News
Advance Synergy Berhad (1225-D) ("ASB") United Merchant Group Berhad (286452-T) ("UMG" Or The "Company") Proposed Disposal Of UMG's Entire 43.53% Equity Interests In Ban Hin Lee Bank Berhad ("BHLB") ("Proposed Disposal")
BackAug 06, 1999
| General Announcement Reference No MM-990806-50062 |
| Submitting Merchant Bank | : | PERDANA MERCHANT BANKERS BERHAD |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 06/08/1999 |
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| Type | : | Announcement |
| Subject | : | ADVANCE SYNERGY BERHAD (1225-D) ("ASB") UNITED MERCHANT GROUP BERHAD (286452-T) ("UMG" or the "Company") Proposed disposal of UMG's entire 43.53% equity interests in Ban Hin Lee Bank Berhad ("BHLB") ("Proposed Disposal") |
Contents :
1.0 INTRODUCTION
On behalf of the Board of Directors of ASB and UMG, Perdana Merchant Bankers Berhad ("Perdana Bankers") is pleased to announce that UMG, a 50.75% owned subsidiary of ASB has on 3 August 1999 received the necessary approvals from the Honourable Minister of Finance vide a letter from Bank Negara Malaysia ("BNM") for the disposal of the Company's entire 43.53% equity interests in BHLB to Southern Bank Berhad ("SBB") for a total cash consideration of RM372,620,000 or equivalent to RM5.00 per BHLB ordinary share of RM1.00 each.
On 5 August 1999, UMG entered into a sale and purchase agreement ("SPA") with SBB in respect of the Proposed Disposal. The salient terms of the SPA with SBB are outlined in the section below.
2.0 SALIENT TERMS OF THE SPA
UMG has agreed to sell 74,524,000 ordinary shares of RM1.00 each in BHLB, representing 43.53% of the total issued and paid-up share capital of BHLB for a cash consideration of RM372,620,000.
The BHLB shares are to be disposed free from all liens, charges and encumbrances and with all rights attached thereto and all dividends and distributions declared after 5 August 1999.
Terms of payment
The cash consideration of RM372,620,000 is payable in the following manner:-
1. A deposit of RM37,262,000 representing 10% of the purchase consideration is to be paid upon the execution of the SPA; and
2. The balance of the consideration is to be paid on completion as defined in the following section.
Conditions of the SPA
The SPA is conditional upon the following approvals being obtained on or before 30 September 1999:-
1. The Minister of Finance and/or BNM, which was obtained vide a letter from BNM dated 3 August 1999;
2. FIC;
3. Shareholders of UMG and SBB in respective extraordinary general meetings to be held; and
4. SC, and any other relevant authorities, if required.
The cash consideration of RM372,620,000 is payable in the following manner:-
1. A deposit of RM37,262,000 representing 10% of the purchase consideration is to be paid upon the execution of the SPA; and
2. The balance of the consideration is to be paid on completion as defined in the following section.
Conditions of the SPA
The SPA is conditional upon the following approvals being obtained on or before 30 September 1999:-
1. The Minister of Finance and/or BNM, which was obtained vide a letter from BNM dated 3 August 1999;
2. FIC;
3. Shareholders of UMG and SBB in respective extraordinary general meetings to be held; and
4. SC, and any other relevant authorities, if required.
The completion of the SPA would take place within seven (7) working days from the date of fulfilment of the last condition precedent above.
Basis of consideration
The sale consideration is at a price to book ratio of approximately 1.50 times the audited net tangible assets of BHLB as at 31 December 1998 and a net after-tax price earning ratio of 35.7 times based on the profit after taxation of BHLB for the financial year ended 31 December 1998.
The Proposed Disposal is in line with the recent merger programme by BNM of financial institutions in Malaysia. UMG, in divesting its investment in an associated company would have cash proceeds to repay bank borrowings of approximately RM268.3 million. The remaining cash of approximately RM104 million will provide UMG with cash resources for future investment opportunities.
4.1 Share capital
The Proposed Disposal will not have any effect on the issued and paid-up share capital of the Company.
4.2 Earnings
The Proposed Disposal is expected to result in an exceptional loss of approximately RM38.8 million to the Company, and RM121 million to the UMG Group.
However, with the cash resources to repay its bank borrowings of RM268.3 million as at 30 June 1999, the Company expects to enjoy interest savings of approximately RM27 million per annum (based on estimated interest rates of 9.75% to 10.25%).
4.3 Net Tangible Assets ("NTA")However, with the cash resources to repay its bank borrowings of RM268.3 million as at 30 June 1999, the Company expects to enjoy interest savings of approximately RM27 million per annum (based on estimated interest rates of 9.75% to 10.25%).
