1. INTRODUCTION
The Board of Directors of AAB wishes to announce that Tasja Sdn Bhd [Registration No. 199001018185 (Company No. 209854-H)] (“TSB”), a wholly-owned subsidiary of AAB, has on 9 October 2020 simultaneously entered into a Sale and Purchase Agreement (“SPA”) and Construction Agreement (“CA”) with Cosmic Gate Sdn Bhd [Registration No. 201901036217 Company No. 1345547-U)] (“Cosmic Gate”) to dispose of a piece of commercial land held under Geran 32941, Lot 212, Seksyen 96, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur (“the Property”) for a total sale consideration of RM12,100,000.00 (“Total Consideration”).
2. INFORMATION ON THE PROPOSED DISPOSAL
2.1 Information on Cosmic Gate
Cosmic Gate was incorporated in Malaysia under Companies Act 1965 and having its business office at Room 1, 3rd Floor, Wisma Kwong Siew, 149, Jalan Tun H.S. Lee, 50000 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur. Their principal activities are properties investment.
2.2 Details of the Property
The Property is a piece of commercial land held under Geran 32941, Lot 212, Seksyen 96, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur measuring approximately 813.1 square metres.
Further details of the Property are as follows:
Date of Purchased : 14 January 2015
Purchased Price : RM7,500,000.00
Cost of Investment as at the disposal date : RM10,500,000
Selling Price : RM12,100,000
Gain on disposal (net of tax) : RM1,308,000
Status of Holding : Freehold
Land Use : Building (under construction)
Encumbrances : Charged to CIMB Bank Berhad
Express Condition : “Tanah ini hendaklah digunakan untuk bangunan perdagangan sahaja.”
2.2 Details of the Construction
As of today, the total building works completion is approximately five percent (5%).TSB shall remove all temporary structure and material onsite save and except the permanent structure, hoarding and interlocking paver blocks at the site entrance road.
3. BASIS OF ARRIVAL AT THE TOTAL CONSIDERATION
There was no formal valuation being conducted in connection with the Proposed Disposal. The Total Consideration for the Proposed Disposal was arrived as on a “willing-buyer willing-seller” basis after the negotiation process and taking into the consideration of the following :-
(a) current conditions and location of the Property;
(b) the original cost of investment of the Property; and
(c) the construction cost expended on the Property.
4. SALIENT TERMS OF THE SPA AND CA
The words and abbreviations used throughout this section of the Announcement shall have the same meaning as defined in the SPA and CA unless the context otherwise required or defined herein.
(a) The Property shall be disposed of with vacant possession on an “as is where is basis“ and free from all encumbrances, debenture, caveats, liens, equities, pledges, squatters, occupants, licensees, easement, tenants, encroachments, trees, burial ground and claims whatsoever but subject to the conditions, restrictions in interest and category of land use.
(b) The total consideration shall be payable in the following manner:-
| SPA | CA | TOTAL |
| Consideration | 9,000,000 | 3,100,000 | 12,100,000 |
| Deposit Sum upon signing | 900,000 | 310,000 | 1,210,000 |
| Balance Sum Payable (3 months) | 8,100,000 | 2,790,000 | 10,890,000 |
i) Cosmic Gate shall pay to TSB a sum of RM1,210,000 being 10% of the total consideration upon execution of the SPA and CA (“the Deposit Sum”);
ii) Cosmic Gate shall pay the balance of the total consideration of RM10,890,000.00 (“the Balance Sum”) to TSB on or before the expiry of the completion period, which is three (3) months commencing from the date of the SPA and CA;
iii) In the event the Balance Sum shall remain unpaid by the Completion Date, TSB shall grant to Cosmic Gate and extension of ONE (1) month from the expiry of the Completion Date (hereinafter referred to as “the Extended Completion Date”) to pay the Balance Sum, subject that Cosmic Gate shall be liable to pay TSB interest at the rate of eight per centum (8%) per annum on daily rest basis;
iv) If Cosmic Gate fail to pay the Balance Purchase Price by end of the Extended Completion Date, TSB shall have the right to terminate the Agreement by written notice to Cosmic Gate and forfeit the Deposit as agreed liquidate damages and any sum paid in excess thereof shall be refunded to Cosmic Gate free of interest within fourteen (14) days of notification of the termination; and
v) If TSB fail, neglect or refuse to complete the sale of the said Property (save and except due to default of Cosmic Gate), Cosmic Gate shall be entitled to claim specific performance or alternatively at their sole discretion to terminate the SPA and CA and TSB shall refund within fourteen (14) days from the date of written notification of such termination all monies paid towards the Purchase Price free of interest and further compensate Cosmic Gate with a sum equivalent to ten per centum (10%) of the Total Consideration as agreed liquidated damages.
