Announcement Details :
1. INTRODUCTION
On behalf of the Board of Directors of KPJ, AmInvestment Bank Berhad, a member of AmInvestment Bank Group ("AmInvestment Bank"), wishes to announce that the Company is proposing to dispose of its entire interest in the Properties to Al-‘Aqar.
The total sale consideration for the Proposed Disposals of RM305,900,000 is to be satisfied partly by cash consideration of RM189,026,250 and partly by the issuance of 123,025,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to be credited as fully paid-up.
The list of the registered proprietors of the Properties is set out in Table 1.
SSHSB, TMCSB, KKSHSB, BMSHSB, PPTSB, JCorp and PNCSB are collectively known as the "Vendors".
2. DETAILS OF THE PROPOSED DISPOSALS
The Vendors propose to dispose off the entire interest in the Properties to Al-‘Aqar for a total sale consideration of RM305,900,000 ("Total Sale Consideration") to be satisfied as follows:
(i) issuance of 123,025,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit ("Consideration Units"), to be credited as fully paid-up; and
(ii) cash consideration of RM189,026,250 to be funded by new Islamic financing to be raised by Al-‘Aqar.
The Properties are to be disposed off free from encumbrances but subject to the restrictions in interest and conditions whether expressed or implied in the issue documents of title to the Properties and subject to the terms and conditions stipulated in the conditional sale and purchase agreements ("SPA(s)").
Save for PNCSB, all the other Vendors had on 19 August 2008 entered into the SPAs with Amanah Raya Berhad, the trustee for Al-`Aqar ("ARB" or "the Trustee"), who is acting as the purchaser for and on behalf of Al-`Aqar.
The Trustee had, on 18 August 2008, issued a letter of offer to PNCSB for the proposed acquisition of PNC Building for RM26 million ("Letter of Offer"), the terms of which are to be formalised by the execution of a formal agreement between the Trustee, PNCSB and the existing registered owner. The Letter of Offer was duly accepted by PNCSB on 19 August 2008.
Based on the unitholdings of Al-`Aqar as at 31 July 2008 and upon completion of the Proposed Disposals, KPJ and its subsidiaries ("Group") will hold an effective interest of approximately 55.7% in Al-‘Aqar.
The Proposed Disposals shall not be inter-conditional, and are not conditional upon any other corporate proposal undertaken by KPJ.
A detailed breakdown of the Total Sale Consideration is set out in Table 2.
2.1 Information on the Properties
2.1.1 Seremban Specialist Hospital Building
Seremban Specialist Hospital Building is a purpose-built private specialist hospital together with all fixtures and fittings erected on freehold land held under title nos. GRN 51612, GRN 51630, Lot Nos. 17522, 17523 and on a leasehold land PN 25974, Lot No. 24007 situated in Pekan Bukit Kepayang, District of Seremban, with land area of 16,823.0 sq. m. bearing postal address Lot 6219 and 6220, Jalan Toman 1, Kemayan Square, 70200 Seremban, Negeri Sembilan.
The registered owner of Seremban Specialist Hospital Building is SSHSB.
SSHSB proposes to dispose off the Seremban Specialist Hospital Building to Al-‘Aqar for a total consideration of RM50,100,000 to be satisfied by the following:
(i) Issuance of 23,731,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to SSHSB; and
(ii) Cash consideration of RM27,555,550 to be raised from new Islamic financing by Al-‘Aqar.
Seremban Specialist Hospital Building is subject to encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to Seremban Specialist Hospital Building upon the terms and conditions stipulated in the SPA entered into between SSHSB and the Trustee.
Other pertinent information in respect of Seremban Specialist Hospital Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 3.
2.1.2 Taiping Medical Centre Building
Taiping Medical Centre Building is a purpose-built private specialist hospital comprising a four (4) storey main hospital building and a parcel of commercial lot with a single-storey store building together with all fixtures and fittings erected on leasehold land held under title nos. PN 235465 - PN 235468, PN 235470, PN 235471 and HSD 2094/89, Lot Nos. 3102 - 3107 and PT 1106 situated in Town of Taiping, Daerah Larut & Matang, Perak collectively with surveyed/provisional land area of 4,439.2 sq. m. bearing postal address No. 39, 41, 43, 45, 47 & 49, Jalan Medan Taiping 2, Medan Taiping, 34000 Taiping Perak.
The registered owner of Taiping Medical Centre Building is TMCSB.
TMCSB proposes to dispose off the Taiping Medical Centre Building to Al-‘Aqar for a total consideration of RM8,800,000 to be satisfied by the following:
(i) Issuance of 3,334,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to TMCSB; and
(ii) Cash consideration of RM5,632,700 to be raised from new Islamic financing by Al-‘Aqar.
