| General Announcement |
| Reference No JC-070410-16C0F |
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| Type |
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Announcement |
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PROPOSED DISPOSAL OF 70% EQUITY INTEREST IN HEALTHCARE TECHNICAL SERVICES SDN BHD BY KUMPULAN PERUBATAN (JOHOR) SDN BHD, A WHOLLY OWNED SUBSIDIARY OF KPJ HEALTHCARE BERHAD TO DAMANSARA REALTY BERHAD ("PROPOSED DISPOSAL")
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Contents :
1. INTRODUCTION
Kumpulan Perubatan (Johor) Sdn Bhd ("KPJSB") a wholly owned subsidiary of KPJ Healthcare Berhad ("KPJ"), had on 10 April 2007 entered into a conditional sale and purchase agreement ("Conditional SPA") with Damansara Realty Berhad ("DBhd") for the disposal of 70% equity interest in Healthcare Technical Services Sdn Bhd ("HTS") comprising 175,000 shares ("Sale Shares") to DBhd for a cash consideration of RM1,717,032 ("Disposal Consideration").
2. INFORMATION ON KPJSB
KPJSB was incorporated in Malaysia under the Companies Act 1965 on 8 June 1988 as a private limited company under the name of Kemajuan Intisari Sdn Bhd and assumed its present name on 23 August 1989.
KPJSB has an authorised share capital of 100,000,000 ordinary shares of RM1.00 each, of which 90,000,000 shares had been issued and fully paid up.
KPJSB is a wholly owned subsidiary of KPJ, a public company listed on the Main Board of Bursa Malaysia.
The principle activity of KPJSB is basically as an investment and holding company.
For the financial year ended 31 December 2005, KPJSB has registered an audited profit after taxation ("PAT") of RM4,103,762 and net tangible assets ("NTA") of RM25,845,006. For the financial year ended 2006, its unaudited PAT is RM2,810,027 with NTA of RM28,655,033.
3. INFORMATION ON HTS
HTS was incorporated in Malaysia under the Companies Act 1965 on 29 April 1995 as a private limited company under the name of Mobimatic Industries Sdn Bhd and subsequently changed its name to TPM Healthcare Services Sdn Bhd on 16 October 1995 and assumed its present name on 14 August 1997.
HTS has an authorised share capital of 500,000 ordinary shares of RM1.00 each, of which 250,000 shares had been issued and fully paid up.
HTS is a subsidiary of KPJSB where 85% of its equity interest is held by KPJSB, a wholly owned subsidiary of KPJ. The remaining 15% of the equity interest in HTS is held by Ir Yahaya Hassan, the Managing Director of HTS. Yahaya Hassan has agreed to waive his pre-emption rights to the Sale Shares and further given his undertaking to sell his 15% interest in HTS to KPJ within one (1) month of the signing of the Conditional SPA.
HTS is principally involved in the project management, maintenance and other related services. It is currently active in the hospital technical consultation services including hospital planning and design and technical advisory services. HTS has managed more than 20 hospitals projects in Malaysia, Indonesia and Bangladesh worth around RM700 million. In addition, HTS also manages the facilities of about 10 hospitals under the KPJ Group.
For the financial year ended 31 December 2005, HTS has registered an audited PAT of RM231,289 and NTA of RM1,072,227. For the financial year ended 31 December 2006, its unaudited PAT is approximately RM610,663 with NTA of RM1,628,890.
4. DETAILS OF THE PROPOSED DISPOSAL
4.1 Salient terms of the Conditional SPA
i) KPJSB shall sell and DBhd shall purchase the HTS shares free from all encumbrances, liens and pledges;
ii) The cash consideration of RM1,717,032 million for the Sale Shares shall be paid by DBhd to KPJSB as follows :
- A sum of RM171,703.20 being ten percent (10%) of the Disposal Price shall be paid via cash upon the execution of the Conditional SPA
- The Balance Purchase Consideration amounting to RM1,545,328.80 being ninety percent (90%) of the Disposal Price shall be paid on the Completion Date or such date to be mutually agreed by both parties.
iii) The Completion Date for the Conditional SPA shall be the date all the Conditions Precedent is fulfilled and shall not be later than sixty (60) days from the date of the SPA or any such date to be agreed by both parties.
4.2 Basis of the Disposal Consideration
The Disposal Consideration of RM1,717,032 was arrived at on a willing-buyer willing-seller basis after taking into the consideration the unaudited NTA of HTS of approximately RM1.629 million as at 31 December 2006 as well as the future potential earnings of HTS.
