| General Announcement |
| Reference No JC-071207-61393 |
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 |
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| Type |
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Announcement |
| Subject |
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KPJ HEALTHCARE BERHAD ("KPJ" OR "COMPANY")
PROPOSED ACQUISITION BY KUMPULAN PERUBATAN (JOHOR) SDN. BHD. ("KPJSB"), A WHOLLY-OWNED SUBSIDIARY OF KPJ, OF 100% OF THE EQUITY INTEREST IN TAIPING MEDICAL CENTRE SDN BHD ("TMCSB") COMPRISING 231,619 ORDINARY SHARES OF RM1.00 EACH FOR A CASH CONSIDERATION OF RM18,000,000 ("PROPOSED ACQUISITION") |
Contents :
1. INTRODUCTION
The Board of Directors of KPJ ("Board")wishes to announce that the Company's wholly-owned subsidiary, KPJSB, has on 7 December 2007 entered into a conditional Sale and Purchase Agreement ("Agreement")with Dr. Ong Boon Taik @ Ong Boon Teik, Cheong Pui Lan, Edmund Ong Teong Liat, Daryl Ong Teong Sheen and Charleen Ong Tzu Fern (collectively known as "Vendors"), to acquire 231,619 ordinary shares of RM1.00 each in TMCSB ("Sale Shares") for a cash consideration of RM18,000,000.
2. INFORMATION ON TMCSB
TMCSB was incorporated in Malaysia on 18 January 1983 as a private limited company under the Companies Act, 1965.
The principal activity of TMCSB is the operation of a private hospital under the name of Taiping Medical Centre located at No. 45-49, Jalan Medan Taiping 2, Medan Taiping, 34000 Taiping, Perak.
As at the date of this announcement, TMCSB has an authorised share capital of RM500,000 comprising 500,000 ordinary shares of RM1.00 each ("Shares"), of which 231,619 Shares have been issued and are fully paid-up.
TMCSB's audited net assets as at 30 April 2007 amounted to RM10,652,754. TMCSB achieved an audited profit after tax of RM1,747,306 for the financial year ended 30 April 2007.
3. PROPOSED ACQUISITION 3.1 Salient Terms of the Proposed Acquisition
The salient terms of the Proposed Acquisition are as follows:-
(a) The Sale Shares will be acquired by KPJSB from the Vendors free from all claims, charges, liens, encumbrances and equities whatsoever together with all rights attached thereto and all dividends and distributions declared, paid or made in respect thereof as from the completion date of the Proposed Acquisition; (b) The Proposed Acquisition of TMCSB is subject to a due diligence (which shall include but shall not be limited to legal and secretarial, financial, building and equipment) to be conducted by KPJSB;
(c) KPJSB shall seek the approval of the Foreign Investment Committee ("FIC") for the Proposed Acquisition within 30 days from the date of the Agreement and shall notify the Vendors in writing upon receipt of notification of the approval or rejection, as the case may be, from the FIC.
In the event that the FIC approval shall be subject to conditions and/or variations to the terms and conditions of the Agreement, any party adversely affected by such conditions and/or variations who finds the conditions and/or variations unacceptable ("Affected Party"), may if it desires, appeal, or request KPJSB to appeal, to the FIC for the revision or removal of the said conditions and/or variations, within 14 days of receipt of notification from the FIC or KPJSB, as the case may be, failing which the conditions and/or variations shall be deemed to have been accepted. In the event of such appeal, the Affected Party shall inform the other parties on whether he/it accepts the decision upon the appeal within 14 days upon receipt of the same from the FIC or KPJSB, as the case may be, failing which the results of the appeal shall be deemed accepted.
In the event that one party shall give notice to the other party within the said 14 days period that he/it does not accept the results of the original application or the results of the appeal, as the case may be, then the condition precedent shall be deemed not to have been fulfilled. In the event that the condition precedent is not fulfilled within 90 days from the date of the Agreement ("Cut-Off Date"), KPJSB's solicitors shall refund the Deposit (as defined below) to KPJSB and return all documents and things forwarded to KPJSB by the Vendors within 14 days, and the Agreement shall terminate;
(d) Dr. Ong Boon Taik @ Ong Boon Teik (who is a medical specialist practicing at the hospital owned by TMCSB) warrants and undertakes that he shall continue to practise full time at the hospital for a period of at least three (3) years from the Completion Date (as defined below); and (e) The aggregate purchase price of RM18,000,000 shall be paid by KPJSB in the following manner:- (i) An aggregate deposit of RM1,800,000 (being 10% of the purchase price) ("Deposit")shall be paid to KPJSB's solicitors as stakeholders upon the execution of the Agreement, and the amount shall be released to the Vendors on or before the expiry of 30 days from the date on which the conditions precedent are fulfilled or waived or such period as may be mutually extended by the parties in writing ("Completion Date"); and (ii) The balance of RM16,200,000 (being 90% of the purchase price) shall be paid to the Vendors on the Completion Date.
3.2 Basis of Determining the Consideration for the Proposed Acquisition
The purchase consideration for the Proposed Acquisition was arrived at on a willing-buyer willing-seller basis after taking into consideration the earnings potential of TMCSB and the net assets of TMCSB.