Taiping Medical Centre Building is free from any encumbrances but subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to Taiping Medical Centre Building upon the terms and conditions stipulated in the SPA entered into between TMCSB and the Trustee.
Other pertinent information in respect of Taiping Medical Centre Building is set out in Table 4.
2.1.3 Kota Kinabalu Specialist Hospital Building
Kota Kinabalu Specialist Hospital Building is a five (5)-storey purpose built private specialist hospital building together with all fixtures and fittings erected on a piece of leasehold land held under title no. Town Lease 017548828 situated at Kota Kinabalu with land area of 3,157.6 sq. m. bearing postal address Lorong Pokok Tepus 1, Off Jalan Damai, 88300 Kota Kinabalu, Sabah.
The registered owner of Kota Kinabalu Specialist Hospital Building is KKSHSB.
KKSHSB proposes to dispose off the Kota Kinabalu Specialist Hospital Building to Al-‘Aqar for a total consideration of RM13,300,000 to be satisfied by the following:
(i) Issuance of 9,100,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to KKSHSB; and
(ii) Cash consideration of RM4,655,000 to be raised from new Islamic financing by Al-‘Aqar.
Kota Kinabalu Specialist Hospital Building is subject to encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to Kota Kinabalu Specialist Hospital Building upon the terms and conditions stipulated in the SPA entered into between KKSHSB and the Trustee.
Other pertinent information in respect of Kota Kinabalu Specialist Hospital Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 5.
2.1.4 Bukit Mertajam Specialist Hospital Building
Bukit Mertajam Specialist Hospital Building is a six (6)-storey purpose built private specialist hospital building together with all fixtures and fittings erected on freehold land held under title no. GRN 19017, GRN 41544, GRN 38350 and HSD 47983, Lot Nos. 54, 55, 1417 and 1529 situated at Section 5, Town of Bukit Mertajam, Seberang Perai Tengah, Pulau Pinang and collectively having a land area of 12,455.9 sq. m. bearing postal address No. 565, Jalan Sungai Rambai, 14000 Bukit Mertajam, Pulau Pinang.
The registered owner of Bukit Mertajam Specialist Hospital Building is BMSHSB.
BMSHSB proposes to dispose off the Bukit Mertajam Specialist Hospital Building to Al-‘Aqar for a total consideration of RM14,100,000 to be satisfied by the following:
(i) Issuance of 8,608,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to BMSHSB; and
(ii) Cash consideration of RM5,922,400 to be raised from new Islamic financing by Al-‘Aqar.
Bukit Mertajam Specialist Hospital Building is subject to encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to Bukit Mertajam Specialist Hospital Building upon the terms and conditions stipulated in the SPA entered into between BMSHSB and the Trustee.
Other pertinent information in respect of Bukit Mertajam Specialist Hospital Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 6.
2.1.5 KPJ Penang Specialist Hospital Building
KPJ Penang Specialist Hospital Building is a purpose built private specialist hospital building comprising of a five (5) storey main hospital building together with all fixtures and fittings erected on a freehold land held under title no. HSM 375, Lot No. PT 799 situated at Mukim 7, Seberang Perai Tengah on a land area of 20,234.3 sq. m. bearing the postal address No. PT 799, Jalan Perda Utama, Bandar Perda, 14000 Bukit Mertajam, Pulau Pinang. KPJ Penang Specialist Hospital is expected to commence operation by end 2008.
The registered owner of KPJ Penang Specialist Hospital Building is BMSHSB.
BMSHSB proposes to dispose of the KPJ Penang Specialist Hospital Building to Al-‘Aqar for a total consideration of RM53,600,000 to be satisfied by the following:
(i) Issuance of 2,821,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to BMSHSB; and
(ii) Cash consideration of RM50,920,050 to be raised from new Islamic financing by Al-‘Aqar.
KPJ Penang Specialist Hospital Building is subject to encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to KPJ Penang Specialist Hospital Building upon the terms and subject to the terms and conditions stipulated in the SPA entered into between BMSHSB and the Trustee.
Other pertinent information in respect of KPJ Penang Specialist Hospital Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 7.
2.1.6 Tawakal Hospital Existing Building
Tawakal Hospital Existing Building is a renovated four (4)-storey shop office building comprising eighteen (18) units together with all fixtures and fittings erected on freehold land held under title nos. GRN 4412 to GRN 4425, GRN 4432 to GRN 4436, Lot Nos. 78 to 91, Lot Nos. 98 to 102 and leasehold land held under titled nos. PN6271 and PN6272, Lot Nos. 124 and 125 situated at Section 85A, Town of Kuala Lumpur, District of Kuala Lumpur, Federal Territory of Kuala Lumpur and collectively with a combined land area of 2,827.8 sq. m. bearing the postal address No. 202A, Jalan Pahang, 53000 Kuala Lumpur.
