of BDB Shares up to the LTD
and also resulted in a net gain for the Company due to the lower
number of new BDB Shares to be issued pursuant to the Proposed
Acquisition.
96- 60
PIVB’s comments
Further, the total value of RM115,300,000 (i.e. the Consideration
Shares) is not affected by the relevant adjustments made in relation to
the Issue Price and number of Consideration Shares pursuant to the
SPA as the illustrative adjusted Issue Price of RM1.53 still represents
a premium of approximately 5.5% over the illustrative TEAP of
RM1.45, which is similar to the premium received from the Issue
Price of RM2.50 over the five (5)-day VWAP of BDB Shares up to
the LTD of RM2.37.
Financial evaluation of the
Proposed
Acquisition
(Cont’d)
In addition, the PER and PBR based on the Issue Price are within the
range of the PER and PBR of the selected comparable companies to
BDB while the EV/EBITDA multiple based on the Issue Price is
higher than the range of the EV/EBITDA multiple of the selected
comparable companies to BDB.

We have noted that the issue price of the Rights Shares will be fixed at
a discount of at least 40% to the TEAP immediately preceding the
price-fixing date. This discount is reasonable as it is within the range
of 4.99% to 50.47% of the market discount rates for rights issue
exercises in Malaysia completed since 2013 up to the LTD.
Evaluation of the
terms of the SPA
salient
Effects of the Proposals
The salient terms of the SPA are reasonable and not detrimental to the
interest of the non-interested shareholders of BDB.
The Proposed Rights Issue and the Proposed Acquisition will:
(i)
result in an increase in the issued and paid-up share capital from
72,815,856 to 257,399,118 BDB Shares;
(ii)
result in a dilution to the Group’s proforma NA per BDB Share from
RM3.75 to RM1.83;
(iii)
not have a material impact on the consolidated earnings and EPS of
BDB for the financial year ending 31 December 2014. However, there
will be a proportionate reduction in the EPS of BDB as a result of an
increase in the number of BDB Shares upon allotment and issuance of
the Rights Shares, Bonus Shares and Consideration Shares; and
(iv)
result in an increase in substantial shareholders’ shareholding in BDB
from 54.5% to 67.8%.
Risk factors
We are of the view that the risk factors highlighted in Section 13 of this IAL
are acceptable and the Board and management of BDB have taken and will
continue to take further steps to mitigate the risks to the extent possible.
Overview and prospects of
the Malaysian economy, the
Malaysian property and
construction
sector,
the
Kedah
property
and
construction
sector,
the
Landbank and the Group for
the next twelve (12) months

The outlook and prospects of the Malaysia economy, the property and
construction sector in Malaysia and in Kedah are expected to be
satisfactory for the next twelve (12) months.

The prospects of the Landbank appear to be favourable. The Proposed
Acquisition will provide the opportunity for BDB to capitalise on the
potential and favourable characteristics of the lands for future
developments.

The prospects of the Group in the medium to long-term are expected to
be favourable in view of the existing and upcoming projects of the
Group. The future development of the Landbank pursuant to the
Proposed Acquisition is also expected to contribute positively to the
long-term earnings of the Group given the prospects of the Landbank.
- 61 -
97
Premised on our overall assessment of the Proposed Acquisition, we are of the opinion that the
Proposed Acquisition is fair and reasonable and not detrimental to the interests of the non-interested
shareholders of BDB.
Accordingly, we recommend that the non-interested shareholders of BDB vote in favour of the
resolutions pertaining to the Proposed Acquisition to be tabled at the forthcoming EGM of BDB.
Yours faithfully,
For and on behalf of
PUBLIC INVESTMENT BANK BERHAD
Teoh Cheng Soon
Chief Executive Officer
Lee Yo-Hunn
Head
Corporate Finance & Advisory
- 98
62 -
Mukim Sungai Ular
Kulim
:
:
Freehold
Nil
Nil
:
:
:
:
:
:
:
Tenure
Reservation Area
Registered Owner
Encumbrances
Caveats
Existing usage
Partly vacant and
partly cultivated with
oil palms
Nil
The subject property is still
under rubber and banana
trees, wild vegetation and
bushes.
Please refer to Note (2)
II -- 11
The land is vacant
from any
cultivation and is
overgrown with
shrubs and bushes.
