News
Advance Synergy Berhad ("ASB") Proposed Sale and Leaseback (With Option To Re-purchase) Of Holiday Villa Alor Setar, Holiday Villa Cherating And Holiday Villa Langkawi
BackFeb 20, 2006
| General Announcement Reference No AS-060220-62004 |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 20/02/2006 |
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| Type | : | Announcement |
| Subject | : | ADVANCE SYNERGY BERHAD ("ASB") Proposed sale and leaseback (with option to re-purchase) of Holiday Villa Alor Setar, Holiday Villa Cherating and Holiday Villa Langkawi |
Contents :
1. Introduction
Further to our announcement on 13 December 2005, we wish to inform the Exchange that the following arrangements have been entered into:-
a. Alor Setar Holiday Villa Sdn Bhd ("ASHV"), Cherating Holiday Villa Berhad ("CHV") and Langkawi Holiday Villa Sdn Bhd ("LHV"), all subsidiaries of ASB, had each entered into a Sale and Purchase Agreement ("Agreements") with Amanah Raya Berhad ("Purhaser") for the sale of their respective hotel properties known as Holiday Villa Alor Setar, Holiday Villa Cherating and Holiday Villa Langkawi ("the Hotels") to the Purchaser for cash consideration of RM28.0 million, RM21.872 million and RM50.0 million respectively ("Sale Price") ("Proposed Sale");
b. In order to facilitate the Proposed Sale, ASHV had entered into a Deed of Assignment with the Purchaser to assign to the Purchaser all of ASHV's rights, interest, title and benefit under the Principal Agreement entered into between ASHV and Aima Development Sdn Bhd on 26 June 1995 and in the hotel property known as Holiday Villa Alor Setar; and
c. In conjunction with the Proposed Sale, ASHV, CHV and LHV had each entered into a Lease Agreement with the Purchaser to leaseback the respective Hotels separately for a period of ten (10) years from the date of completion of the Proposed Sale with an option to extend for another period of five (5) years ("Proposed Lease"). ASHV, CHV and LHV have each been granted by the Purchaser an option at the end of the Proposed Lease to purchase the Hotels at a price of RM29.0 million, RM23.0 million and RM53.0 million respectively, hereinafter referred to as the "Repurchase Price" ("Proposed Option").
a. Alor Setar Holiday Villa Sdn Bhd ("ASHV"), Cherating Holiday Villa Berhad ("CHV") and Langkawi Holiday Villa Sdn Bhd ("LHV"), all subsidiaries of ASB, had each entered into a Sale and Purchase Agreement ("Agreements") with Amanah Raya Berhad ("Purhaser") for the sale of their respective hotel properties known as Holiday Villa Alor Setar, Holiday Villa Cherating and Holiday Villa Langkawi ("the Hotels") to the Purchaser for cash consideration of RM28.0 million, RM21.872 million and RM50.0 million respectively ("Sale Price") ("Proposed Sale");
b. In order to facilitate the Proposed Sale, ASHV had entered into a Deed of Assignment with the Purchaser to assign to the Purchaser all of ASHV's rights, interest, title and benefit under the Principal Agreement entered into between ASHV and Aima Development Sdn Bhd on 26 June 1995 and in the hotel property known as Holiday Villa Alor Setar; and
c. In conjunction with the Proposed Sale, ASHV, CHV and LHV had each entered into a Lease Agreement with the Purchaser to leaseback the respective Hotels separately for a period of ten (10) years from the date of completion of the Proposed Sale with an option to extend for another period of five (5) years ("Proposed Lease"). ASHV, CHV and LHV have each been granted by the Purchaser an option at the end of the Proposed Lease to purchase the Hotels at a price of RM29.0 million, RM23.0 million and RM53.0 million respectively, hereinafter referred to as the "Repurchase Price" ("Proposed Option").
The above arrangements are hereinafter collectively referred to as "the Proposal".
ASHV, CHV and LHV are hereinafter collectively referred to as "the Vendors".
The Sale Price was mutually agreed by both parties after taking into consideration the valuation of the Hotels by a Registered Valuer appointed by the Purchaser. The Vendors will sell the Hotels to the Purchaser free from all encumbrances and legal possession together with all fixtures and fittings (excluding all movable assets).
The salient features of the Proposal are as follows:-
a. the Purchaser shall pay to the Vendors' Solicitors (as stakeholders) a deposit of 10% of the Sale Price upon the execution of the Agreements. The balance Sale Price shall be paid by the Purchaser to the Vendors' Solicitors (as stakeholders) on or before sixty (60) days from the unconditional date or such extension of time as mutually agreed upon;
The salient features of the Proposal are as follows:-
a. the Purchaser shall pay to the Vendors' Solicitors (as stakeholders) a deposit of 10% of the Sale Price upon the execution of the Agreements. The balance Sale Price shall be paid by the Purchaser to the Vendors' Solicitors (as stakeholders) on or before sixty (60) days from the unconditional date or such extension of time as mutually agreed upon;
b. ASHV, CHV and LHV shall leaseback the respective Hotels for a term of ten (10) years commencing from the completion of the Proposed Sale and the rental per annum for the Proposed Lease shall range from 6.7% to 7.3% of the respective Sale Price over the lease period.
The Purchaser shall grant to the Vendors an option to renew the Proposed Lease for a further period of five (5) years at such rental and terms to be mutually agreed upon by both parties.
c. upon the expiry of the Proposed Lease, each of the Vendors has an option to buyback the Hotels separately at the respective Repurchase Price.
