Postal address : No. 288 Jalan Raja Laut, Kuala Lumpur

Transcription

1 HONG LEONG BANK BERHAD ( HLB OR THE BANK ) PROPOSED DISPOSAL BY HLB OF A PARCEL OF LAND (THE LAND ) TOGETHER WITH A COMMERCIAL OFFICE BUILDING KNOWN AS MENARA RAJA LAUT (THE BUILDING ) ERECTED ON THE LAND (COLLECTIVELY THE PROPERTY ) TO HONG LEONG ASSURANCE BERHAD ( HLA ) FOR A CASH CONSIDERATION OF RM220,000,000 ( PROPOSED DISPOSAL ) 1. INTRODUCTION HLB writes to inform that the Bank had on 6 April 2015 entered into a sale and purchase agreement ( SPA ) with HLA in respect of the Proposed Disposal. 2. DETAILS OF THE PROPOSED DISPOSAL 2.1 Information on the Property Postal address : No. 288 Jalan Raja Laut, Kuala Lumpur Description of the Building : 27-storey office building (inclusive of a 6-level elevated car park) and a lower ground floor Property use : Commercial building Age of the Building : Approximately 22 years Tenure : Freehold Land area : 60,988 sq. ft. Total net lettable area of the Building : 397,939 sq. ft. Occupancy rate of the Building as at 18 March 2015 Rental income received during the year 2014 Amount of lettable space available for letting as at 18 March 2015 Original cost of investment in the Property Net book value of the Property based on latest audited financial statements : 41%, of which approximately 36% are occupied by HLB and its subsidiaries ( HLB Group ) : RM1.69 million : 235,833 sq. ft. : RM180,000,000 made on 1 July 2011 : RM170,038,829 as at 30 June 2014 Part of the Land is leased to Tenaga Nasional Berhad ( Lease ) and portions of the Building are currently occupied by tenants ( Tenancies ). The Property is subject to the Lease and Tenancies but otherwise free from encumbrances. 2.2 Basis and justification in arriving at the disposal consideration The Proposed Disposal is for a cash consideration of RM220,000,000 ( Consideration ). The Consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the market value of the Property of RM220,000,000 as appraised by CB Richard Ellis (Malaysia) Sdn Bhd (now known as Savills (Malaysia) Sdn Bhd) in its valuation report dated 29 August The valuation for the Property had been carried out using the investment method of valuation and the comparison approach. 1

2 The investment method involves deriving the capital value of the property from an estimate of a yearly stream of gross rental income which the property can reasonably be let for. Outgoings, such as property taxes, repairs and maintenance, insurance and management are then deducted from the annual rental income stream. The net annual income is then capitalised at an appropriate market yield to arrive at its indicative capital value. The comparison approach involves comparing the subject property with similar properties that were either transacted recently or listed for sale within the same location or other comparable localities. In comparing properties, due consideration is given to factors such as location, size, tenure and time element. 2.3 Utilisation of proceeds The Consideration to be received by HLB is proposed to be used for working capital purposes, i.e. for HLB s general banking and financing activities and defraying expenses in connection with the Proposed Disposal within 3 months from completion of the Proposed Disposal. 2.4 Salient terms of the SPA HLB agrees to sell and HLA agrees to purchase the Property, on an as is where is basis as at the date of the SPA, free from all encumbrances but subject to the Lease and Tenancies, and all restrictions in interest and the conditions and category of land use expressed in the document of title, and upon the terms and conditions of the SPA. (a) Payment of Consideration A deposit of RM22,000,000 ( Deposit ) equivalent to 10% of the Consideration had been paid upon the execution of the SPA. The balance RM198,000,000 ( Balance Consideration ) equivalent to 90% of the Consideration shall be paid within 90 days of the date on which the last of the conditions precedent is fulfilled or waived (as the case may be) ( Initial Period ). In the event HLA is unable to pay the Balance Consideration within the Initial Period, HLB shall automatically grant to HLA an extension of time of 90 days from the expiry of the Initial Period ( Extended Period ) to pay the Balance Consideration or any part remaining unpaid, subject to interest at the rate of 8% per annum on the outstanding balance calculated on a daily basis. (b) Conditions precedent The SPA is conditional upon conditions precedent being fulfilled within 90 days from the date of the SPA ( Conditional Period ), failing which the parties agree that the Conditional Period shall be extended automatically for another 60 days from the expiry of the Conditional Period ( Extended Conditional Period ). The last day of the Conditional Period or the Extended Conditional Period (where applicable) shall be referred to as the Cut-Off Date. The conditions precedent to be fulfilled on or before the Cut-Off Date are as follows: the approval of the shareholders of Hong Leong Financial Group Berhad ( HLFG ), HLA s holding company for the acquisition of the Property; and a letter from Tenaga Nasional Berhad addressed to the relevant Land Office consenting to the transfer of the Property to HLA, subject to the Lease being obtained by HLB and delivered to HLA. 2