Please refer to
Note (5)
Please refer to
Note (3)
The land is
overgrown with
old oil palm trees
and the holding is
fairly well
maintained
Kemajuan Masa
Hadapan
Tapak Kediaman
The land is
cultivated with
tapioca trees and
the rest is
overgrown with
shrubs and bushes
Please refer to
Note (3)
Tapak Kediaman
Restriction-ininterest
Getah
:
Tanah yang terkandung
dalam hakmilik ini
hendaklah digunakan sebagai
tapak pertanian sahaja
Express condition
(1)
Building
Agriculture land
:
Agriculture land
151.41
Kuala Muda
93.07
HSD 126050
PT 2423
―Sungai Petani‖
Bandar Amanjaya
HSD 126045
PT 2418
Kedah Darul Aman
HSD 126043
PT 2416
:
51.45
Pokok Sena
Bandar Pokok Sena
HSD 2979
PT 2516
―Pokok Sena‖
Surveyed land area
(hectares)
State
District
:
HSD 69188 -69197
:
Title Nos.
Bandar / Pekan /
Mukim
PT 2333-2342
:
Lot Nos.
―Sungai Ular‖
The land is
vacant and is
overgrown with
shrubs and
bushes.
Please refer to
Note (5)
Kemajuan Masa
Hadapan
HSD 34392
PT 65003
The summary of the Non-Malay Reserved Land as extracted from the Valuation Certificate (save for the net book value) is set out in the table below:
DETAILS OF THE LANDBANK
The land is
overgrown with old
oil palm trees and the
holding is fairly well
maintained
Please refer to Note
(3)
Tapak Perniagaan
Kuala Muda
Bandar Sungai Petani
HSD 90453
PT 48856
APPENDIX I
:
:
Market value
Net book value (6)
Ditegah tuan tanah membuat sebarang perkiraan (dealings) di atas tanah yang hendak dimajukan sebagai tapak perumahan itu melainkan tuan tanah bina dan peliharakan simpanan jalan itu dan taruh
batu dan tar menurut taraf Jabatan Kerja Raya serta perbuat parit-parit dengan sepuas hati Penguasa Tempatan serta mendapat sokongan daripada Jabatan Kerja Raya atau ada jaminan daripada
Penguasa Tempatan dan Jabatan Kerja Raya bahawa jalan-jalan dan parit-parit itu dapat disempurnakan.
Ditegah tuan tanah membuat sebarang perkiraan (dealings) di atas tanah yang hendak dimajukan sebagai tapak perumahan itu melainkan tuan tanah bina dan peliharakan simpanan jalan itu dan taruh
batu dan tar menurut taraf Jabatan Kerja Raya serta perbuat parit-parit dengan sepuas hati Penguasa Tempatan serta mendapat sokongan daripada Jabatan Kerja Raya atau ada jaminan daripada
Penguasa Tempatan dan Jabatan Kerja Raya bahawa jalan-jalan dan parit-parit itu dapat disempurnakan.
(4)
(5)
(6)
Ditegah tuan tanah membuat sebarang perkiraan (dealings) kecuali gadaian di atas tanah yang hendak dimajukan sebagai Bandar Aman Jaya melainkan tuan tanah menyediakan simpanan jalan dan parit
dan serta bina dan pelihara simpanan jalan iti dan taruh batu dan tar menurut taraf Jabatan Kerja Raya serta perbuat parit-parit dengan sepuas hati Penguasa Tempatan serta mendapat sokongan
daripada Jabatan Kerja Raya atau ada jaminan daripada Penguasa Tempatan dan Jabatan Kerja Raya bahawa jalan-jalan dan parit-parit itu dapat disempurnakan.
(3)
3,827,943
3,827,943
6,947,078
6,947,078
31 December 2012
31 December 2011
II -- 22
RM
3,827,943
RM
6,947,078
―Pokok Sena‖
31 December 2013
―Sungai Ular‖
16,029,000
16,029,000
RM
16,029,000
―Sungai Petani‖
Based on audited financial statements of PKNK as at 31 December 2013, 31 December 2012 and 31 December 2011, the net book values of the Landbank are as follows:
SEKATAN KEPENTINGAN TAMBAHAN
Ditegah tuan tanah membuat sebarang perkiraan (dealings) dan tidak boleh didirikan apa-apa bangunan diatas tanah ini, sehingga tanah ini dicantum dengan Lot yang bersempadan menurut tataletak
yang diluluskan Oleh Majlis Perbandaran Sungai Petani dan dipersetujui oleh Perancang Bandar dan Desa Negeri Kedah.
