Boustead Holdings Berhad ("Boustead" Or "Company") Disposal Of 51% Shareholding In Mariwasa Kraftangan Sdn Bhd ("MKSB") ("Disposal")
1.
INTRODUCTION
The Board of Directors of Boustead, wishes to announce that the Company has on 1 November 1999 ented a memorandum of agreement with MKSB, and Megat Mohamed Abdul Wahab bin Haji Megat Abu Bakar and Rosnah Binti Abdul Latif ("Megat" or "Purchaser") wherein Boustead has on even date concurrently entered into a sale and purchase agreement with Megat to dispose of its 51% equity interest in MKSB.
Set out in the ensuing paragraphs are details of the Disposal.
2.
INFORMATION ON THE DISPOSAL
2.1
Background information on MKSB
MKSB was incorporated in Malaysia under the Companies Act, 1965 as a private limited company on 8 July 1975. The principal activity of MKSB is the sale of pewter, silverware and award medals. MKSB has an authorised share capital of RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each of which 2,800,000 shares have been issued and fully paid-up.
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On 8 August 1994, Boustead purchased from Megat 408,000 ordinary shares of RM1.00 each in MKSB representing 51% of the issued and paid share capital of the company of RM800,000. MKSB subsequently issued an additional 2,000,000 shares which was subscribed by Boustead and Megat in proportion to their shareholdings in MKSB of 51% and 49% respectively.
2.2
Particulars and salient terms of the Disposal
The Disposal involved the disposal by Boustead of its 51% equity interest in MKSB comprising 1,428,000 ordinary shares of RM1.00 each in MKSB for a nominal sale consideration of RM1.00 to Megat.
The salient terms and conditions of the Disposal include inter-alia the following:-
(a) The sale shares are sold with all rights and liabilities attaching thereto with effect from the date of the sale and purchase agreement.
(b) The Disposal is conditional upon the concurrent completion of the memorandum of agreement ("MOA") made between the relevant parties in respect of Boustead's advances to MKSB which totalled RM9,473,247 as at 14 October 1999.
In respect of the said amount, Boustead has agreed to accept RM7,450,752 in settlement of the advancement thereto. This amount would be settled in the following manner:
(i) Cash payment of RM2,000,000; and
(ii) The remaining amount of RM5,450,752 shall be converted into redeemable preference shares which shall have the following feature:
- Dividend of five percent (5%) per annum.
- Shall be redeemable over four (4) years with the first redemption due at the end of the first year and thereafter, on a quarterly basis.
2.3
Basis of arriving at the sale consideration
The sale consideration of RM1.00 was negotiated on a willing buyer-willing seller basis after taking into consideration, inter-alia, the unaudited net capital deficit of MKSB as at 31 July 1999 of RM5,806,000.
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3.
RATIONALE FOR DISPOSAL
MKSB has been incurring losses in the past years. Based on its audited accounts for the year ended 30 June 1998, it registered a net loss of RM3,818,803. Further, Boustead has over the years financed MKSB's working capital requirements with total advancements of approximately RM9.5 million as at 14 October 1999. As such, the Disposal represents an opportunity to the Company to financially relieve itself from continuing to support a loss making entity.
4.
FINANCIAL EFFECTS
4.1
On Share Capital
The Disposal will not have any effect on the share capital of Boustead.
4.2
On Net Tangible Assets
The Disposal would not have any material impact on the net tangible assets of Boustead as at 30 June 1998.
4.3
On Earnings
The Disposal is not expected to have any material impact on the earnings of the Boustead Group for the financial year ending 31 December 1999.
5.
CONDITIONS OF THE DISPOSAL
The Disposal is conditional, inter-alia, upon the following:-
(a) The approval of the Foreign Investment Committee on the acquisition of the sale shares by the purchaser, if required;
(b) The completion of the MOA; and
(c) Approvals of any other relevant authorities being obtained, if required.
6.
INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS AND PERSONS CONNECTED TO THEM
None of the Directors and substantial shareholders of Boustead and persons connected with them has any interest whether direct or indirect, in the Disposal.