3 (c) Cut-Off Date In the event the conditions precedent are not fulfilled and/or waived, as the case may be, on or before the Cut-Off Date, HLA shall be entitled to issue a notice to HLB notifying that the SPA shall lapse and be of no further effect. In such event, HLB shall refund to HLA, free of interest, the Deposit and any other monies that have been paid by HLA pursuant to the SPA within 14 days from HLB's receipt of such notice, failing which HLB shall pay interest at the rate of 8% per annum on the amount owing calculated on a daily basis. (d) Completion Completion of the SPA shall take place on a business day falling within the Initial Period or, as the case may be, the Extended Period ( Completion Date ). On the Completion Date, amongst others: (iii) HLA shall pay or procure the payment of the Balance Consideration; HLB and HLA shall execute a novation in respect of the Tenancies and HLB shall procure the execution of the novation by the relevant tenants; and in the event HLB is unable to procure the execution of the novation by the tenants, HLB and HLA shall execute an assignment in respect of the tenancies of such tenants. (e) Possession HLB shall deliver possession of the Property to HLA on an "as-is-where-is" basis as at the date of the SPA (fair wear and tear excepted) on the Completion Date. 2.5 Liabilities to be assumed Save for liabilities under the Tenancies which HLA shall assume with effect from the Completion Date upon execution of the relevant novation agreements, there are no liabilities, which include contingent liabilities or guarantees, to be assumed by HLA arising from its acquisition of the Property. 2.6 Background information on HLA HLA was incorporated in Malaysia on 20 December 1982 under the Companies Act, 1965 as a private limited company under the name of Hong Leong Assurance Sendirian Berhad. HLA was converted into a public limited company and assumed its present name on 6 March HLA is principally involved in the life insurance business. HLA is a 70% subsidiary of HLA Holdings Sdn Bhd, which in turn is a wholly-owned subsidiary of HLFG. The remaining 30% equity interest in HLA is held by Mitsui Sumitomo Insurance Company, Limited. 3. RATIONALE FOR THE PROPOSED DISPOSAL The Property formed part of the assets and liabilities of the former EON Bank Berhad, which were vested in HLB on 1 July HLB Group has maintained some of its offices located in Menara Raja Laut since then. In the longer term, HLB Group has plans to consolidate its personnel currently located in Menara Raja Laut with those located in other premises. As such, HLB is undertaking the Proposed Disposal to realise its investment in the Property. HLB will lease the required office space in Menara Raja Laut from HLA when the Proposed Disposal is completed. 3