Ditegah tuan tanah membuat sebarang perkiraan (dealings) di atas tanah yang hendak dimajukan sebagai tapak perumahan itu melainkan tuan tanah bina dan pelihara simpanan jalan itu dan taruh batu
dan tar menurut taraf Jabatan Kerja Raya Serta perbuat parit-parit dengan sepuas hati Penguasa Tempatan serta mendapat sokongan daripada Jabatan Kerja Raya atau jaminan daripada Penguasa
Tempatan dan Jabatan Kerja Raya bahawa jalan-jalan dan parit-parit itu dapat disempurnakan.
RM45,100,000
(2)
RM16,050,000
Comparison method
―Sungai Petani‖
(i) Tanah yang terkandung dalam hakmilik ini hendaklah ditanam dengan pokok-pokok getah. Walaubagaimanapun tanaman-tanaman lain boleh juga di tanam di atas tanah ini dengan syarat pemilik tanah
hendaklah memberitahu Pentadbir Tanah terlebih dahulu akan pertukaran jenis tanaman itu serta keluasan tanamannya dan (ii) Tidak lebih dari 1/5 bahagian daripada kesemua tanah atau 2 hektar atau
mana-mana yang kurang, boleh digunakan untuk bangunan yang dibenarkan oleh Seksyen 115(4) Kanun Tanah Negara (Pindaan Tahun 1992).
RM37,500,000
―Pokok Sena‖
(1)
Notes:
:
Valuation method
―Sungai Ular‖
DETAILS OF THE LANDBANK (Cont’d)
APPENDIX I
GRN 11523
Mukim Hosba
Kubang Pasu
Kedah Darul Aman
:
:
:
:
Title Nos.
Malay Reservation Area
Nil
Nil
Getah
Nil
Freehold
Comparison method
RM55,000,000
:
:
:
:
:
:
:
:
:
:
:
Express condition
Restriction-ininterest
Tenure
Reservation Area
Registered Owner
Encumbrances
Caveats
Existing usage
Valuation method
Market value
Net book value (3)
Ditegah membuat sebarang perkiraan kecuali pajakan atau gadaian
melainkan dengan kebenaran Majlis Mesyarat Kerajaan
II -- 33
RM44,630,000
Comparison method
The site is still a secondary jungle and is overgrown with wild trees and bushes.
99 year leasehold interest expiring on 16th October, 2111. The lease has an unexpired term of about 97 years.
Lain-lain jenis tanaman
Building
Agriculture land
12.26
Kedah Darul Aman
Langkawi
:
Agriculture land
HSD 1151
PT 2044
Mukim Ulu Melaka
79.85 ^
79.30
Kedah Darul Aman
HSD 1149 & 1150
PT 2042 & 2043
―Ulu Melaka‖
:
Surveyed land area
(hectares)
Category of land
use
State
District
Bandar / Pekan /
Mukim
1659
:
Lot Nos.
―Hosba‖
The summary of the Malay Reserved Land as extracted from the Valuation Certificate (save for the net book value) is set out in the table below:
Malay Reserved Land
APPENDIX I
PT 2044: Tanah yang terkandung dalam hakmilik ini hendaklah digunakan bagi maksud yang dibenarkan semata-mata iaitu Tapak Bangunan Perniagaan sahaja.
Based on audited financial statements of PKNK as at 31 December 2013, 31 December 2012 and 31 December 2011, the net book values of the Malay Reserved Land are as follows:
(2)
(3)
10,291,056
10,291,056
5,950,000
5,950,000
31 December 2012
31 December 2011
II -- 44
RM
10,291,056
RM
5,950,000
31 December 2013
―Ulu Melaka‖
The subject property is planted with old rubber trees. The rubber trees are no longer tapped and the land is not maintained and is overgrown with shrubs, bushes and wild trees.
(1)
―Hosba‖
After deducting the land affected by three land acquisitions on the subject property on 2 June 1984, 16 November 1985 and 9 October 1995.
