The Board of Directors of Tambun Indah (â€œBoardâ€) wishes to announce the following proposals:
(i) Mustiara Sdn Bhd (â€œMustiaraâ€ or â€œPurchaserâ€), a 70% owned subsidiary of the Company, had on 9 April 2019, acknowledged a letter of acceptance of offer dated 27 March 2019 (â€œLetter of Acceptanceâ€) from TPPT Sdn Bhd (â€œTPPTâ€ or â€œVendorâ€) in relation to the proposed acquisition by Mustiara from TPPT of 27 parcels of freehold land measuring in aggregate approximately 209.54 acres identified as Lot Nos. 1058, 1060, 1066, 1295, 1309, 1373, 1375, 1376, 1378, 1442, 3407 to 3423, Mukim 15, District of Seberang Perai Selatan, Pulau Pinang (â€œLandâ€) for a total purchase consideration of RM131.0 million to be satisfied entirely by cash (â€œProposed Land Acquisitionâ€); and
(ii) provision of financial assistance of up to RM3.45 million via shareholderâ€™s advances by Tambun Indah to Mustiara to fund the acceptance deposit in relation to the Letter of Acceptance and other costs related to the Land (â€œProposed Provision of Financial Assistanceâ€);
(collectively referred to as â€œProposalsâ€).
2. DETAILS OF THE PROPOSED LAND ACQUISITION
The Proposed Land Acquisition entails the acquisition of the Land for a total purchase consideration of RM131.0 million (â€œPurchase Considerationâ€).
The Land is a freehold land and a major portion of the Land is located adjoining to the southern side of Bandar Tasek Mutiara (marketed as Pearl City) in Seberang Perai developed by Tambun Indah.
Pursuant to the terms of the Letter of Acceptance, Mustiara had on 9 April 2019 paid the acceptance deposit of RM2.62 million. The acceptance deposit was funded via the Proposed Provision of Financial Assistance, as detailed in Section 3 of this announcement.
The Proposed Land Acquisition shall be subject to a formal sale and purchase agreement (â€œSPAâ€) to be entered into between Mustiara and TPPT.
The remaining balance of the Purchase Consideration will be funded via bank borrowings and/or additional financial assistance from the shareholders of Mustiara, of which the exact quantum and the resultant proportion has not been ascertained at this juncture.
Further details of the Proposed Land Acquisition will be announced upon the execution of the SPA in due course.
3. DETAILS OF THE PROPOSED PROVISION OF FINANCIAL ASSISTANCE
As at this juncture, Tambun Indah anticipates to extend provision of financial assistance of up to RM3.45 million to Mustiara in the form of shareholderâ€™s advances, when necessary, to fund the acceptance deposit for the Land and other costs related to the Land (â€œShareholderâ€™s Advancesâ€). The Shareholderâ€™s Advances are subject to an interest rate of 5.12%* per annum, calculated on a monthly basis.
* Based on the average interest rate of Tambun Indah and its subsidiariesâ€™ (â€œTambun Indah Groupâ€ or the â€œGroupâ€) revolving credit facilities as at the date of this announcement. However, this interest rate is subject to a monthly review and will be changed according to the average interest rate of the Groupâ€™s revolving credit facilities.
As at the date of this announcement, Tambun Indah had advanced a sum of RM2.62 million to Mustiara to satisfy the acceptance deposit for the Land, and the balance sum of up to RM0.83 million will be advanced to Mustiara, as and when necessary, to satisfy other costs related to the Proposed Land Acquisition.
In view that 30% equity interest in Mustiara is held by Encik Taufiq Ahmad @ Ahmad Mustapha Bin Ghazali (â€œEncik Taufiqâ€), who is the former Non-Independent Non-Executive Director of the Company^, the Proposed Provision of Financial Assistance is deemed as a related party transaction pursuant to Paragraphs 8.23(2)(b) and 10.08(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (â€œBursa Securitiesâ€) (â€œListing Requirementsâ€).
