News

We refer to our announcement on 30 November 2010 concerning the granting of a Kuala Lumpur High Court Order on 29 November 2010 (“Court Order”), the effect of which is to compel ASCAP to perform the Proposed Disposal as defined below. The Board of Directors of ASB have on 14 December 2010 received a Notice to convene an Extraordinary General  Meeting of ASCAP (“ASCAP EGM”) on 29 December 2010 to consider and if thought fit, to approve the proposed disposal by ASCAP, a wholly-owned subsidiary of the Company, of ASCAP’s entire shareholding of 49,000,000 ordinary shares of RM1.00 each representing 49% of the total issued and paid-up share capital in ACE Synergy Insurance Berhad (“ASIB”) (“ASIB  Shares”) to ACE INA for a total cash consideration of RM117.0 million (“Proposed Disposal”). ASB has on 29 December 2010 attended the ASCAP EGM and directed the Chairman to adjourn the ASCAP EGM pending a meeting of the shareholders of ASB to consider and if thought fit, to approve the Proposed Disposal.

We wish to inform the Exchange that the Board of Directors of ASB had on 2 February 2011 resolved that the Company seeks approval from its shareholders for the Proposed Disposal.

A circular to the shareholders of ASB setting out information on the Proposed Disposal will be despatched in due course.

Details on the Proposed Disposal 

The Proposed Disposal arises from ACE INA exercising the call option on 4 February 2009 for ASIB Shares for a cash consideration of RM117.0 million. The exercise of the call option was pursuant to the Amended and Restated Shareholders Agreement dated 1 January 2009 between ACE INA, ASCAP and ASB (“ARSA”). The validity of the ARSA and the call option is disputed by ASCAP. 

ACE INA filed the Originating Summons No. D-24 NCC-332-2010 (“OS”) to inter alia, compel ASCAP to forward the board and shareholders resolutions and completion documents in respect of the Proposed Disposal to ACE INA. The Kuala Lumpur High Court had on 29 November 2010 granted with costs various orders sought by ACE INA under the said OS to compel ASCAP to perform the Proposed Disposal.

Pending the outcome of ASCAP’s appeal or any proceedings that may be filed by ASCAP in any court against or in connection with  the Court Order and/or the decision of the Minister of Finance in approving the Proposed Disposal, ASCAP is compelled under the Court Order to perform the Proposed Disposal and the Board of Directors of ASCAP has passed the necessary resolutions for the Proposed Disposal and will convene an adjourned ASCAP EGM in due course to enable its shareholder to consider and if deemed fit to pass the requisite resolution.

The Proposed Disposal is subject to the approval of shareholders of ASB.

The salient features of the Proposed Disposal are as follows:-

a.      Based on the audited financial statements of ASIB for the financial year ended 31 December 2007 and after taking into consideration ASCAP's share of the net asset value of ASIB and the consideration of RM117.0 million, the price/book value multiple is about 1.5 times.

b.      ACE INA shall pay the consideration in cash on completion. 

c.      The ASIB Shares will be sold free from any security, mortgage, lien, charge, pledge, encumbrance and claim or right of any kind, and with all rights attaching thereto and subject to the terms and conditions of the Sale and Purchase Agreement of ASIB Shares.

d.      There are no liabilities to be assumed by ACE INA pursuant to the Proposed Disposal.

The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements is 30.7% which was derived at based on ASCAP’s share of the net profit after tax of ASIB of RM10,019,000 for the financial year ended 31 December 2009 divided by the net profit after tax of the ASB Group of RM32,671,000 for the financial year ended 31 December 2009. 

Background Information on ASIB

ASIB, a public limited company incorporated in Malaysia on 26 October 1995, is licensed to carry out underwriting of all classes of general insurance business in Malaysia under the Insurance Act 1996. The authorised share capital of ASIB is RM100,000,000 divided into 100,000,000 ordinary shares of par value RM1.00 each of which 100,000,000 ordinary shares of par value RM1.00 each have been issued and fully paid-up.

The key financial information of ASIB is set out in Table A.

ASCAP’s original cost of investment in ASIB is RM71,000,000 and the completion date of such investment is 15 January 2003.

Background Information on ACE INA

ACE INA, the holding company of ASIB with 51% equity interest in ASIB, is a corporation established under the laws of Delaware, United States of America (“USA”) and having its principal office at One Beaver Valley Road, Wilmington, Delaware 19803, USA.

Effect of the Proposed Disposal

a.      Share Capital and Substantial Shareholders’ Shareholdings

The Proposed Disposal has no effect on the share capital and substantial shareholders’ shareholdings of ASB as it does not involve any issuance of securities.

b.      Net Assets (“NA”), Gearing, Earnings and Earnings per share (“EPS”)

For illustration purposes, the proforma effects of the Proposed Disposal on the NA per share, gearing, earnings and EPS of the ASB Group are set out in Table B.

Proposed utilisation of proceeds 

As at the date of this announcement, the Board of Directors of ASB is still assessing and evaluating plans for the optimal utilisation of the cash proceeds from the Proposed Disposal for ASB Group.

Rationale 

Pursuant to the Court Order, ASCAP is compelled to perform the Proposed Disposal.  In any event, the Group is expected to benefit from the cash proceeds arising from the Proposed Disposal and the Proposed Disposal is in line with the Group's plan to streamline and focus its resources.

Directors’ and major shareholders’ interest

None of ASB Directors and/or major shareholders, and/or any person connected to them has any interests, direct or indirect, in the Proposed Disposal other than:-

a.      Dato’ Ahmad Sebi Bakar (“Dato' Ahmad”) (who is also a director of ASCAP) whose indirect interest in ASCAP is by virtue of his interest in ASB pursuant to Section 6A of the Companies Act, 1965; and

b.      Suasana Dinamik Sdn Bhd, a company in which Dato' Ahmad is deemed to have an interest therein pursuant to Section 6A of the Companies Act, 1965, has indirect interest in ASCAP by virtue of its interest in ASB pursuant to Section 6A of the Companies Act, 1965.

Directors’ Recommendation

The Board of Directors of ASB (save for Dato' Ahmad, who is also a director of ASCAP and has abstained from expressing his opinion and recommendations in respect of the Proposed Disposal), after having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of ASB Group.

This announcement is dated 2 February 2011.