^
Notes:
APPENDIX I
APPENDIX II
VALUATION CERTIFICATE
II - 1
APPENDIX II
VALUATION CERTIFICATE (Cont’d)
II - 2
APPENDIX II
II - 3
APPENDIX II
II - 4
APPENDIX II
II - 5
APPENDIX II
II - 6
APPENDIX II
II - 7
APPENDIX II
II - 8
APPENDIX II
II - 9
APPENDIX II
II - 10
APPENDIX II
II - 11
APPENDIX II
II - 12
APPENDIX II
II - 13
APPENDIX II
II - 14
APPENDIX II
II - 15
APPENDIX II
II - 16
APPENDIX II
II - 17
APPENDIX II
II - 18
APPENDIX III
LETTER FROM THE REPORTING ACCOUNTANTS ON THE ADEQUACY OF RESERVES
III - 1
APPENDIX III
LETTER FROM THE REPORTING ACCOUNTANTS ON THE ADEQUACY OF RESERVES (Cont’d)
III - 2
APPENDIX III
III - 3
APPENDIX III
III - 4
APPENDIX III
III - 5
APPENDIX III
III - 6
APPENDIX IV
PROFORMA CONSILADETED STATEMENTS OF FINANCIAL POSITION OF OUR COMPANY AS
AT 31 DECEMBER 2013 TOGETHER WITH REPORTING ACCOUNTANTS’ LETTER THEREON
IV - 1
APPENDIX IV
(Cont’d)
IV - 2
APPENDIX IV
(Cont’d)
IV - 3
APPENDIX IV
(Cont’d)
IV - 4
APPENDIX IV
(Cont’d)
IV - 5
APPENDIX IV
(Cont’d)
IV - 6
APPENDIX IV
(Cont’d)
IV - 7
APPENDIX IV
(Cont’d)
IV - 8
APPENDIX IV
(Cont’d)
IV - 9
APPENDIX IV
(Cont’d)
IV - 10
APPENDIX IV
(Cont’d)
IV - 11
APPENDIX IV
(Cont’d)
IV - 12
APPENDIX IV
(Cont’d)
IV - 13
APPENDIX V
FURTHER INFORMATION
1.
RESPONSIBILITY STATEMENT
The Circular has been seen and approved by our Board and that they collectively and individually
accept full responsibility for the accuracy of the information given and confirm that after making all
reasonable enquiries, and to the best of their knowledge and belief, there are no other facts, the
omission of which would make any statement in this Circular misleading.
Information relating to PKNK and the details of the Landbank in this Circular, have been obtained
from information/documents provided by PKNK and publicly available resources, where available.
PKNK accepts full responsibility for the accuracy of the information given, confirm that after having
made all reasonable enquiries, to the best of their knowledge and belief, there are no other facts the
omission of which would make any statement in this Circular false or misleading. The sole
responsibility of our Board is therefore limited to ensure that the relevant information so provided had
been accurately reproduced in this Circular.
2.
CONSENTS AND CONFLICT OF INTERESTS
2.1
RHB Investment Bank
RHB Investment Bank, being the Principal Adviser for the Proposals, has given and has not
subsequently withdrawn its written consent to the inclusion in this Circular of its name and all
references thereto in the form and context in which it appears in this Circular.
RHB Investment Bank and its related companies (―RHB Group‖) form a diversified financial
group and are engaged in a wide range of investment and commercial banking, brokerage,
securities trading, asset and funds management and credit transaction service businesses. The
RHB Group has engaged and may in the future, engage in transactions with and perform
services for BDB in addition to the roles set out in this Circular. In addition, in the ordinary
course of business, any member of the RHB Group may at any time offer or provide its
services to or engage in any transactions (on its own account or otherwise) with our Company,
hold long or short positions, and may trade or otherwise effect transactions for its own account
or the account of its other customers in debt or equity securities or senior loans of our
Company. This is a result of the businesses of the RHB Group generally acting independently
of each other and accordingly there may be situations where parts of the RHB Group and/or its
customers now have or in the future, may have interest or take actions that may conflict with
the interests of our Company.
As at the LPD, RHB Bank Berhad (―RHB Bank‖) has offered various facilities with a
combined limit of RM18 million to our Group which are in RHB Group‘s ordinary course of
business.
Notwithstanding the above, RHB Investment Bank is of the view that there is no conflict of
interests which exists or is likely to exist in relation to RHB Investment Bank‘s role as the
Principal Adviser for the Proposals as RHB Bank‘s existing exposure to our Group is not
material compared with RHB Capital Berhad‘s audited consolidated gross loans, advances and
financing of RM121,753 million as at 31 December 2013.
V-1
V-1
APPENDIX V
FURTHER INFORMATION (Cont’d)
2.2
KPMG
Messrs. KPMG, being the Reporting Accountants for the Proposals, has given and has not
Messrs. KPMG has given its written confirmation that it is not aware of any conflict of
interests which exists or is likely to exist in its capacity as the reporting accountant to our
Company for the Proposals.
2.3
Rahim & Co
Rahim & Co, being the independent valuer for the Proposals, has given and has not
Rahim & Co has given its written confirmation that it is not aware of any conflict of interests
which exists or is likely to exist in its capacity as the independent valuer to our Company for
the Proposals.
