BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD ("BATM" OR "COMPANY")
PROPOSED DISPOSAL BY TOBACCO IMPORTERS AND MANUFACTURERS SDN BERHAD (“TIM”), A
WHOLLY-OWNED SUBSIDIARY OF BATM, OF ITS TWO PARCELS OF LEASEHOLD LAND (“LANDS”)
TOGETHER WITH BUILDINGS ERECTED THEREON (“BUILDINGS”), COLLECTIVELY KNOWN AS
“PROPERTY”
1.
INTRODUCTION
We refer to the earlier announcement dated 17 March 2016 made by the Board of Directors
("Board") of BATM in relation to the cessation of TIM’s factory operations located at Virginia Park,
Jalan Universiti, 46200 Petaling Jaya, Selangor Darul Ehsan.
The Board wishes to announce that TIM had on 8 June 2016 entered into a conditional sale and
purchase agreement ("SPA") with LGB Properties (M) Sdn Bhd (Company No. 1100321-M)
("Purchaser"), to dispose of the Property (“Proposed Disposal”).
Details of the Proposed Disposal are set out in the ensuing sections.
2.
DETAILS OF THE PROPOSED DISPOSAL
2.1
Proposed Disposal
The Proposed Disposal was conducted by way of a public tender exercise which was closed on 29
April 2016. On 23 May 2016, the Board evaluated the bids which were submitted by various bidders
and decided on the Purchaser’s holding company as the successful bidder. The Proposed Disposal
falls within paragraph 10.08 (11)(j) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“MMLR”) and is not regarded as a related party transaction.
2.2
Description of the Property
TIM is the registered proprietor of the following Lands:
(a) Lot 1 Seksyen 36 held under PN 3917 measuring approximately 35,483.5266 square metres in
area with a tenure of ninety-nine (99) years expiring on 29 September 2060 (“Lot 1”); and
(b) Lot 102 Seksyen 36 held under PN 30108 measuring approximately 17,540.0000 square metres
in area with a tenure of ninety-nine (99) years expiring on 8 April 2062,
together with the following Buildings in which TIM’s factory operations were carried out:
No.
Type of Buildings
1
2
4-storey office
2-storey warehouse with an annexed 2-storey cafeteria
with a basement level
1-storey factory with a mezzanine floor
1-storey factory
1-storey factory with a mezzanine floor
4-storey factory/warehouse with a basement level
4-storey office/warehouse
2-storey office
3
4
5
6
7
8
1
Approximate Age of
the Buildings
41
17
54
54
14
23
33
36
9
1-storey factory
36
The market value of the Lands is RM216,800,000 whereas the market value of the Buildings is
RM45,700,000. As such, the total market value of the Property is RM262,500,000, as appraised by
Messrs. DTZ Nawawi Tie Leung Property Consultants Sdn Bhd on 22 April 2016. The valuation for
the Property was carried out using the Comparison Method of Valuation.
The comparison method 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, building
differences, improvements and amenities and time element.
The category of land use of the Lands is “nil” with an express condition being “industrial”. The
Buildings are currently occupied by TIM.
Part of the Lot 1 is leased to Tenaga Nasional Berhad for a term of thirty (30) years expiring on 18
July 2032 vide lease presentation no. 78057/2002 for the erection and operation of an electrical substation thereon (“TNB Lease”).
The Lands are presently free from encumbrances.
2.3
Salient terms of the SPA
2.3.1
Sale and Purchase
TIM agreed to sell and the Purchaser agreed to purchase the Property upon the terms and
conditions of the SPA and on the following basis:
2.3.2
(a)
on an “as is where is” basis;
(b)
free from encumbrances, save and except the TNB Lease;
(c)
subject to the TNB Lease and the existing category of land use and all restrictions in interest
and conditions of title whether express or implied applicable thereto and contained in the
issue documents of title to the Property;
(d)
excluding the Excluded Assets (i.e. all machines, machineries, equipment, furniture and
loose fittings located, contained, kept or placed on or attached to any part of the Property, as
detailed in the SPA); and
(e)
the Purchaser granting a tenancy of the Property (“Tenancy”) to TIM for twelve (12) months
with an option to extend for two (2) further terms of six (6) months each from the completion
of the SPA and entering into a tenancy agreement simultaneously with execution of the SPA
for this purpose.