The NTA of the UMG Group as at 31 December 1998 is expected to decrease by 38.6 sen per share as a result of the exceptional loss arising from the Proposed Disposal.
4.4 Substantial Shareholders
The Proposed Disposal will not have any effect on the substantial shareholding structure of UMG.
5.0 INFORMATION ON BHLB
BHLB was incorporated on 17 September 1935 in the Federation of Malaya under the Companies Ordinance, 1923 as a company limited by shares under the name of Ban Hin Lee Bank Ltd.. On 20 October 1966, the Company was converted into a public company under the Companies Act, 1965 and assumed its present name.
The authorised share capital of BHLB is 1,000,000,000 ordinary shares of RM1.00 each. Its current issued and paid-up share capital is RM171,187,500 comprising 171,187,500 ordinary shares of RM1.00 each.
On 7 January 1991, BHLB was officially listed on the Main Board of the Kuala Lumpur Stock Exchange.
BHLB's principal activities are in commercial banking business and the provision of related financial services which also includes interest-free banking business.
As at 31 December 1998, there were 46 branches in total in both Peninsular Malaysia and Sabah and Sarawak. During the first half of 1999, two (2) new branches were opened in Alor Setar and Nilai with one (1) new branch to be opened in the second half of 1999.
As at 31 December 1998, BHLB's loan assets stood at RM4.82 billion, and total deposits (both conventional and Islamic deposits) were RM5.80 billion. In addition, BHLB is also involved in fee-based income activities. Its proprietary automated teller machines total seventy-one as at 31 December 1998.
BHLB has eight (8) subsidiary companies, and they are principally involved in the provision of nominees services, management of unit trust funds, investment management and in property holding.
The audited consolidated net tangible assets of BHLB as at 31 December 1998 was RM570,720,000 or equivalent to RM3.33 per ordinary BHLB share, while the consolidated profit after tax of BHLB for the financial year ended 31 December 1998 was RM23,915,000.
The original total cost of investment in BHLB by UMG since 26 June 1995 was RM411,399,000.
The original total cost of investment in BHLB by UMG since 26 June 1995 was RM411,399,000.
6.0 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
7.0 DIRECTORS' OPINION
Having considered all aspects of the Proposed Disposal, the Board of Directors of UMG are of the opinion that the Proposed Disposal is fair and reasonable and in the long term interest of the UMG Group.
8.0 INSPECTION OF DOCUMENTS
A copy of the Agreement is available for inspection at the Registered Office of UMG at Level 29, Menara Shahzan Insas, 30, Jalan Sultan Ismail, 50250 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of two (2) weeks from the date of this announcement.
APPENDIX I
INFORMATION ON UMG
UMG was incorporated in Malaysia as a private limited company under the Companies Act, 1965 on 10 January 1994 under the name United Merchant Group Sdn. Bhd. UMG was converted from a private limited company into a public company on 4 April 1994, and assumed its present name on the same date.
Presently, the Company has an authorised share capital of RM1,000,000,000 represented by 1,000,000,000 ordinary shares of RM1.00 each. Its issued and paid-up share capital as at the date of this announcement is RM313,721,671 represented by 313,721,671 ordinary shares of RM1.00 each.
UMG was listed on the Main Board of the Kuala Lumpur Stock Exchange on 18 August 1994.
The principal activities of the Company consist of investment holding and provision of management services.
The principal activities of the Group relate to banking and financial services including commercial banking, merchant banking and finance company business, real property investment and nominee services.
Other than its equity interests in BHLB, an associated company of UMG, the Company also holds equity interests in United Merchant Finance Berhad, a licensed finance company and Perdana Merchant Bankers Berhad, which is involved in the merchant banking business.
APPENDIX II
INFORMATION ON SBB
SBB was incorporated as Southern Banking Limited in Malaysia on 21 December 1963 under the Companies Ordinance 1940 to 1946, with an authorised share capital of RM20,000,000 comprising 4,000,000 ordinary shares of RM5.00 each and an issued and paid-up capital of RM40,000,000 comprising 8,000 ordinary shares of RM5.00 each. On 15 April 1966, SBB changed its name to Southern Banking Berhad and was converted into a public company. On 13 January 1984, there was another change of name to Southern Bank Berhad.
SBB was admitted on the Official List of the Kuala Lumpur Stock Exchange on 1 September 1987.
The present authorised share capital of SBB is RM2,000,000,000 comprising 2,000,000,000 ordinary shares of RM1.00 each of which 719.506 ordinary shares have been issued and fully paid-up.
The Bank is licensed under the Banking and Financial Institutions Act, 1989 and commenced business in 1965. In addition to its banking business, SBB through its subsidiary companies is also involved in property management, asset management, venture capital, the provision of nominee services, stockbroking, investment and unit trust management.