2.4
PIVB
PIVB, being the Independent Adviser for the Proposed Acquisition, has given and has not
PIVB has given its written confirmation that it is not aware of any conflict of interests which
exists or is likely to exist in its capacity as the Independent Adviser to our Company for the
Proposed Acquisition.
2.5
Kadir Andri & Partners
Messrs. Kadir Andri & Partners has given its written confirmation that it is not aware of any
conflict of interests which exists or is likely to exist in its capacity as the legal adviser to our
Company for the Proposals.
3.
MATERIAL COMMITMENTS
As at 30 September 2014, being the latest practicable date at which such amounts could be calculated
prior to the printing of this Circular, our Group had total material commitments amounting to
approximately RM10.9 million. The total material commitments are divided into the following:
RM
Equipment:
- Approved and contracted for
- Approved but not contracted for
Total
4.
3,199,207
7,718,969
10,918,176
CONTINGENT LIABILITIES
As at the LPD, our Group does not have any contingent liabilities.
5.
MATERIAL CONTRACTS
Our Group has not entered into any material contracts (not being contracts entered into in the ordinary
course of business) within the past two years immediately preceding the LPD.
V-2
V-2
APPENDIX V
FURTHER INFORMATION (Cont’d)
6.
MATERIAL LITIGATION
As at the LPD, our Company and our subsidiaries are not engaged in any material litigation either as
plaintiff or defendant, claim or arbitration, and our Board is not aware of any proceedings, pending or
threatened, against our Company and/or subsidiaries or at any fact likely to give rise to any proceedings
which may materially and adversely affect the business or financial position of our Group.
7.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the Registered Office of our
Company following the date of this Circular from Sunday to Thursday (except Public Holidays) during
business hours up to and including the date and time of our forthcoming EGM:
(i)
our Memorandum and Articles of Association;
(ii)
our audited consolidated financial statements for the past two financial years ended 31
December 2012 and 31 December 2013 and 6-month unaudited consolidated financial results
of our Company for the financial period ended 30 June 2014;
(iii)
the letter from the Reporting Accountants on adequacy of reserves as set out in Appendix III
of this Circular;
(iv)
the proforma consolidated statements of financial position of our Company as at 31 December
2013 together with reporting accountants‘ letter thereon as set out in Appendix IV of this
Circular;
(v)
the letters of consent referred to in Section 2 of this Appendix; and
(vi)
the valuation reports together with the Valuation Certificate referred to in Appendix II for
each of the Landbank prepared by the Valuer in relation to the Proposed Acquisition.
V-3
V-3
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting of Bina darulaman Berhad
(“BDB” or “the Company”) will be held at Centre of learning (Col), level 4, Menara BdB, 88,
lebuhraya darulaman, 05100 Alor setar, Kedah darul Aman on sunday, 23 November 2014 at 10.00 a.m.
for the purpose of considering and if thought fit, passing the following resolutions, with or without any
modifications:
SPECIAL RESOLUTION 1
PROPOSED AMENDMENTS TO THE COMPANY’S MEMORANDUM AND ARTICLES OF
ASSOCIATION (“PROPOSED M&A AMENDMENT”)
“THAT subject to the passing of ordinary Resolution 1, ordinary Resolution 2, ordinary Resolution 4 and
the approvals of the relevant authorities/parties being obtained, approval be and is hereby given for the
existing Clause 5 of the Memorandum of Association of the Company to be amended in the following
manner:
Existing
Amended
“The share capital of the company is
RM100,000,000.00 divided into 100,000,000
shares of RM1/- each. The Company shall have
the power to increase, or reduce its capital, to
consolidate or sub-divide the shares into shares of
larger or smaller amounts, and to divide the
shares forming the capital (original, increased or
reduced) of the Company into several classes and
to attach thereto respectively, preferential,
deferred or special rights, privileges or conditions
as may be determined by, or in accordance with
the regulations for the time being of the Company
and to issue additional capital with any such
rights, privileges or conditions as aforesaid, and
any preference share may be issued on the terms
that it is, or at the option of the Company, liable
to be redeemed.”