The registered owner of Tawakal Hospital Existing Building is PPTSB, save for GRN No. 4423 and 4424, Lot Nos. 89 & 90, Section 85A, Town of Kuala Lumpur, District of Kuala Lumpur, Federal Territory of Kuala Lumpur, which are registered in the name of JCorp ("JCorp Portion").
PPTSB and JCorp propose to dispose off the Tawakal Hospital Existing Building to Al-‘Aqar for a total consideration of RM37,000,000 to be satisfied by the following:
(i) Issuance of 13,631,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to PPTSB; and
(ii) Cash consideration of RM24,050,550 to be raised from new Islamic financing by Al-`Aqar.
Out of the total consideration of RM37,000,000, JCorp will receive RM3,900,000 as the cash consideration for the disposal of JCorp Portion to Al-`Aqar.
Tawakal Hospital Existing Building is subject to the following encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to Tawakal Hospital Existing Building upon the terms and conditions stipulated in the SPA entered into between PPTSB and the Trustee and the Letter of Offer and subject to the terms and conditions stipulated in the SPA to be entered into between JCorp and the Trustee for JCorp Portion.
Other pertinent information in respect of Tawakal Hospital Existing Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 8.
2.1.7 KPJ Tawakal Specialist Hospital Building
KPJ Tawakal Specialist Hospital Building is a seven (7) storey purpose built specialist hospital building with a single storey podium as the main lobby and a three (3) level elevated car park together with all fixtures and fittings erected on a freehold land held under title no. HSD 114982, Lot No. PT 135 situated at Section 85A, Town of Kuala Lumpur, District of Kuala Lumpur, Federal Territory of Kuala Lumpur on a land area of 8,284.0 sq. m. bearing the postal Jalan Pahang Barat / Jalan Sarikei, 53000 Kuala Lumpur. KPJ Tawakal Specialist Hospital Building is expected to commence operation by end 2008.
The registered owner of KPJ Tawakal Specialist Hospital Building is PPTSB.
PPTSB proposes to dispose off the KPJ Tawakal Specialist Hospital Building to Al-‘Aqar for a total consideration of RM103,000,000 to be satisfied by the following:
(i) Issuance of 61,800,000 new units in Al-‘Aqar at an issue price of RM0.95 per unit to SSHSB; and
(ii) Cash consideration of RM44,290,000 to be raised from new Islamic financing by Al-‘Aqar.
KPJ Tawakal Specialist Hospital Building is subject to encumbrances and also subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to KPJ Tawakal Specialist Hospital Building upon the terms and conditions stipulated in the SPA entered into between PPTSB and the Trustee.
Other pertinent information in respect of KPJ Tawakal Specialist Hospital Building and the details of the chargee and encumbrances as at 31 July 2008 are set out in Table 9.
2.1.8 PNC Building
PNC Building is a private nursing and health sciences college consisting of a block of hostel and car parks together with all the fixtures and fittings erected on freehold lands held under title nos. HS(D) 189780 and HS(D) 189781, Lot Nos. PT 7 and PT 8, Bandar Baru Kota Sri Mas, District of Seremban and future expansion site held under title nos. HS(D) 180229, HS(D) 180301, Lot Nos. PT 29558 and PT 29560 situated at Mukim of Labu, District of Seremban, Negeri Sembilan with a combined land area of 91,411.0 sq. m. bearing the postal address PT 17010, Persiaran Seriemas, Kota Seriemas, 71800 Nilai, Negeri Sembilan.
On 4 June 2008, PNCSB entered into a sale and purchase agreement to acquire PNC Building from its existing owner, which is still pending completion.
On 18 August 2008, the Trustee had issued a letter of offer to PNCSB for the proposed acquisition of PNC Building for RM26,000,000, the terms of which are to be formalised by the execution of a formal tripartite agreement between the Trustee, PNCSB and the existing registered owner of PNC Building. The Letter of Offer was duly accepted by PNCSB on 19 August 2008.
PNCSB proposes to dispose off the PNC Building to Al-‘Aqar for a total consideration of RM26,000,000 to be satisfied wholly by cash consideration to be raised from new Islamic financing by Al-‘Aqar.
PNC Building is free from any encumbrances but subject to the restrictions in interest and conditions, whether expressed or implied, in the issue documents of title to PNC Building upon the terms and conditions stipulated in the SPA to be entered into between PNCSB and the Trustee.
Other pertinent information of in respect of PNC Building is set out in Table 10.
