News
Advance Synergy Berhad ("ASB") Proposed Disposal of 100% Equity Interest In Interwell International Limited ("IIL"), A Subsidiary Of ASB
BackDec 20, 2005
| General Announcement Reference No AS-051220-44557 |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 20/12/2005 |
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| Type | : | Announcement |
| Subject | : | ADVANCE SYNERGY BERHAD ("ASB") Proposed Disposal of 100% equity interest in Interwell International Limited ("IIL"), a subsidiary of ASB |
Contents :
1. Introduction
Further to our announcement on 31 October 2005, we wish to inform the Exchange that the following arrangements have been entered into:-
a. Agreement for the Sale of Shares ("Agreement") between Alangka-Suka International Limited ("ASIL") and Alangka-Suka Hotels & Resorts Berhad ("ASHR"), both are subsidiaries of ASB, and Leeds Property Limited("Purchaser") for the disposal of ASIL's entire shareholding of 2 ordinary shares of USD1.00 each representing 100% of the total issued and paid-up share capital of its wholly-owned subsidiary, IIL ("IIL Shares") to the Purchaser for a cash consideration of ?5.86 million (equivalent to RM39.0 million) ("Sale Price") ("Proposed Disposal"); and
b. Option Agreement between ASIL and IIL to grant ASIL an option at the end of the Lease (as described below) to purchase the hotel property as described below ("Proposed Option").
a. Agreement for the Sale of Shares ("Agreement") between Alangka-Suka International Limited ("ASIL") and Alangka-Suka Hotels & Resorts Berhad ("ASHR"), both are subsidiaries of ASB, and Leeds Property Limited("Purchaser") for the disposal of ASIL's entire shareholding of 2 ordinary shares of USD1.00 each representing 100% of the total issued and paid-up share capital of its wholly-owned subsidiary, IIL ("IIL Shares") to the Purchaser for a cash consideration of ?5.86 million (equivalent to RM39.0 million) ("Sale Price") ("Proposed Disposal"); and
b. Option Agreement between ASIL and IIL to grant ASIL an option at the end of the Lease (as described below) to purchase the hotel property as described below ("Proposed Option").
Holiday Villas (UK) Ltd, a subsidiary of ASB, shall leaseback the Hotel for a Lease period of ten (10) years commencing from the date of completion of the Proposed Disposal ("Lease").
The above arrangements are hereinafter collectively referred to as "Proposal".
The Sale Price was arrived at on a willing buyer and willing seller basis. The Sale Price is based on a price of ?10.1 million for the hotel property owned by IIL known as Holiday Villa London (equivalent to approximately RM67.3 million) less the amount of any loan outstanding to IIL's bankers at the date of completion (estimated to be approximately ?4.24 million) (equivalent to approximately RM28.3 million). There will be no liabilities to be assumed by the Purchaser under the terms of the Agreement. The Purchaser shall pay the Sale Price in cash on completion. The IIL Shares are sold with all rights attaching to them with effect from completion.
The salient features of the Proposal are as follows:-
a. The Purchaser shall pay ASIL a deposit of ?505,000 upon signing of the Agreement;
The salient features of the Proposal are as follows:-
a. The Purchaser shall pay ASIL a deposit of ?505,000 upon signing of the Agreement;
b. The Hotel is leased by Holiday Villas (UK) Ltd for a period of ten (10) years and the rental for the Lease shall be ?669,125 per annum for the first two (2) years. Commencing from the third year, the rental shall be increased at the rate of 2.75% per annum.
c. Under the Proposed Option, ASIL has an option at the end of the Lease to purchase the hotel property as described below.
The IIL Shares were acquired by ASIL in 1997 at a cost of RM22.00 million less liabilities of RM11.00 million.
The Proposed Disposal is expected to be completed on 26 January 2006. Upon completion of the Proposed Disposal, IIL will cease to be a subsidiary of ASB.
There is no departure from the Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
The Proposal is not subject to the approval of stockholders of ASB or any other relevant government authorities.
