News
Advance Synergy Berhad (1225-D) ("ASB") United Merchant Group Berhad (286452-T) ("UMG" Or "The Company") Proposed Disposal Of UMG's Entire Equity Interest In United Merchant Finance Berhad ("UMF") To Southern Bank Berhad ("SBB") For Cash ("Proposed Disposal").
BackJan 06, 2000
| General Announcement Reference No MM-000106-54406 |
| Submitting Merchant Bank | : | PERDANA MERCHANT BANKERS BERHAD |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 06/01/2000 |
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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 EQUITY INTEREST IN UNITED MERCHANT FINANCE BERHAD ("UMF") TO SOUTHERN BANK BERHAD ("SBB") FOR CASH ("PROPOSED DISPOSAL"). |
Contents :
1.0 INTRODUCTION
Perdana Merchant Bankers Berhad ("Perdana Bankers") is pleased to announce on behalf of the Board of Directors of ASB and UMG that UMG, a 50.75%-owned subsidiary of ASB, has received the necessary approvals from the Minister of Finance vide a letter from Bank Negara Malaysia ("BNM") dated 6 January 2000 for the proposed disposal of the Company's entire 100% equity interest in UMF to SBB.
On 6 January 2000, UMG entered into a sale of shares agreement ("SSA") with SBB in respect of the Proposed Disposal. Further details of the Proposed Disposal are outlined below.
2.0 DETAILS OF THE PROPOSED DISPOSAL
2.1 Information on the Proposed Disposal and Salient Terms of the SSA
UMG currently holds an aggregate of 229,000,000 ordinary shares of RM1.00 each in UMF representing 100% of the equity interest in UMF. In line with the merger programme initiated by BNM, UMG proposes to divest its entire equity interest in UMF to SBB.
Amongst some of the principal terms and conditions of the SSA for the Proposed Disposal are as follows:-
The UMF shares are to be disposed free from all claims, charges, equities, liens, pledges, trust and other encumbrances and with all rights, benefits and entitlements attaching thereto including without limitation, all dividends and distributions declared from the last day of the month preceding the completion date which falls on a date not later than seven (7) business days after the fulfilment of the conditions precedent as set out section 6.0 below. ("Completion Date")
Consideration
The consideration is payable wholly by cash, and is equivalent to one point two (1.2) times the net tangible assets ("NTA") of UMF to be determined by a firm of public accountants, namely Messrs. Kassim Chan & Co ("the Designated Auditors").
The consideration is to be determined based on the NTA of UMF on the last day of the month immediately preceding the completion date of the SSA ("Completion Accounts Date") after making theadjustments in the manner set out in the SSA ("Completion NTA").
The formula set out in the SSA shall be used to determine the Completion NTA and it includes adjustments for general provisions and revaluation of loan assets and other tangible and intangible assets.
For illustrative purposes, should the completion of the SSA fall on 23 March 2000, the purchase consideration for UMF would be determined at 1.2 times the Completion NTA as at 29 February 2000.
Completion Audit
On Completion Date, the Designated Auditors shall commence a verification exercise on the accounts of UMF as at Completion Accounts Date to determine the Completion NTA. In the event of any disagreement with regard to any of the assets value in the determination of the Completion NTA, UMG shall have the option to purchase the disputed asset at its net book value.
Terms of payment
The consideration for UMF is payable fully in cash in the following manner:-
2.2 Basis of the Sale Consideration
On Completion Date, the Designated Auditors shall commence a verification exercise on the accounts of UMF as at Completion Accounts Date to determine the Completion NTA. In the event of any disagreement with regard to any of the assets value in the determination of the Completion NTA, UMG shall have the option to purchase the disputed asset at its net book value.
Terms of payment
The consideration for UMF is payable fully in cash in the following manner:-
- A deposit of RM31,941,480 representing 10% of the NTA of UMF as at 30 June 1999 ("Initial Consideration") is to be paid upon the execution of the SSA;
- The remaining balance of RM287,473,320 representing 90% of the Initial Consideration is to be paid on Completion Date;
- Should the final consideration (as calculated based on 1.2 times the Completion NTA) ("Final Consideration") exceed the Initial Consideration, the difference is payable in cash by SBB to UMG, with interest calculated three (3) months from the Completion Date up to the date of receipt by UMG of the difference; and
- Conversely, should the Final Consideration be lower than the Initial Consideration, the difference is refundable in cash by UMG to SBB, with interest calculated three (3) months from the Completion Date up to the date of receipt by SBB of the difference.
The method of determination of the sale consideration for the Proposed Disposal was negotiated on a willing buyer-willing seller basis after taking into consideration the underlying NTA of UMF and the premium for the entire controlling block of shares in UMF and for the finance company licence.
2.3 Proposed Utilisation of proceeds from the Proposed Disposal
The total proceeds from the Proposed Disposal will be utilised towards new investment opportunities that may arise. In the meantime, the proceeds will be placed out to earn interest income for UMG.
3.1 UMF
UMF was incorporated on 29 June 1960 under the Companies Ordinance, 1940-1946 as a company limited by shares under the name of Tong Bee Company (Malaya) Limited. On 17 May 1980, the Company changed its name to Malayan United Finance Berhad and thereafter on 26 June 1989, its name was changed to MUI Finance Berhad. The Company assumed its present name on 10 January 1994.
The authorised share capital of UMF is RM800,000,000 comprising 800,000,000 ordinary shares of RM1.00 each of which 229,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up.