3. SALIENT TERMS OF THE SPAs
The Proposed Disposals is subject to, inter alia, the following terms and conditions:
(a) the Properties are free from encumbrances and to be sold subject to any express and implied conditions of title and restrictions in interest affecting the Properties;
(b) specific representations and warranties made by the Vendors and the Trustee; and
(c) mode of payment and satisfaction of the purchase consideration of the Properties.
The Proposed Disposals is also subject to the fulfilment of inter alia, the following conditions precedent:
(a) the approval of the Securities Commission ("SC") in relation to the proposed acquisitions by Al-`Aqar of the Properties;
(b) the approval of the Board and the shareholders of KPJ and the Vendors in their respective meetings and/or general meetings for the disposal of the respective Properties to the Trustee and in the event such approval is given conditionally, the satisfaction of all such conditions to the said approval;
(c) the receipt of approval in principle of Bursa Malaysia Securities Berhad ("Bursa Securities") for the quotation and listing of the Consideration Units on the Main Board of Bursa Securities;
(d) the approval of the unitholders of Al-`Aqar being obtained in accordance with the Guidelines on Real Estate Investment Trusts issued by the SC;
(e) where applicable, the receipt of the relevant Vendors' undertaking in favour of the Trustee or its financier, an undertaking to refund the purchase consideration in the event the transfer of the relevant Properties cannot be registered for any reason whatsoever;
(f) where applicable, the Vendors shall obtain the letter of non-rejection from Tenaga Nasional Berhad for the disposal of the respective Properties to Trustee;
(g) the receipt of a registrable memorandum of transfer of the Properties with the relevant stamp duty office endorsement on the same as being exempted from the payment of stamp duly pursuant to Stamp Duty (Exemption) (No. 4) Order 2004;
(h) all such other consents and regulatory and/or governmental approvals required to be obtained by the Vendors, KPJ and/or the Trustee;
(i) the stakeholder solicitors certifying that all conditions precedent under all the SPAs to be entered into between the Vendors and the Trustee for the Properties are satisfied and the acquisition of the Properties are ready for completion; and
(j) in respect of PNC Building, the proposed tripartite agreement shall include, inter alia, the following terms and conditions:-
(a) the new purchaser at its own cost and expense obtaining the approval or letter of non-objection of the Foreign Investment Committee ("FIC") for the purchase of PNC Building in favour of the new purchaser ("FIC Approval") and in the event such approval is given conditionally, the satisfaction of all such conditions to the said approval ("FIC Approval");
(b) the vendor shall have made and/or caused an application to be made, or the vendor shall have procured the proprietor, I&P Seriemas Sdn Bhd ("Proprietor") to make and/or caused an application to be made to the relevant State Authority under the provisions of the National Land Code, to obtain the consent/approval of such State Authority for the transfer of the P.T. No 29560 and P.T. No 29558 from the Proprietor / the vendor directly to the new purchaser; and
(c) the receipt of confirmation that the memorandum of transfer for PNC Building have been duly perfected and registered at the relevant land office or alternatively, receipt of the original undertaking of the vendor to effect the direct transfer of PNC Building from the purchaser to the new purchaser.
Upon the fulfilment of the conditions precedent, the Vendors will inter-alia, deliver or cause to be delivered to the stakeholder solicitors:
(i) the original issue document of title of the Properties;
(ii) the latest quit rent and assessment receipts in respect of the Properties;
(iii) all such documents required for the purpose of facilitating the registration and transfer of the beneficial and registered ownership in the Properties from the Vendors to the Trustee;
(iv) all security deposits and utilities deposits (if applicable); and
(v) all relevant documents, agreements, licences, permits, approvals, consents, certificate of fitness, plans, building plans and drawings in respect of the Properties (where applicable).
The SPAs for the Properties are not inter-conditional and shall be completed within three (3) months from the date of fulfilment of the conditions precedent of the respective SPAs.
The Lease Arrangement
Upon completion of the SPA, all the Vendors shall inter alia deliver legal possession of the Properties to the Trustee, and save for BMSHSB, enter into lease agreements with the Trustee upon the terms and conditions to be agreed upon.
KPJ Penang Specialist Hospital Building, which is expected to commence operation in November 2008, will be operated by Prai Specialist Hospital Sdn Bhd ("PSHSB") that will lease KPJ Penang Specialist Hospital Building from BMSHSB. Upon completion of the SPA in relation to the Proposed Disposals of KPJ Penang Specialist Hospital Building, BMSHSB will novate the lease agreement to the Trustee upon the terms and conditions to be agreed upon between the parties.
PSHSB was incorporated in Malaysia under the Companies Act on 29 July 2005 as a private limited company under the name of SMC Land & Properties Sdn Bhd and assumed its present name on 7 May 2008. PSHSB is a 100%-owned subsidiary company of KPJ and it is principally operating as a specialist hospital. The current directors are Jasimah Binti Hassan and Tuan Hj Abdol Wahab Bin Baba. As at 31 July 2008, its authorised share capital is 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each are fully issued and paid-up.