“The share capital of the company is
RM400,000,000.00 divided into 400,000,000
shares of RM1/- each. The Company shall have
the power to increase, or reduce its capital, to
consolidate or sub-divide the shares into shares
of larger or smaller amounts, and to divide the
shares forming the capital (original, increased or
reduced) of the Company into several classes
and to attach thereto respectively, preferential,
deferred or special rights, privileges or
conditions as may be determined by, or in
accordance with the regulations for the time
being of the Company and to issue additional
capital with any such rights, privileges or
conditions as aforesaid, and any preference
share may be issued on the terms that it is, or at
the option of the Company, liable to be
redeemed.”
AND THAT the Board of directors of the Company (“Board”) are hereby authorised and empowered to
take all steps and to do all acts, deeds, things and to execute, enter into, sign and deliver for and on behalf
of the Company all documents as they may consider necessary to give full effect to the Proposed M&A
Amendment, with full powers to assent to and accept any conditions, modifications, variations,
arrangements and/or amendments as may be required by the law and/or the relevant authority(ies).”
ORDINARY RESOLUTION 1
PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW ORDINARY SHARES OF RM1.00 EACH IN
BDB (“BDB SHARES”) (“RIGHTS SHARES”) TO RAISE GROSS PROCEEDS OF UP TO RM95
MILLION, TOGETHER WITH BONUS ISSUE OF NEW BDB SHARES (“BONUS SHARES”)
(“PROPOSED RIGHTS ISSUE”)
“THAT, subject to passing of ordinary Resolution 2, ordinary Resolution 4, special Resolution 1 and the approvals
of all relevant authorities/parties being obtained, where required, and the conditions precedent in the sale and
purchase agreement dated 4 september 2014 (as amended and supplemented by a supplemental agreement dated 3
October 2014) entered into between BDB and Perbadanan Kemajuan Negeri Kedah (“PKNK”) (“SPA”) being
fulfilled or waived (as the case maybe), the Board be and are hereby authorised:
(i)
to provisionally allot and issue such number of Rights shares and Bonus shares by way of a renounceable
rights issue together with a bonus issue to raise gross proceeds of up to RM95,000,000, to the shareholders
of BdB whose names appear in the record of depositors of the Company (“Record of Depositors”) at the
close of business on the entitlement date to be determined by the Board, or their renouncee(s), to be
credited as fully paid-up upon the full payment, on the entitlement basis and at the issue price to be
determined later by the Board; and
(ii)
to capitalise and apply such amount that may be required from the share premium account and retained
earnings of the Company for the purposes of issuance of the Bonus shares;
THAT the Rights shares and Bonus shares, shall upon being issued and allotted as fully paid-up, rank pari passu
with the then existing and paid-up share capital of BdB save that they shall not be entitled to any dividends, rights,
bonuses, issues or other allotments or distributions which relevant book closing date is on or before the date of
allotment of the Rights shares and Bonus shares;
THAT the Board be and are hereby empowered and authorised to disregard and deal with any fractional entitlement
and fraction of the BdB shares that may arise from the Proposed Rights issue in such manner at their absolute
discretion deem fit or expedient and in the best interest of the Company;
THAT the Board be and are hereby empowered and authorised to deal and made available for excess applications,
the Rights shares not taken up by any shareholder or not validly taken up in such manner as the Board shall
determine in a fair and equitable manner and on such basis as they may deem fit or expedient and in the best interest
of the Company;
THAT approval be and is hereby given for the Company to utilise the proceeds of the Proposed Rights issue for the
purposes as set out in the Circular, and the Board be and are hereby authorised with full powers to vary the manner
and/or purpose of the utilisation of such proceeds in such manner as the Board shall in their absolute discretion deem
fit, necessary, expedient and/or appropriate in the best interest of the Company;
AND THAT the Board be and are hereby authorised to execute or enter into agreements or arrangements as the
Board may deem necessary or expedient to take all such necessary steps to give effect to the aforesaid Proposed
Rights issue with full power to consent to and to adopt such conditions, modifications, variations and/or
amendments in any manner as may be required or imposed by the relevant authorities in respect of the Proposed
Rights issue and to deal with all matters relating thereto and to take all such steps and do all acts and things in any
manner as they may deem necessary or expedient to implement, finalise and give full effect to the Proposed Rights
Issue in the best interest of the Company.”