UMF is a licenced finance company under the Banking and Financial Institutions Act, 1989 and is involved in the provision of a wide range of financial products and services.
As at 31 December 1998, there were 38 branches in total in Peninsular Malaysia, Sabah and Sarawak.
As at 31 December 1998, UMF Group's loan assets stood at RM3,822,572,000, and total deposits were RM4,641,065,000.
The audited consolidated net tangible assets of UMF Group as at 31 December 1998 was RM249,360,000 or equivalent to RM1.09 per ordinary UMF share, while the consolidated loss after tax and zakat of UMF for the financial year ended 31 December 1998 was RM120,228,000.
UMG's written-down value of the investment in UMF as at 31 December 1998 was RM230,216,641 and UMG has held the entire equity interest in UMF since 21 June 1994.
3.2 UMGUMG's written-down value of the investment in UMF as at 31 December 1998 was RM230,216,641 and UMG has held the entire equity interest in UMF since 21 June 1994.
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 merchant banking and finance company business, real property investment and nominee services.
On 19 October 1999, UMG completed its disposal of Ban Hin Lee Bank Berhad ("BHLB"). Upon completion of the Proposed Disposal, UMG will primarily be involved in the merchant banking business via its 70.1% equity interest in Perdana Merchant Bankers Berhad.
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 merchant banking and finance company business, real property investment and nominee services.
On 19 October 1999, UMG completed its disposal of Ban Hin Lee Bank Berhad ("BHLB"). Upon completion of the Proposed Disposal, UMG will primarily be involved in the merchant banking business via its 70.1% equity interest in Perdana Merchant Bankers Berhad.
3.3 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 719,522,678 ordinary shares have been issued and fully paid-up.
SBB is licensed under the Banking and Financial Institutions Act, 1989. In addition to its banking business, SBB through its subsidiary companies are also involved in finance, property management, asset management, venture capital, the provision of nominee services, stockbroking, investment and unit trust management.
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 719,522,678 ordinary shares have been issued and fully paid-up.
SBB is licensed under the Banking and Financial Institutions Act, 1989. In addition to its banking business, SBB through its subsidiary companies are also involved in finance, property management, asset management, venture capital, the provision of nominee services, stockbroking, investment and unit trust management.
4.0 RATIONALE OF THE PROPOSED DISPOSAL
The Proposed Disposal is in line with the recent merger programme by BNM for financial institutions in Malaysia. With the cash proceeds arising from the Proposed Disposal, the UMG Group will be well placed to consider new investment opportunities that can help to maximise returns to its shareholders.
5.1 Share capital
The Proposed Disposal will not have any effect on the issued and paid-up share capital of the Company.
5.2 Earnings
The effect on the earnings of the UMG Group is dependent upon the amount of Final Consideration that is to be determined after the Completion Date.
However, for illustrative purposes, based on the Initial Consideration of RM319.4 million and UMF's contribution of the unaudited profit after taxation up to 30 June 1999, the Proposed Disposal is expected to give rise to an exceptional gain of approximately RM46.8 million for the UMG Group for the financial year ending 31 December 2000.
The future earnings of the UMG Group would be dependent on the interest rates derived from the placement of the sale proceeds into banking institutions and on the performance of new investments embarked upon by UMG.However, for illustrative purposes, based on the Initial Consideration of RM319.4 million and UMF's contribution of the unaudited profit after taxation up to 30 June 1999, the Proposed Disposal is expected to give rise to an exceptional gain of approximately RM46.8 million for the UMG Group for the financial year ending 31 December 2000.
5.3 Net Tangible Assets ("NTA")
As the Final Consideration is to be determined after the Completion Date, the actual effects of the Proposed Disposal on the NTA of the UMG Group remains uncertain.
However, for illustrative purposes, at an Initial Consideration of RM319.4 million, after taking into account the effect of the Proposed Disposal, the proforma audited NTA as at 31 December 1998 of the UMG Group is expected to increase by 22.3 sen on the assumption that the Proposed Disposal was effected on that date.
5.4 Substantial Shareholders
The Proposed Disposal will not have any effect on the substantial shareholding structure of UMG.
6.0 CONDITIONS OF THE PROPOSED DISPOSAL
The Proposed Disposal is conditional upon the following:-
(a) The approval of the Minister of Finance and/or BNM, which was obtained on 6 January 2000;
(b) The approval of the Foreign Investment Committee, to be obtained by SBB;
(c) SBB being satisfied that there has been no breach of any of the representations and warranties given by UMG to SBB;
(d) SBB being satisfied that there has been no material adverse change in the business, assets or financial position of UMF from the date of the SSA;
(b) The approval of the Foreign Investment Committee, to be obtained by SBB;
(c) SBB being satisfied that there has been no breach of any of the representations and warranties given by UMG to SBB;
(d) SBB being satisfied that there has been no material adverse change in the business, assets or financial position of UMF from the date of the SSA;
(e) The approval of the shareholders of UMG and SBB in respective extraordinary general meetings to be convened; and
(f) Any other relevant authorities.
(f) Any other relevant authorities.
The Completion Date shall take place not later than 5.00 p.m. on the date falling seven (7) business days from the date of fulfilment of all the conditions as listed above, or such other date as SBB and UMG may mutually agree in writing.
7.0 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS
8.0 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.
9.0 INSPECTION OF DOCUMENTS
A copy of the SSA 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.