The disposal consideration of RM1,717,032 for 70% equity interest in HTS represents the following:
a) based on 70% NTA of HTS as at 31 December 2006 of RM1,201,922 the consideration of RM1,717,032 represents a premium of 0.4 times; and
b) a price earnings multiple of approximately 4 times based on 70% of HTS' unaudited PAT of RM427,464
4.3 Original cost of investment
KPJSB's total cost of investment in HTS is RM314,393 and was incurred between 1996 to 2005. KPJ Group is expected to recognise gain on disposal of RM1,402,639.
4.4 Liabilities to be assumed
There will be no liabilities to be assumed by DBhd pursuant to the Proposed Disposal in accordance with the terms of the Conditional SPA.
4.5 Utilisation of proceeds
The proceeds from the Proposed Disposal shall be utilised as working capital.
4.6 Other terms and conditions of the Conditional SPA
Other terms and conditions of the Conditional SPA are as follows:-
- Legal and financial due diligence on HTS to be carried out by DBhd or its representatives
- Prior to the completion of the SPA, HTS to complete the transfer of the staff seconded by KPJ to HTS
- Prior to the completion of the SPA, HTS to complete the transfer of the biomedical engineering section to KPJ
5. RATIONALE FOR THE PROPOSED DISPOSAL
HTS is principally involved in the healthcare sector from hospital planning, design to project management and maintenance. HTS is also planning to expand similar services into other sectors like construction.
KPJHB Group is principally involved in providing healthcare services through its network of specialist hospitals. KPJ intends to concentrate in this core activity and the disposal of HTS will ensure KPJ will remain in this core activity.
6. EFFECTS OF THE PROPOSED DISPOSAL
6.1 Share Capital
The Proposed Disposal will not have any impact on the issued and paid-up share capital of KPJ.
6.2 NA and Gearing
The Proposed Disposal will not have any effect on NA and gearing of the KPJ Group.
6.3 Substantial Shareholders' Shareholding
The Proposed Disposal will not have any effect on the substantial shareholders' shareholding in KPJ.
6.4 Earnings
The Proposed Disposal is not expected to have any material impact on the earnings of the KPJ Group for the financial year ending 31 December 2007.
7. CONDITIONS PRECEDENT TO THE PROPOSED DISPOSAL
The Proposed Disposal is subject to, inter-alia, the following being obtained:
1. The approval of the Foreign Investment Committee ("FIC")
2. The approval of the Board of KPJSB;
3. The approval of the Board of DBhd; and
4. Any other approvals required, if any, from the relevant authorities.
8. DEPARTURE FROM THE SECURITIES COMMISSION'S POLICIES AND GUIDELINES ON THE ISSUE/OFFER OF SECURITIES ("SC GUIDELINES")
To the best knowledge of the Board of KPJ, the Proposed Disposal does not depart from the SC Guidelines.
9. DIRECTORS' AND SUBSTANTIAL INTEREST
Johor Corporation ("JCorp") is deemed interested in the Proposed Disposal by virtue of it being a common substantial shareholder of DBhd and KPJ. Kulim (Malaysia) Berhad, KPJSB, and Johor Land Berhad are deemed interested in the Proposed Disposal by virtue of them being persons connected with JCorp.
Tan Sri Dato' Muhammad Ali Hashim, Datin Paduka Siti Sa'diah Sh Bakir and Kamaruzzaman Abu Kassim are deemed interested in the Proposed Disposal by virtue of them being the directors of KPJ and the directors of several companies within JCorp Group.
The Managing Director of DBhd, Yahaya Hassan is deemed interested in the Proposed Disposal by virtue of him being the director of DBhd and also a shareholder of HTS.
The interested directors have abstained from deliberations and voting at the Board of Directors' meetings for the Proposed Disposal. Accordingly, the said directors and substantial shareholder and persons connected with them will abstain from voting in respect of their direct/indirect shareholdings in KPJ, if any, on the resolution to be tabled at an extraordinary general meeting ("EGM") to be convened for the Proposed Disposal, if required.
Save as disclosed above, none of the Directors and substantial shareholders of the KPJ Group as well as persons connected with them have any interest, direct and/or indirect, in the Proposed Disposal.
10. DIRECTORS' RECOMMENDATION
Having considered the rationale and effects of the Proposed Disposal, the Board of KPJ, save for the interested directors, is of the opinion that the Proposed Disposal is in the long-term interest of the KPJ Group.
11. ESTIMATED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, the Proposed Disposal is expected to be completed in the second quarter of 2007.
12. DOCUMENTS FOR INSPECTION
The SPA is available for inspection at the registered office of KPJ at Level 13, Menara Johor Corporation, Kotaraya, 80000 Johor Bahru, Johor during normal business hours from Monday to Friday (except Public Holidays ) for a period of 3 months from the date of this announcement.