4. BASIS OF ARRIVING AT THE TOTAL SALE CONSIDERATION
The Total Sale Consideration for the Proposed Disposals was arrived at on a "willing buyer willing seller" basis after taking into consideration the MV of the Properties which collectively amounts to RM317,750,000 based on the valuations performed by the Independent Valuer vide the valuation report dated 15 July 2008. The adjusted NBV of the Properties as mentioned in Section 8 herein is RM287.40 million.
The valuations for the Properties have been carried out by the Independent Valuer the using appropriate methods of valuation such as Profits Method, Depreciated Replacement Cost Method and Investment Method where applicable. The sale consideration represents an average discount of approximately 4% to the MV of the Properties.
5. BASIS OF DETERMINING THE ISSUE PRICE OF THE CONSIDERATION UNIT
The issue price of the Consideration Units of RM0.95 represents a premium of 5.6% over the 5-day weighted average market price of Al-`Aqar ended 18 August 2008 of RM0.90, being the market day before the date of the SPAs.
6. RANKING OF THE CONSIDERATION UNITS
The Consideration Units shall rank pari passu with other units of Al-‘Aqar without any preference or priority amongst themselves.
7. INFORMATION ON THE COMPANIES INVOLVED IN THE PROPOSED DISPOSALS
7.1 Information on Al-‘Aqar
Al-‘Aqar is a real estate investment trust with an existing fund size of 428.721 million units. The investment objective of Al-‘Aqar is to own and invest in Syariah-compliant healthcare related real estate and real estate-related assets whether directly or indirectly through the ownership of single-purposes companies whose principal assets comprise real estate.
ARB is the Trustee of Al-‘Aqar. The Trustee was established in 1995 when the Department of Public Trustee and Official Administrator Malaysia, which existed since 1921 was corporatised. ARB was incorporated on 29 May 1995 under the Act and established under the Public Trust Corporation Act 1995. As at 31 July 2008, the issued and paid-up share capital of ARB is RM6,000,002 comprising 6,000,002 shares of RM1 each with an authorised share capital of RM10,000,000. ARB is wholly-owned by the Government of Malaysia and its shares are held by the Ministry of Finance (Incorporated) and the Federal Land Commissioner.
The Trustee's functions, duties and responsibilities are set out in the trust deed dated 27 June 2006 and supplemental trust deed dated 16 June 2008 constituting Al-`Aqar KPJ REIT (collectively, "Trust Deed"). The general function, duties and responsibility of the Trustee include, but not limited to, the followings:
(a) acting as the trustee of Al-‘Aqar and safeguarding the rights and interests of the unitholders;
(b) holding the assets of Al-‘Aqar on the Trust Deed for the benefit of the unitholders; and
(c) exercising all the powers of a trustee and the powers that are incidental to the ownership of the assets of Al-‘Aqar.
The management company of Al-‘Aqar is the Damansara REIT Managers Sdn Berhad ("Manager" or "DRMSB"). The Manager was incorporated in Malaysia under the Act under the name of Ultimate Benchmark Sdn Bhd on 8 December 2005 and assumed its present name on 15 March 2006. The issued and fully paid up share capital of the Manager as at 31 July 2008 is RM1,000,000.
The main responsibility of the Manager is to manage Al-‘Aqar's assets and liabilities for the benefit of unitholders. In particular, the Manager is responsible for the day-to-day management of the assets held by Al-‘Aqar and shall at its discretion, make recommendations of the Trustee on the management and operation of the assets and the annual budget.
The list of directors and substantial shareholders of Al-`Aqar are set out in Table 11.
The audited financial information of Al-‘Aqar for the past two (2) years and the latest interim results are set out in Table 12.
7.2 Information on JCorp
JCorp was established under the Johor Corporation Enactment (No. 4 of 1968) (as amended by Enactment No. 5 of 1995) and commenced operation under the name of Johor State Economic Development Corporation and subsequently changed its name to Johor Corporation on 21 November 1995.
JCorp is principally an investment holding entity and its subsidiaries are principally involved in oil palm plantation and processing of palm oil related products, private healthcare service provider, property development, industrial land development and port operations and hospitality service provider. The registered office of JCorp is at 13th Floor, Menara Johor Corporation, Kotaraya, 80000 Johor Bahru, Johor.
Based on the latest audited consolidated financial statements for the FYE 31 December 2007, JCorp registered a consolidated PAT of RM478.00 million and the NA of RM3.701 million.