Condition Precedent
The SPA is conditional upon TIM obtaining the approval of the shareholders of BATM (“BATM’s
Shareholders Approval”) for the sale of the Property on or before a date that falls within three (3)
months from the date of the SPA (“CP Fulfillment Due Date”). TIM may at its sole and absolute
discretion by notice to the Purchaser extend the CP Fulfilment Due Date by a further one (1) month
from the expiry of the CP Fulfilment Due Date.
In the event that the condition precedent is not fulfilled on the expiry of the CP Fulfilment Due Date or
such extension thereof, TIM shall be entitled to terminate the SPA by serving a written notice on the
Purchaser.
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2.3.3
Payment of consideration
The total consideration for the Property is RM218,000,000 (“Purchase Price”). The Purchaser has
paid the sum of RM2,000,000 prior to the execution of the SPA and a balance deposit of
RM19,800,000 was paid upon execution of the SPA, both being part payment of the Purchase Price
and accordingly the balance of the Purchase Price payable under the SPA amounts to
RM196,200,000 (“Balance Purchase Price”) which shall be paid in accordance with the terms of the
SPA.
2.3.4
Completion
Completion of the SPA shall take place on the date when the full amount of the Balance Purchase
Price and the late payment interest, if any, are received by TIM’s solicitors in clear funds (“SPA
Completion Date”).
2.3.5
Tenancy
Simultaneously with the execution of the SPA, TIM (as tenant) and the Purchaser (as landlord) have
executed a tenancy agreement (“Tenancy Agreement”) to take a tenancy of the Property for twelve
(12) months commencing on the SPA Completion Date (“Rental Term”) at a monthly rental of
RM1,090,000, payable on or before the 10th day of each month. TIM may request to extend the
tenancy by written notice for two (2) further terms of six (6) months each upon expiry of the Rental
Term at the same monthly rental subject to the like covenants and provisions contained in the
Tenancy Agreement.
2.3.6
Possession
Pursuant and to give effect to the Tenancy and notwithstanding completion of the sale and purchase
of the Property, vacant possession of the Property shall be retained by TIM until, and will be deemed
delivered to the Purchaser on an “as is where is” basis in the state and condition then existing as at,
the date of expiry or early termination of the Tenancy by TIM.
2.4
Basis and justification in arriving at the consideration
The Purchase Price was arrived at, based on a “willing buyer willing seller” basis and is justified after
taking into consideration the highest bid received by way of a public tender exercise which was
closed on 29 April 2016.
2.5
Expected gain arising from the Proposed Disposal
Based on the Purchase Price, the expected net gain to the BATM Group arising from the Proposed
Disposal is approximately RM148,784,366 after taking into account the following:
2.6
(a)
the audited net book value of the Property of approximately RM59,213,878 as at 31 December
2015;
(b)
the estimated expenses to be incurred for the Proposed Disposal of approximately RM
2,171,000; and
(c)
the Real Property Gain Tax of RM7,830,756.
Original cost and date of investment
The Property was previously acquired by TIM from Rothmans of Pall Mall (Malaysia) Berhad (now
known as BATM) pursuant to a Sale and Purchase Agreement dated 25 November 1996 entered by
the aforesaid parties at a purchase price of RM62,388,954.
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2.7
Utilisation of proceeds
The use of the gross cash proceeds of RM218,000,000 will be reviewed and determined by the
Board in the best interest of the Company by the end 2016, and may be utilised to declare dividends,
undertake capital reduction of BATM/TIM and/or repay current revolving credit facilities.
2.8
Liabilities to be assumed
There are no liabilities, including contingent liabilities and guarantees, to be assumed by the
Purchaser pursuant to the Proposed Disposal.