PROPOSED ACQUISITION OF APPROXIMATELY 731.3 ACRES (296.0 HECTARES) OF LANDS
LOCATED IN KEDAH DARUL AMAN (“NON-MALAY RESERVED LAND”), FOR A TOTAL
CONSIDERATION OF RM100,502,000 FROM PKNK UPON THE TERMS AND CONDITIONS AS SET
OUT IN SPA (“PROPOSED ACQUISITION OF NON-MALAY RESERVED LAND”)
“THAT, subject to and conditional upon the passing of ordinary Resolution 1, ordinary Resolution 4, special
Resolution 1 and the approvals of all relevant regulatory authorities/parties being obtained, where required, and the
conditions precedent in the sPA being fulfilled or waived (as the case maybe), approval be and is hereby given for
BdB to acquire the Non-Malay Reserved land from PKNK for a total consideration of RM100,502,000, which will
be satisfied in accordance with the provisions of the sPA;
THAT pursuant to the terms of the sPA, approval be and is hereby given for the Company to allot and issue such
number of new BdB shares, Rights shares and Bonus shares to PKNK and/or their nominee(s) (if applicable);
THAT all the new BdB shares to be issued, shall upon being issued and allotted as fully paid-up, rank pari passu
with the then existing and paid-up share capital of BdB save that they shall not be entitled to any dividends, rights,
allotment of the new BdB shares to be issued;
AND THAT, the Board be and are hereby authorised and empowered to give full effect to the Proposed Acquisition
of Non-Malay Reserved land and the sPA with full powers to complete and implement the Proposed Acquisition of
Non-Malay Reserved land in such manner as the Board may deem fit or necessary, including: to negotiate, approve,
agree, and/or assent to any, conditions, modifications, variations, revaluations and/or amendments in any manner as
may be required/permitted by the law, the relevant authorities or deemed necessary by the Board, to take all such
steps and to execute and deliver and/or cause to be executed and delivered the sPA and all such other agreements,
arrangements, undertakings, indemnities, transfers, extensions, assignments, confirmations, declarations, and/or
guarantees to any party or parties and to do all such acts and matters as they may deem fit, necessary and/or
expedient in the best interest of the Company.”
PROPOSED ACQUISITION OF APPROXIMATELY 423.5 ACRES (171.4 HECTARES) OF LANDS
LOCATED IN KEDAH DARUL AMAN (“MALAY RESERVED LAND”), FOR A TOTAL
CONSIDERATION OF RM101,498,000 FROM PKNK UPON THE TERMS AND CONDITIONS AS SET
OUT IN SPA (“PROPOSED ACQUISITION OF MALAY-RESERVED LAND”)
“THAT, subject to and conditional upon the passing of ordinary Resolution 1, ordinary Resolution 4, special
Resolution 1 and the approvals of all relevant regulatory authorities/parties being obtained, where required, and the
conditions precedent in the sPA being fulfilled or waived (as the case maybe), approval be and is hereby given for
BdB to acquire the Malay Reserved land from PKNK for a total consideration of RM101,498,000, which will be
satisfied in accordance with the provisions of the sPA;
THAT pursuant to the terms of the sPA, approval be and is hereby given for the Company to allot and issue such
number of new BdB shares to PKNK and/or their nominee(s) (if applicable);
THAT the new BdB shares to be issued, shall upon being issued and allotted as fully paid-up, rank pari passu with
the then existing and paid-up share capital of BdB save that they shall not be entitled to any dividends, rights,
allotment of the new BdB shares to be issued;
AND THAT the Board be and are hereby authorised and empowered to give full effect to the Proposed Acquisition
of Malay Reserved land and the sPA with full powers to complete and implement the Proposed Acquisition of
Malay Reserved land in such manner as the Board may deem fit or necessary, including: to negotiate, approve,
agree, and/or assent to any, conditions, modifications, variations, revaluations and/or amendments in any manner as
may be required/permitted by the law, the relevant authorities or deemed necessary by the Board, to take all such
steps and to execute and deliver and/or cause to be executed and delivered the sPA and all such other agreements,
arrangements, undertakings, indemnities, transfers, extensions, assignments, confirmations, declarations, and/or
guarantees to any party or parties and to do all such acts and matters as they may deem fit, necessary and/or
expedient in the best interest of the Company.”
PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL OF BDB FROM RM100,000,000
COMPRISING 100,000,000 BDB SHARES TO RM400,000,000 COMPRISING 400,000,000 BDB SHARES
(“PROPOSED IASC”)
“THAT subject the passing of ordinary Resolution 1, ordinary Resolution 2, special Resolution 1 and approvals of
the relevant authorities/parties being obtained, the authorised share capital of the Company be and is hereby
increased from RM100,000,000 comprising 100,000,000 BdB shares to RM400,000,000 comprising 400,000,000
BdB shares by the creation of an additional 300,000,000 unissued BdB shares.