7.3 Information on the Vendors
7.3.1 SSHSB
SSHSB was incorporated in Malaysia under the Act on 1 June 1967 as a private limited company under the name of Hew Pharmacy Sdn Bhd and assumed its present name on 16 December 1993.
SSHSB is a 72%-owned subsidiary company of KPJ and it is principally operating as a specialist hospital.
The current directors are Hj. Amiruddin Bin Abdul Satar, Jasimah Binti Hassan, Dato' Mohd Haslah Bin Mohamad Amin, Rosman Bin Abdullah, Hj. Abdol Wahab Bin Baba, Dr Wan Hazmy Che Hon, Hj. Mohd Nasir Bin Mohamed and Mohd Taufik Bin Ismail.
As at 31 July 2008, its authorised share capital is 25,000,000 ordinary shares of RM1.00 each, of which 25,000,000 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 31 December 2007, SSHSB registered a PAT of RM1.41 million and the NA and NA per share of RM27.94 million and RM1.12 respectively.
7.3.2 TMCSB
TMCSB was incorporated in Malaysia under the Act on 18 January 1983 as a private limited company under the name of Ong Maternity Centry Sdn Bhd and assumed its present name on 8 January 1993.
TMCSB is a wholly-owned subsidiary of KPJ and it is principally operating as a specialist hospital.
The current directors are Mr Lee Swee Hee, Dr Yoong Fook Ngian, Dr Ong Boon Taik @ Ong Boon Teik, Hj. Ahmad Nasirruddin Bin Harun and Noreen Binti Abdul Rashid.
As at 31 July 2008, its authorised share capital is 500,000 ordinary shares of RM1.00 each, of which 231,619 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 30 April 2007, TMCSB registered a PAT of RM1.75 million and the NA and NA per share of RM10.65 million and RM45.99 respectively.
7.3.3 KKSHSB
KKSHSB was incorporated in Malaysia under the Act on 19 December 1989 as a private limited company under the name of Damai Specialist Centre Sdn Bhd and assumed its present name on 18 February 2008.
KKSHSB is a 95%-owned subsidiary of KPJ and it is principally operating as a specialist hospital.
The current directors are Lee Swee Hee, Datuk Dr Patawari Bin Hj. Patawe, Noreen Binti Abdul Rashid, Hj. Abdol Wahab Bin Baba, Dr Lim Keok Tang and Dr Kok Chin Leong.
As at 31 July 2008, its authorised share capital is 10,000,000 ordinary shares of RM1.00 each, of which 5,947,200 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 31 December 2007, KKSHSB registered a loss after taxation of RM0.54 million and the NA and NA per share of RM10.3 million and RM1.74 respectively.
7.3.4 BMSHSB
BMSHSB was incorporated in Malaysia under the Act on 29 November 1985 as a private limited company under the name of Butterworth Medical Centre Sdn Bhd and subsequently changed its name to Medicare Specialist Centre Holdings Sdn Bhd on 4 November 1993 and assumed its present name on 21 November 2001.
BMSHSB is a 70%-owned subsidiary of KPJ and it is principally operating as a specialist hospital.
The current directors are Jasimah Binti Hassan, Hj. Abdol Wahab Bin Baba, Dr. Ewe Khay Guan, Lim Beng See, Hj. Ahmad Nasirruddin Bin Harun and Nora Binti Buhari.
As at 31 July 2008, its authorised share capital is 20,000,000 ordinary shares of RM1.00 each, of which 13,500,000 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 31 December 2007, BMSHSB registered a PAT of RM1.18 million and the NA and NA per share of RM9.39 million and RM0.70 respectively.
7.3.5 PPTSB
PPTSB was incorporated in Malaysia under the Act on 7 March 1984 as a private limited company.
PPTSB is a wholly-owned subsidiary of KPJ and it is principally operating as a private specialist hospital.
The current directors are Datin Paduka Siti Sa'diah Sh. Bakir, Datuk Dr. Hussein Awang, Datuk Azzat Bin Kamaludin, Dr. Sappany s/o Arnachalam, Jasimah Binti Hassan, Fauziah Binti Johari, Hj. Aminudin Bin Dawam, Amiruddin Bin Abdul Satar and Hj. Abdul Wahab Bin Baba.
As at 31 July 2008, its authorised share capital is 25,000,000 ordinary shares of RM1.00 each, of which 9,195,003 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 31 December 2007, PPTSB registered a PAT of RM6.02 million and the NA and NA per share of RM47.98 million and RM5.22 respectively.
7.3.6 PNCSB
PNCSB was incorporated in Malaysia under the Act on 9 December 1992 as a private limited company.
PNCSB is a wholly-owned subsidiary of KPJ and it is principally operating as a private nursing college.