^ On 9 April 2019, the Company announced that Encik Taufiq has resigned as the Non-Independent Non-Executive Director of the Company. Pursuant to Paragraph 10.02(c) of the Listing Requirements, a director has the meaning given in Section 2(1) of the Capital Markets Services Act 2007 and includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon.
Should Tambun Indah Group subsequently extend any additional financial assistance to Mustiara which is in excess of the quantum specified under the Proposed Provision of Financial Assistance, the approval of the Companyâ€™s shareholders may be required pursuant to the Listing Requirements and such approval from shareholders will be sought, as and when required, by the Company.
3.1 Background information on Mustiara
Mustiara is incorporated in Malaysia under the Companies Act, 2016 on 24 January 2019. The present issued share capital of Mustiara is RM100,000. Mustiara is principally involved in property development.
Tambun Indah currently holds 70% equity interest in Mustiara, whilst the remaining balance of 30% equity interest is held by Encik Taufiq.
The Directors of Mustiara are Teh Kiak Seng, Teh Deng Wei, Teh Theng Theng and Encik Taufiq.
3.2 Rationale for the Proposed Provision of Financial Assistance
The Proposed Provision of Financial Assistance of RM2.62 million was used to fund the acceptance deposit in relation to the Letter of Acceptance and the balance sum of up to RM0.83 million will be used to fund other costs related to the Proposed Land Acquisition such as legal fees, valuation fees and other related expenses.
3.3 Source of funding
Tambun Indah intends to fund the Shareholderâ€™s Advances via its internally generated funds.
3.4 Effects of the Proposed Provision of Financial Assistance
The Proposed Provision of Financial Assistance will not have any effect on the issued share capital and substantial shareholdersâ€™ shareholdings of Tambun Indah.
In addition, the Proposed Provision of Financial Assistance is not expected to have any material effect on the net assets per share, earnings per share and gearing of the Tambun Indah Group for the financial year ending 31 December 2019.
3.5 Risk Factors
The Board does not envisage any specific risk associated with the Proposed Provision of Financial Assistance as the Board is of the view that, barring any unforeseen circumstances, Mustiara will be able to service its obligations as and when they fall due.
4. APPROVALS REQUIRED
The Proposals are not subject to the approval of the shareholders of the Company or regulatory authorities.
5. PERCENTAGE RATIOS
5.1 Proposed Land Acquisition
The highest percentage ratio applicable to the Proposed Land Acquisition pursuant to Paragraph 10.02(g) of the Listing Requirements based on the latest audited consolidated financial statements of Tambun Indah for the financial year ended 31 December 2017 is approximately 15.78%.
5.2 Proposed Provision of Financial Assistance
The highest percentage ratio applicable to the Proposed Provision of Financial Assistance pursuant to Paragraph 10.02(g) of the Listing Requirements based on the latest audited consolidated financial statements of Tambun Indah for the financial year ended 31 December 2017 is approximately 0.59%.
6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM
6.1 Proposed Land Acquisition
None of the directors and/or major shareholders of the Company and/or persons connected with them has any interest, directly or indirectly, in the Proposed Land Acquisition.
6.2 Proposed Provision of Financial Assistance
None of the directors and/or major shareholders of the Company and/or persons connected with them has any interest, directly or indirectly, in the Proposed Provision of Financial Assistance.
7. AUDIT COMMITTEEâ€™S STATEMENT
The Audit Committee of Tambun Indah, after having considered all aspects of the Proposed Provision of Financial Assistance, is of the opinion that the Proposed Provision of Financial Assistance is:
(i) in the best interests of Tambun Indah Group;
(ii) fair, reasonable and on normal commercial terms; and
(iii) not detrimental to the interest of the non-interested shareholders of Tambun Indah.
8. DIRECTORSâ€™ STATEMENT
The Board, having considered all aspects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company.
9. TRANSACTIONS WITH RELATED PARTY FOR THE PAST 12 MONTHS
There is no related party transaction with Encik Taufiq for the past 12 months preceding the date of this announcement.
This announcement is dated 9 April 2019.