(c) The Construction Cost shall be inclusive of all and any taxes payable by the TSB under the Agreement and TSB shall bear all and any expenses to be incurred by the TSB in performing its obligation under the Agreement in compliance with any laws, regulations and by-laws in relation to the taxation regime in Malaysia, including the payment of all taxes assessed against TSB.
(d) The SPA and CA shall be simultaneously completed and not otherwise.
5. UTILISATION OF PROCEEDS
The proceeds from the Proposed Disposal shall be utilised for general working requirements in respect of the Company day-to-day operation to support its existing business operations and to reduce AAB Group’s bank borrowings.
6. RATIONALE OF THE PROPOSED DISPOSAL
The Proposed Disposal provides immediate cash flow which can be channelled towards the Company’s business operations for its working capital and reduce the Company’s bank borrowing.
7. RISK FACTORS
The Proposed Disposal is subject to the execution and completion of the SPA and CA. There can be no assurance that the SPA will ultimately be completed within the timeframe set out therein. Any non-fulfilment of the relevant terms and conditions as stipulated in the SPA and CA, prolonged delay or non-completion of the SPA will lead to the termination of the SPA. The Company endeavours to ensure full compliance in relation to the fulfilment of its obligations under the SPA and CA.
8. EFFECTS OF THE PROPOSED DISPOSAL
8.1 SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS
The Proposed Disposal does not involve any issuance of new shares in the Company and therefore will not have any effect on the share capital and substantial shareholders’ shareholding of the Company.
8.2 EARNINGS AND EARNINGS PER SHARE
The Proposed Disposal is not expected to have any material impact to the earnings and earnings per share of the Group for the financial year ending 31 December 2020. The AAB Group is expected to realise a net gain (after deducting the estimated expenses and the tax for the Proposed Disposal ) of approximately RM1,308,000 arising from the disposal.
8.3 NET ASSETS (“NA”), NA PER SHARE AND GEARING
The Proposed Disposal is not expected to have any immediate material effect on the NA, NA per share and gearing of AAB for the financial year ending 31 December 2020.
9. ASSUMPTION OF LIABILITIES
There are no other liabilities, including contingent liablities and guarantees to be assured by the Company arising from the Proposed Disposal.
10. APPROVALS REQUIRED
The Proposed Disposal is not subject to the approval of the shareholders of the Company and/or any other relevant authorities.
11. PERCENTAGE RATIOS
The highest percentage ratio applicable to the Disposal pursuant to paragraph 10.02 (g) of the Main Market Listing Requirements of Bursa Securities is 14.7%, based on the latest audited consolidated financial statements of the Company for the financial year ended 31 December 2019 and the latest market capitalisation of the Company.
12. DIRECTORS AND MAJOR SHAREHOLDERS’ INTERESTS
None of the Directors and/or substantial shareholders and/or persons connected with them has any interest, whether direct or indirect, in the Proposed Disposal.
13. DIRECTORS’ STATEMENT
The Board, having considered all aspects of the Proposed Disposal, including but not limited to the rationale of the Disposal is of the opinion that the Disposal is in the best interest of the Company.
14. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed within 3 months from the date of the SPA and CA.
15. DOCUMENTS AVAILABLE FOR INSPECTION
The SPA and CA are available for inspection at the Registered Office of the Company during normal office hours from Mondays to Fridays (except public holidays) at Level 12, Menara TSR, No. 12, Jalan PJU 7/3, Mutiara Damansara, 47810 Petaling Jaya, Selangor Darul Ehsan for a period of 3 months from the date of the SPA and CA.
This announcement is dated 9 October 2020.
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