The current directors are Jasimah Binti Hassan, Hj. Yusof Bin Ismail, Hj. Abdol Wahab Bin Baba, Rabiyah Binti Senin and Mohd Taufik Bin Ismail.
As at 31 July 2008, its authorised share capital is 1,000,000 ordinary shares of RM1.00 each, of which 1,000,000 ordinary shares of RM1.00 each are fully issued and paid-up.
Based on the latest audited financial statements for the FYE 31 December 2007, PNCSB registered a PAT of RM1.38 million and the NA and NA per share of RM2.93 million and RM14.67 respectively.
8. RATIONALE FOR THE PROPOSED DISPOSALS
The Proposed Disposals will allow the KPJ Group to unlock the value of the Properties and realise its investment in the Properties. The aggregate NBV of the Properties as at 31 December 2007 is RM217.86 million. Subsequently in 2008, the NBV of all the Properties shall be adjusted to RM287.40 million pursuant to the completed acquisition of Taiping Medical Centre Building and PNC Building and the inclusion of estimated cost to completion for KPJ Penang Specialist Hospital Building and KPJ Tawakal Specialist Hospital Building of RM69.54 million.
After taking into consideration the MV of the Properties at their respective valuation dates, and the adjusted NBV of all the Properties in 2008 as mentioned above, the estimated capital gain to the KPJ Group is expected to be approximately RM14.61 million (excluding the NBV for JCorp's Portion).
The Proposed Disposals will result in a cash inflow for the KPJ Group of RM185.13 million of which RM157.09 million will be used to reduce its existing bank borrowings.
The Proposed Disposals will also enable the KPJ Group to continue to participate in the local real estate investment trust industry where the growth prospects are expected to be high in view of the current environment in Malaysia which appears to be conducive for real estate investment trust due to the high dividend payouts and flexibilities accorded by the Malaysian authorities. The Manager will be directly involved in the operations of Al-`Aqar, and hence, ensuring that the KPJ Group as a unitholder, will continue to reap benefits from the Properties through the stable cash distribution of Al-`Aqar.
The Consideration Units received by KPJ pursuant to the Proposed Disposals are for investment purposes. However, in the event of good investment opportunities, the Company may sell the Consideration Units to strategic investors / partners to retain the KPJ Group's interest in Al-`Aqar KPJ REIT to below 50%, depending on market condition.
9. EFFECTS OF THE PROPOSED DISPOSALS
9.1 Share Capital and Substantial Shareholder's Shareholding
The Proposed Disposals will not have any effect on the issued and paid up share capital as well as substantial shareholder's shareholding in KPJ.
9.2 Net Assets ("NA") and Gearing
The proforma effects of the Proposed Disposals on the NA, NA per share and gearing of the KPJ Group based on the latest audited consolidated financial statements of KPJ as at 31 December 2007 is set out in Table 13.
9.3 Earnings and Earnings Per Share ("EPS")
The proforma effects of the Proposed Disposals on the earnings and EPS of the KPJ Group for the financial year ended 31 December 2007 are set out in Table 14.
Upon completion of the Proposed Disposals, the net EPS of the Group will increase from 35.73 sen to 46.83 sen.
As mentioned in Section 8 above, the estimated capital gain to the KPJ Group is expected to be approximately RM14.61 million (excluding the NBV for JCorp's Portion).
As the proceeds from the Proposed Disposals will mainly be used for repayment of the KPJ Group's bank borrowing of RM157.09 million as at 31 December 2007, the Proposed Disposals will result in interest savings of approximately RM10.00 million per annum to the KPJ Group. The interest savings and reduction of the loan will contribute positively to the future earnings and cash flows of the KPJ Group.
10. APPROVALS REQUIRED FOR THE PROPOSED DISPOSALS
The Proposed Disposals is conditional upon approvals being obtained from the following:
(i) the approval of the SC in relation to the proposed acquisitions by Al-`Aqar of the Properties;
(ii) the approval of shareholders of KPJ for the Proposed Disposals and in the event such approval is given conditionally, the satisfaction of all such conditions to the said approval;
(iii) the approval of the shareholders and Board of Directors of the Vendors for the Proposed Disposals;
(iv) the receipt of approval in principle of Bursa Securities for the quotation and listing of the Consideration Units on the Main Board of Bursa Securities;
(v) the approval of the unitholders of Al-`Aqar in accordance with the Guidelines on Real Estate Investment Trusts issued by the SC;
(vi) in respect of Seremban Specialist Hospital Building, Taiping Medical Centre Building, KPJ Penang Specialist Hospital Building and PNC Building, the respective vendors shall have made and/or caused an application to be made to the relevant State Authority under the provisions of the National Land Code 1965, to obtain the consent of such State Authority for the disposal of the aforesaid properties to the Trustee; and
(vii) all such other consents and regulatory and/or governmental approvals required to be obtained by the Vendors, PSHSB, KPJ and/or the Trustee in order to effect the completion of the Proposed Disposals;
Apart from the conditions set out in Section 3 and 10 above, and the other conditions precedent set out in the SPAs, KPJ and the Vendors are not subject to any other condition so as to render the Proposed Disposals to be conditional upon any other proposal undertaken or to be undertaken by the Company.
