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The Board of Directors of Malaysia Building Society Berhad ("MBSB") is pleased to announce that Sigmaprise Sdn Bhd ("Sigmaprise"), a wholly owned subsidiary of MBSB has enterned into a Sale and Lease Back Agreement ("the said Agreement") with Westmount Leisure Sdn Bhd ("the vendor") to acquire a piece of leasehold land held under Pajakan Negeri No. 7164 Lot 353 Kawasan Bandar VIII, Daerah Melaka Tengah, Negeri Melaka measuring approximately 7048.1 square metres in area together with building known as "The Golden Legacy Hotel"("the Hotel") and permanent fittings and fixtures to be acquired by Sigmaprise.
The aggregate value of the consideration is tentatively fixed at RM110 million. The purchase consideration is computed based on the loans balance due from the vendor as at March 31, 2001 after waiving 50% of the penalty interest due. The impact on earnings per share and net tangible assets are not available due to MBSB is still in the process of finalising the restructuring scheme. However, we will make further announcement to the Exchange once the information is made available.
The net book value of the Hotel as per the vendor's latest audited accounts as at December 31, 2000 was RM112 million. There will be no impact on MBSB's share capital and shareholders' shareholdings and there were no liabilities to be assumed arising from the above transaction.
The rational of the transaction is to enhance MBSB's activities. The salient terms of the said Agreement is as follows :-
(i) The property together with fixtures shall be purchased free from all liens claims and encumbrances together with legal possession subject however to the conditions and restrictions of title of the property expressed or implied in the document of title at the purchase price of RM110,000,000.00 upon the terms of the sale and purchase agreement and subject to the condition precedents.
(ii) The sale and purchase transaction is conditional upon amongst others,
(a) the vendor ensuring that all windiung up petitions files against the vendor has been set aside and that there are no other winding up petition filed against the vendor prior to the completion date;
(b) obtaining of Foreign Investment Committee Approval;
(c) obtaining of the State Authority approval;
(d) carrying out & completion of a due diligence review on the property within and the purchaser shall be satisfied with the results thereof;
(e) obtaining of the relevant corporate approvals by the parties.
(iii) The Balance Purchase Price shall be paid and satisfied by the purchaser no later than one (1) month from the date of the Memorandum of Transfer in favour of the purchaser is submitted for registration which payment shall be made by way of paying for and on behalf of the vendor, the redemption sum to the vendor's financier and if any, the remaining of the Balance purchase price shall be paid to the vendor.
The estimated time frame for the completion of the above transaction is approximately three (3) months form the date the aggrement becomes unconditional. The transaction does not involve the issuance and offer of securities. Hence it has not departed from the Commission's Policies and Guidelines on Issue/ Offer of Securities.
As per the Hotel Stock Report for year 2000 issued by the Valuation and Property Services Department of Kementerian Kewangan Malaysia, the average occupancy rate for the Hotel has shown steady growth from 30% in the first quarter to 60% in the second quarter and maintaining at the 60% level in the third quarter of year 2000. The Hotel should be able to maintain it business growth and minimise its risk factors such as a low occupancy rate based on the following factors :-
(i) Promotional activities being carried out by the Melaka State Government to promote tourism in Melaka such as Melaka Tourism Festival that is being held locally in various cities in Malaysia and as well as abroad. For example in June 2000, it would held in Pekan Baru, Indonesia, April 2000 in Singapore and September 2000 in China.
(ii) Promotional activities by Malaysia Airline Systrem("MAS") and Malaysia Tourism Development Corporation ("TDC") such as "Cuti Cuti Malaysia" and Malaysia Mega Sale Carnival to promote tourism imn Malaysia as a whole.
(iii) Introduction of alternate Saturday holidays for the Public Sector.
(iv) The Hotel will not encounter any new competitor in the Melaka hotel sector as there is no new hotel being constructed in Melaka.
The Board also wishes to announce that in their opinion, the transaction is in the best interest of MBSB. The Board of Directors have no interest whether direct or indirect on the transaction.
Thank you.
Yours faithfully,
Mat Rashid Yeop
GROUP COMPANY SECRETARY