AND THAT the Board be and are hereby authorised and empowered to give full effect to the Proposed iAsC with
full powers to assent to any modifications and/or amendments as may be required by the law, the relevant
authorities/parties or deemed necessary by the Board and to take all steps as they may deem fit, necessary and/or
expedient or in the best interests of the Company in order to implement, finalise and give full effect to the Proposed
IASC.”
By order of the Board,
KHAIRULMUNA BINTI ABD GHANI
(ls 0008190)
Company secretary, Alor setar
Kedah darul Aman
31 october 2014
Notes:
(1)
With regards to deposited securities, only members whose names appear in the Record of Depositors as at 17
November 2014 shall be eligible to attend and vote at the meeting.
(2)
A member of the Company entitled to attend and vote at the meeting is entitled to appoint up to two proxies to attend
and vote in his stead. A member shall specify the shareholding proportion where two proxies are appointed. A proxy
need not be a member of the Company.
(3)
The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised
in writing or if the appointer is a corporation, either under its common seal or under the hand of an officer or attorney
duly authorised in writing.
(4)
The instrument appointing a proxy together with the power of attorney or other authority shall be deposited at the
Company’s Registered Office at Level 9, Menara BDB, 88, Lebuhraya Darulaman, 05100 Alor Setar, Kedah Darul
Aman not less than 48 hours before the time set for holding the meeting or at any adjournment thereof.
(5)
For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting the Bursa
Malaysia Depository Sdn Bhd (“Depository”) in accordance with Rules of the Depository, to issue the Record of
Depositors and make available to the Company pursuant to Article 52(ii) of the Company’s Articles of Association and
Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
PROXY FORM
NUMBER OF SHARES
i/We
of
being member/members of the abovementioned Company hereby appoint _____________________
___________________________________________ NRiC No. __________________________________
of ____________________________________________________________________________________
or failing him, ________________________________ NRiC No. _________________________________
of ____________________________________________________________________________________
or failing him, the CHAIRMAN OF THE MEETING as my/our *proxy to attend and vote for me/us on
my/our behalf at the Extraordinary General Meeting of the Company to be held at Centre of learning
(Col), level 4, Menara BdB, 88, lebuhraya darulaman, 05100 Alor setar, Kedah darul Aman on
sunday, 23 october 2014, at 10.00 a.m. or any adjournment thereof.
My/our proxy is to vote as indicated below:
Resolution
special
Resolution 1
ordinary
Resolution 1
ordinary
Resolution 2
ordinary
Resolution 3
ordinary
Resolution 4
Description
PROXY
For
Against
Proposed Rights issue
Proposed Acquisition of Non-Malay Reserved land
Proposed Acquisition of Malay Reserved land
Proposed increase in Authorised share Capital
For appointment of two proxies, percentage
shareholdings to be represented by the proxies :
No. of
shares
signature / Common seal
Number of shares held :
date
:
Proxy 1
Proxy 2
of
Percentage
%
%
100%
Notes:
(1)
With regards to deposited securities, only members whose names appear in the Record of Depositors as at 17
November 2014 shall be eligible to attend and vote at the meeting.
(2)
A member of the Company entitled to attend and vote at the meeting is entitled to appoint up to two proxies to
attend and vote in his stead. A member shall specify the shareholding proportion where two proxies are
appointed. A proxy need not be a member of the Company.
(3)
The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly
authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of
an officer or attorney duly authorised in writing.
(4)
The instrument appointing a proxy together with the power of attorney or other authority shall be deposited
at the Company’s Registered Office at Level 9, Menara BDB, 88, Lebuhraya Darulaman, 05100 Alor Setar,
Kedah Darul Aman not less than 48 hours before the time set for holding the meeting or at any adjournment
thereof.
(5)
For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting
the Bursa Malaysia Depository Sdn Bhd (“Depository”) in accordance with Rules of the Depository, to issue
the Record of Depositors and make available to the Company pursuant to Article 52(ii) of the Company’s
Articles of Association and Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
Fold This FLAP FOR SEALING
Than fold here
PlEAsE Fold hERE
________________________________________________________________________________________________
AFFIX
STAMP
STAMP
THE COMPANY SECRETARY
BINA DARULAMAN BERHAD (332945-X)
LEVEL 9, MENARA BDB
88, LEBUHRAYA DARULAMAN
05100 ALOR SETAR
KEDAH DARUL AMAN
________________________________________________________________________________________________
PlEAsE Fold hERE
1st fold here

BINA DARULAMAN BERHAD

Transcription

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