The agreements in respect of the Proposal are available for inspection at the registered office of ASB from Mondays to Fridays (except public holidays) during normal office hours.
c. Under the Proposed Option, ASIL has an option at the end of the Lease to purchase the hotel property as described below.
The IIL Shares were acquired by ASIL in 1997 at a cost of RM22.00 million less liabilities of RM11.00 million.
The Proposed Disposal is expected to be completed on 26 January 2006. Upon completion of the Proposed Disposal, IIL will cease to be a subsidiary of ASB.
There is no departure from the Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
The Proposal is not subject to the approval of stockholders of ASB or any other relevant government authorities.
The agreements in respect of the Proposal are available for inspection at the registered office of ASB from Mondays to Fridays (except public holidays) during normal office hours.
3. Background Information on IIL
IIL which owns a hotel property known as Holiday Villa London ("Hotel") was incorporated in the British Virgin Islands on 7 December 1993 as an International Business Company. IIL has an authorised share capital of USD50,000divided into 50,000 ordinary shares of USD1.00 each, of which 2 ordinary shares are issued and fully paid.
Based on the audited financial statements of IIL for the financial year ended 31 December 2004, the net tangible assets value of IIL was ?4.95 million (approximately RM33.0 million).
Based on the audited financial statements of IIL for the financial year ended 31 December 2004, the net tangible assets value of IIL was ?4.95 million (approximately RM33.0 million).
The Hotel, having its postal address at 35-39, Leinster Gardens, London W2 3AN, England, United Kingdom is erected on a piece of freehold land measuring approximately 990 square metres and is registered at HM Land Registry under Title Number NGL 178149. The Hotel has 100 Ensuite Bedrooms, 7 fully equipped Conference and Function Suites, restaurants and karaoke lounge. The Hotel is approximately 154 years old.
There is a legal charge over the Hotel and a debenture over the assets of IIL in respect of the term loan facility granted by Bank of Scotland to IIL.
There is a legal charge over the Hotel and a debenture over the assets of IIL in respect of the term loan facility granted by Bank of Scotland to IIL.
4. Background Information on the Purchaser
Leeds Property Limited (Company No. 606287) is a company incorporated in the British Virgin Islands with its registered office situated at Akara Buildings 24 de Castro Street, Wickhams Cay, P.O. Box 3136, Road Town, Tortola, British Virgin Islands.
5. Effect of the Proposal
The estimated gains to ASB Group arising from the Proposed Disposal is approximately RM18.7 million.
The Proposal has no effect on the share capital and major stockholders' stockholdings of ASB as it does not involve any issuance of securities.
Since the Proposed Disposal will be completed in year 2006, it is not expected to have any impact on the earnings per stock unit and net tangible assets per stock unit of ASB Group for the financial year ending 31 December 2005.
However, the Proposed Disposal is expected to increase both the earnings per stock unit and net tangible assets per stock unit of ASB Group by approximately 5.53 sen for the financial year ending 31 December 2006.
6. RationaleThe Proposal has no effect on the share capital and major stockholders' stockholdings of ASB as it does not involve any issuance of securities.
Since the Proposed Disposal will be completed in year 2006, it is not expected to have any impact on the earnings per stock unit and net tangible assets per stock unit of ASB Group for the financial year ending 31 December 2005.
However, the Proposed Disposal is expected to increase both the earnings per stock unit and net tangible assets per stock unit of ASB Group by approximately 5.53 sen for the financial year ending 31 December 2006.
The Proposed Disposal will enable ASB Group to capitalise on the gains and re-invest when the opportunity arises. Meanwhile, the leaseback will enable ASB Group to maintain its presence in London. The net proceeds from the Proposed Disposal will be utilised for the working capital purposes of ASB Group.
7. Directors' and major stockholders' interest
None of the directors, major stockholders and/or persons connected with the directors and major stockholders of ASB has any interest, direct or indirect, in the Proposal.
8. Directors' Recommendation
The Board of Directors of ASB, after careful deliberation, is of the opinion that the Proposal is in the best interests of ASB.
[This announcement is dated 20 December 2005.]