4 4. EFFECTS OF THE PROPOSED DISPOSAL 4.1 Share capital and substantial shareholders shareholdings The Proposed Disposal will not have any effect on the share capital and substantial shareholders shareholdings of the Bank. 4.2 Net assets The Proposed Disposal is not expected to have any material effect on the net assets per share of the Bank. 4.3 Earnings The Proposed Disposal is expected to result in a gain of approximately RM50 million to the HLB Group for the financial year ending APPROVALS REQUIRED The approval of Bank Negara Malaysia ( BNM ) for the proposed acquisition of the Building by HLA was obtained vide BNM's letter dated 4 March The Proposed Disposal is subject to the approval of the shareholders of HLFG pursuant to Section 132E of the Companies Act, The Proposed Disposal is not subject to the approval of the shareholders of HLB. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM Hong Leong Company (Malaysia) Berhad ( HLCM ) is a major shareholder of HLB through HLFG. YBhg Tan Sri Quek Leng Chan is a Director and major shareholder of HLB, HLFG, HLA and HLCM. Mr Quek Kon Sean is a Director of HLB and HLA, a Director and shareholder of HLFG, and a son of YBhg Tan Sri Quek Leng Chan. Mr Kwek Leng Hai is a Director and shareholder of HLB and HLCM, and a shareholder of HLFG. Mr Choong Yee How is a Director of HLB and HLA, and a Director and shareholder of HLFG. Mr Kwek Leng Beng is a major shareholder of HLB and HLFG, and a Director and major shareholder of HLCM. Mr Quek Leng Chye and Mr Kwek Leng Kee are major shareholders of HLB, HLFG and HLCM. YBhg Tan Sri Quek Leng Chan, Mr Kwek Leng Hai and Mr Quek Leng Chye are brothers. The shareholdings of HLFG, HLCM, YBhg Tan Sri Quek Leng Chan, Mr Kwek Leng Hai, Mr Kwek Leng Beng, Mr Quek Leng Chye and Mr Kwek Leng Kee in HLB as at 18 March 2015 are as follows: No. of ordinary shares held in HLB Name Direct % Indirect % HLFG 1,143,931, ,995,880 (1) 0.78 HLCM - - 1,160,501,285 (1) Tan Sri Quek Leng Chan - - 1,160,549,285 (2) Mr Kwek Leng Hai 4,750, Mr Kwek Leng Beng - - 1,160,501,285 (2) Mr Quek Leng Chye - - 1,160,501,285 (2) Mr Kwek Leng Kee 243, ,160,501,285 (2)

5 Notes: (1) Held through subsidiaries (2) Held through HLCM and company(ies) in which the substantial shareholder has interest YBhg Tan Sri Quek Leng Chan, Mr Quek Kon Sean, Mr Kwek Leng Hai and Mr Choong Yee How have abstained and will continue to abstain from deliberating and voting in respect of the Proposed Disposal at the Board level. Save as disclosed above, none of the Directors and major shareholders of the Bank and/or any persons connected with them has any interest, direct or indirect, in the Proposed Disposal. 7. STATEMENT BY THE BOARD AUDIT COMMITTEE ( BAC ) The BAC of the Bank, having considered all aspects of the Proposed Disposal (including, but not limited to the terms and rationale for the Proposed Disposal), is of the opinion that the Proposed Disposal is: (iii) in the best interest of HLB; fair, reasonable and on normal commercial terms; and not detrimental to the interests of the non-interested shareholders of HLB. 8. DIRECTORS STATEMENT The Board of Directors of HLB (save for YBhg Tan Sri Quek Leng Chan, Mr Quek Kon Sean, Mr Kwek Leng Hai and Mr Choong Yee How who had abstained from deliberation and voting), having taken into consideration all aspects of the Proposed Disposal (including, but not limited to the terms and rationale for the Proposed Disposal), is of the opinion that the Proposed Disposal is in the best interest of the HLB Group. 9. PERCENTAGE RATIO APPLICABLE TO THE PROPOSED DISPOSAL Based on the audited consolidated financial statements of HLB for the financial year ended 30 June 2014, the highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 1.51%. 10. RELATED PARTY TRANSACTIONS Save for recurrent related party transactions that are disclosed in HLB s circular to shareholders dated 2 October 2014 and had been approved by shareholders of HLB on 24 October 2014, there were no other related party transactions entered into with the interested Directors and interested major shareholders (including persons connected with them) for the 12 months preceding the date of this announcement. 11. EXPECTED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by the first half of the year DOCUMENTS AVAILABLE FOR INSPECTION The SPA is available for inspection at the registered office of HLB during office hours from Mondays to Fridays (except for public holidays) at Level 8, Wisma Hong Leong, 18 Jalan Perak, Kuala Lumpur for a period of 3 months from the date of this announcement. This announcement is dated 6 April