2.9
Information on the Purchaser
The Purchaser was incorporated in Malaysia as a private limited company on 3 July 2014 under the
Companies Act, 1965 with its registered address at Level 20, Menara LGB, No. 1, Jalan Wan Kadir,
Taman Tun Dr. Ismail, 60000 Kuala Lumpur, Wilayah Persekutuan, and is principally a construction
company.
As at current, the Purchaser has an authorised share capital of RM1,000,000 comprising 1,000,000
ordinary shares of RM1.00 each, of which 1000,000 ordinary shares have been issued and fully
paid-up.
The directors of the Purchaser are Datin Lim Ai Ling and Mr. Lim Chin Sean. The Purchaser is a
wholly-owned subsidiary of LGB Realty Sdn Bhd (Company No. 102592-M) which was the
successful bidder of the public tender conducted for the Proposed Disposal.
LGB Realty Sdn Bhd is not a related party to the Company.
3.
RATIONALE FOR THE PROPOSED DISPOSAL
The Proposed Disposal is in line with the Company’s intention to cease TIM’s factory operations
further to its objective to restructure its business operations in Malaysia by sourcing tobacco
products for the domestic market from other BAT Group factories regionally.
4.
EFFECTS OF THE PROPOSED DISPOSAL
4.1
Share capital and substantial shareholders’ shareholdings
The Proposed Disposal will not have any effect on the issued and paid-up share capital and the
shareholdings of the substantial shareholders of the Company.
4.2
Net Assets (“NA”) and gearing
Based on the latest audited consolidated financial statements of the Company as at the financial
year ended 31 December 2015, the proforma effects of the Proposed Disposal on the audited NA
and gearing of the Company are set out in the table below:
BATM (Group Level)
Share capital
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Audited as at
FYE 31
December 2015
RM'000
After the Proposed
Disposal
142,765
142,765
RM'000
BATM (Group Level)
Audited as at
FYE 31
December 2015
358
403,500
546,623
After the Proposed
Disposal
No. of shares in issue (‘000)
NA per share (RM)
285,530
1.91
285,530
2.44
Borrowings (interest-bearing) (RM)
Gearing (times)
305,000
0.56
305,000
0.44
Cash flow hedge reserve
Retained earnings
Shareholders' funds / NA
4.3
358
552,284
695,407
Earnings and earnings per share
Based on the audited net assets of BATM as at 31 December 2015, the Proposed Disposal is
expected to result in a total net gain on disposal at BATM Group level of approximately RM
148,784,366. This will translate into an increase in earnings per share by approximately 52.1 sen
based on the weighted average number of ordinary shares in issue of BATM as at 31 December
2015.
5.
APPROVALS REQUIRED
The Proposed Disposal is subject to the approval of the shareholders of the Company and is not
subject to the approval of any regulatory authorities.
6.
INTERESTS OF DIRECTORS', MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED
WITH THEM
None of the directors and/or major shareholders of the Company and/or persons connected with the
directors and/or major shareholders (as defined in the MMLR), have any interest, whether direct or
indirect, in the Proposed Disposal.
7.
DIRECTORS’ STATEMENT
The Board, after having considered all relevant aspects of the Proposed Disposal, is of the opinion
that the Proposed Disposal is in the best interests of the Company.
8.
ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Disposal is expected to complete by end of the
year.
9.
HIGHEST PERCENTAGE RATIO
Based on the audited consolidated financial statements of the Company for the financial year ended
31 December 2015, the highest percentage ratio applicable to the Proposed Disposal pursuant to
paragraph 10.02 (g) of the MMLR is 40% which is the Purchase Price compared with the NA of
BATM Group based on the latest audited financial statement of BATM as at 31 December 2015.
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10.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be made available for inspection at the Company’s registered
office at Virginia Park, Jalan Universiti, 46200 Petaling Jaya, Selangor Darul Ehsan, during normal
business hours from Monday to Friday (except public holidays) for a period of three (3) months from
the date of this announcement:
(a)
the SPA and Tenancy Agreement;
(b)
the Valuation Report; and
(c)
the Valuation Certificate.
This announcement is dated 8 June 2016.
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