11. UTILISATION OF THE CASH PROCEEDS FROM THE PROPOSED DISPOSALS
The net cash proceeds from the Proposed Disposals amounting to RM189,026,250 would be utilised principally for the repayment of the Group's bank borrowing, working capital and estimated expenses in relation to the Proposed Disposals. The details of the utilisation of proceeds are set out as set out in Table 15.
Based on the KPJ Group's audited consolidated financial statements for the financial year ended 31 December 2007, the bank borrowings of the Group stood at RM393.93 million. Upon repayment of the KPJ Group's bank borrowings using the proceeds from the Proposed Disposals, the bank borrowings shall be reduced to RM292.85 million. Interest savings arising from the repayment on the bank borrowings are expected to be approximately RM10.00 million per annum.
12. DEPARTURE FROM THE GUIDELINES ON THE OFFERING OF EQUITY AND EQUITY-LINKED SECURITIES BY THE SC
To the best knowledge of the Company, the Proposed Disposals do not depart from the Guidelines on the Offering of Equity and Equity-Linked Securities.
13. DIRECTORS AND MAJOR SHAREHOLDER'S INTERESTS
Save as disclosed below, none of the Directors, major shareholders of KPJ and/or persons connected to the Directors and/or major shareholder has any interest, direct and/or indirect, in the Proposed Disposals.
13.1 Directors
Tan Sri Dato' Muhammad Ali Bin Hashim, Datin Paduka Siti Sa'diah Binti Sh Bakir and Kamaruzzaman Bin Abu Kassim are directors of KPJ, the Manager and are also senior management personnel of JCorp. (Tan Sri Dato' Muhammad Ali Bin Hashim, Datin Paduka Siti Sa'diah Binti Sh Bakir, Kamaruzzaman Bin Abu Kassim are collectively referred to as "Interested Directors").
The Interested Directors are deemed interested in the Proposed Disposals by virtue of them being persons connected to KPJ.
Accordingly, the Interested Directors shall abstain and will continue to abstain from all deliberations and voting in respect of any resolution in relation to the Proposed Disposals at the forthcoming Extraordinary General Meeting ("EGM") of KPJ and shall undertake to ensure that persons connected to them shall abstain from voting in respect of their direct and/or indirect interests on the resolution pertaining to the Proposed Disposals to be tabled at the forthcoming EGM of KPJ.
13.2 Major Shareholders
The Vendors are the subsidiary and/or associated companies of KPJ, where JCorp is the ultimate shareholder of KPJ. Therefore, KPJ and JCorp are deemed interested in the Proposed Disposals.
JCorp is also deemed interested in the Proposed Acquisitions, as it is also proposing to dispose its interest in Tawakal Hospital Existing Building to Al-`Aqar for a sale consideration of RM3.9 million.
JCorp shall abstain from voting in respect of its direct and/or indirect interest on the resolution pertaining to the Proposed Disposals to be tabled at the forthcoming EGM of KPJ Group. In addition, JCorp shall undertake to ensure that persons connected to them shall abstain from voting in respect of their direct and/or indirect interest in KPJ Group.
14. APPOINTMENT OF ADVISER
The Board of Directors of KPJ has appointed AmInvestment Bank as the Adviser for the Proposed Disposals. In view of the Interested Parties have interest in the Proposed Disposals as mentioned above,the Board of Directors of KPJ have also appointed OSK Investment Bank Berhad to act as the Independent Adviser for the Proposed Disposals.
15. DIRECTORS' RECOMMENDATION
The Board of Directors, save for the Interested Directors, of KPJ having considered the rationale for the Proposed Disposals, and after careful deliberation, is of the opinion that the Proposed Disposals are in the best and long term interests of the KPJ Group and its shareholders. Accordingly, they recommend that you vote in favour of the ordinary resolution to be tabled at the forthcoming EGM.
16. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Disposals is expected to be completed by the end of 2008.
17. DOCUMENTS FOR INSPECTION
The SPAs, the Letter of Offer, the valuation reports and certificate of valuation will be made available for inspection at the registered office of KPJ at 13th Floor, Menara Johor Corporation, Kotaraya, 80000 Johor Bahru, Johor Darul Takzimduring normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement.
This announcement is dated 19 August 2008.
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