4. ASSUMPTION OF LIABILITIES AND SOURCE OF FINANCING
There are no liabilities to be assumed by KPJ or KPJSB as an entity arising from the Proposed Acquisition.
The purchase consideration for the Proposed Acquisition will be financed from the KPJ Group's internally generated funds.
5. VENDORS' ORIGINAL COST AND DATE OF INVESTMENT
The Vendors' total cost of investment in the Sale Shares is RM231,619 and the investment was made since the incorporation of TMCSB.
6. PROSPECTS OF THE HEALTHCARE INDUSTRY
The demand for private healthcare has been good over the last few years. More people are seeking better medical care and services especially among urban dwellers. The growing affluence of the Malaysian population and their increasing demand for better healthcare services as well as the Malaysian Government's national effort to promote health tourism has contributed to the growth in the usage of private hospitals in Malaysia. Under the Ninth Malaysia Plan, efforts will be undertaken to consolidate healthcare services, enhance human resource development and optimize resource allocation. Improvements in the delivery system will be undertaken with greater involvement of the private sector and non-governmental organizations. In view of the above factors, the KPJ Group believes that the prospects of the healthcare industry including TMCSB will remain promising.
7. INVESTMENT CONSIDERATIONS
The overall performance of TMCSB is subject to certain risks inherent in the healthcare industry. These business risks include, but are not limited to, adverse changes in general political, economic, business and credit conditions such as a general downturn in the global, regional or national economy, inflation, adverse changes in taxation and interest rates, changes in demographic patterns, shortage in the supply of medical personnel, increase in operating costs, obsolescence of healthcare technologies, adverse changes in legislation, and the entry of new players offering similar services as those of TMCSB in nearby locations.
8. RATIONALE FOR THE PROPOSED ACQUISITION
The Proposed Acquisition is in line with the KPJ Group's objective to increase its network of hospitals to locations where private healthcare is in demand.
9. EFFECTS OF THE PROPOSED ACQUISITION
The effects of the Proposed Acquisition are as follows:-
9.1 Share Capital and Shareholding Structure
The Proposed Acquisition will not have any effect on the share capital and shareholding structure of KPJ, as it will not involve any issuance of new shares in the Company.
9.2 Earnings per Share ("EPS")
The Proposed Acquisition is not expected to have a material effect on the EPS of the KPJ Group for the financial year ending 31 December 2007.
9.3 Net Assets
The Proposed Acquisition will not have any material effect on the net assets of the KPJ Group.
9.4 Gearing
The Proposed Acquisition is not expected to have any material effect on the gearing position of the KPJ Group.
9.5 Dividend
The Proposed Acquisition is not expected to have any material effect on the policy of the Company in recommending dividends to its shareholders.
10. APPROVALS REQUIRED
The Proposed Acquisition is subject to the approval of the following:-
(a) The FIC; and (b) Any other relevant authorities (if required).
The Proposed Acquisition is not subject to the approval of the shareholders of KPJ.
KPJ expects to submit an application to the FIC within one (1) month from the date of this announcement.
11. ESTIMATED TIMEFRAME FOR COMPLETION
KPJ expects to complete the Proposed Acquisition by January 2008.
12. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
None of the directors or substantial shareholders of KPJ or persons connected with them has any interest, direct or indirect, in the Proposed Acquisition.
13. DIRECTORS' STATEMENT
Having considered all aspects of the Proposed Acquisition, the Board is of the opinion that the Proposed Acquisition is in the best interests of the KPJ Group in the long term.
14. DEPARTURE FROM THE SC'S POLICIES AND GUIDELINES ON ISSUE / OFFER OF SECURITIES ("SC GUIDELINES")
To the best knowledge and belief of the Board, there are no departures from the SC Guidelines in connection with the Proposed Acquisition.
15. DOCUMENTS FOR INSPECTION
A copy of the Agreement is available for inspection by the shareholders of KPJ at the Registered Office of KPJ at 13th Floor, Menara Johor Corporation, Kotaraya, 80000 Johor Bahru, Johor Darul Takzim, during normal office hours from Mondays to Fridays (except public holidays) for a period of three (3) months commencing from the date of this announcement.
This announcement is dated 7 December 2007.
Table 1
Particulars of the Vendors and the Apportionment of the Sale Shares and the Purchase Price
| Vendors |
Sale Shares (Ordinary Shares)
|
|
Purchase Price
|
Deposit
|
Balance
|
|
No. of Shares
|
(%)
|
(RM)
|
(RM
|
(RM)
|
| Dr. Ong Boon Taik @ Ong Boon Teik |
87,970
|
37.98
|
6,836,486
|
683,649
|
6,152,837
|
| Cheong Pui Lan |
53,316
|
23.02
|
4,143,391
|
414,339
|
3,729,052
|
| Edmund Ong Teong Liat |
30,111
|
13.00
|
2,340,041
|
234,004
|
2,106,037
|
| Daryl Ong Teong Sheen |
30,111
|
13.00
|
2,340,041
|
234,004
|
2,106,037
|
| Charleen Ong Tzu Fern |
30,111
|
13.00
|
2,340,041
|
234,004
|
2,106,037
|
|
|
|
|
|
|
| TOTAL |
231,619
|
100.00
|
18,000,000
|
1,800,000
|
16,200,000
|