The Proposed Sale is expected to be completed by the end of June 2006. Upon completion of the Proposed Sale, the Vendors will cease to hold legal possession in the Hotels.
There is no departure from the Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
The Proposal is subject to the approvals, if required, of the shareholders of the respective parties and any other relevant government authorities.
ASB is not required to seek approval from its stockholders and any other relevant government authorities in respect of the Proposal. However, an Information Circular to Stockholders will be issued in due course.
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.
The Purchaser shall grant to the Vendors an option to renew the Proposed Lease for a further period of five (5) years at such rental and terms to be mutually agreed upon by both parties.
c. upon the expiry of the Proposed Lease, each of the Vendors has an option to buyback the Hotels separately at the respective Repurchase Price.
The Proposed Sale is expected to be completed by the end of June 2006. Upon completion of the Proposed Sale, the Vendors will cease to hold legal possession in the Hotels.
There is no departure from the Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
The Proposal is subject to the approvals, if required, of the shareholders of the respective parties and any other relevant government authorities.
ASB is not required to seek approval from its stockholders and any other relevant government authorities in respect of the Proposal. However, an Information Circular to Stockholders will be issued in due course.
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 the Hotels
ASHV is a company incorporated in Malaysia on 23 February 1995 and owns a hotel property known as Holiday Villa Alor Setar held under Master Titles Nos. Geran 7040 (Freehold Interest) and HS(D) 1100/85 (Leasehold Interest), Section 5, Town of Alor Setar, District of Kota Setar, Kedah. The hotel property has 160 guest rooms and suites, meeting rooms, restaurants, shopping arcade and karaoke lounge. The hotel property is approximately 9 years' old and was acquired by ASHV in 1995 at a cost of RM24.0 million. Based on the audited financial statements of ASHV for the financial year ended 31 December 2004, the net book value of the hotel property was RM29.6 million.
CHV is a company incorporated in Malaysia on 26 April 1984 and owns a resort hotel property known as Holiday Villa Cherating held on six (6) parcels of land, Lot nos. 1301, 1302, 1303, 1305, PT1300, Mukim Sungai Karang, District of Kuantan, Pahang. The hotel property has 100 guest rooms and 12 exclusive Malaysian Boutique Villas, 4 meeting rooms, restaurants, pub and karaoke lounge. The hotel property is approximately 19 years' old and was acquired by CHV in 1987 at a cost of RM16.3 million. The hotel property was revalued in 2000 and based on the audited financial statements of CHV for the financial year ended 31 December 2004, the net book value of the hotel property was RM36.5 million.
LHV is a company incorporated in Malaysia on 2 November 1989 and beneficially owns a beach hotel property known as Holiday Villa Langkawi held under two (2) parcels of land held under Titles Nos. HS(M) 13/86-PT344 and HS(M) 49/96-PT725, Mukim of Kedawang, District of Langkawi, Kedah. The hotel property has 258 sea-facing guest rooms and suites, 3 meeting rooms, restaurants and karaoke lounge. The hotel property is approximately 14 years' old and was acquired by LHV in 1991 at a cost of 28.7 million. The hotel property was revalued in 2000 and based on the audited financial statements of LHV for the financial year ended 31 December 2004, the net book value of the hotel property was RM71.7 million.
CHV is a company incorporated in Malaysia on 26 April 1984 and owns a resort hotel property known as Holiday Villa Cherating held on six (6) parcels of land, Lot nos. 1301, 1302, 1303, 1305, PT1300, Mukim Sungai Karang, District of Kuantan, Pahang. The hotel property has 100 guest rooms and 12 exclusive Malaysian Boutique Villas, 4 meeting rooms, restaurants, pub and karaoke lounge. The hotel property is approximately 19 years' old and was acquired by CHV in 1987 at a cost of RM16.3 million. The hotel property was revalued in 2000 and based on the audited financial statements of CHV for the financial year ended 31 December 2004, the net book value of the hotel property was RM36.5 million.
LHV is a company incorporated in Malaysia on 2 November 1989 and beneficially owns a beach hotel property known as Holiday Villa Langkawi held under two (2) parcels of land held under Titles Nos. HS(M) 13/86-PT344 and HS(M) 49/96-PT725, Mukim of Kedawang, District of Langkawi, Kedah. The hotel property has 258 sea-facing guest rooms and suites, 3 meeting rooms, restaurants and karaoke lounge. The hotel property is approximately 14 years' old and was acquired by LHV in 1991 at a cost of 28.7 million. The hotel property was revalued in 2000 and based on the audited financial statements of LHV for the financial year ended 31 December 2004, the net book value of the hotel property was RM71.7 million.
There are legal charges over the Hotels created in relation to banking facilities granted by a financial institution.
4. Background Information on the Purchaser
The Purchaser, Amanah Raya Berhad (Company No. 344986V) as trustee for Kumpulan Wang Am, is a company established in Malaysia under the Public Trust Corporate Act 1995 and registered under the Companies Act 1965.
5. Effect of the Proposal
The Proposal is not expected to result in any gain or loss to the ASB Group as the sale and leaseback arrangements are treated as finance leases rather than outright disposals.
The Proposal has no effect on the share capital and major stockholders' stockholdings of ASB as it does not involve any issuance of securities.
The Proposal is expected to reduce the earnings per stock unit of ASB Group by approximately 1.37 sen for the financial year ending 31 December 2006 due to provisions on taxation. However, the Proposal is expected to have future positive effects on the earnings of ASB Group arising from savings in interest.
The Proposal is not expected to have a material impact on the net tangible assets per stock unit of ASB Group 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.
The Proposal is expected to reduce the earnings per stock unit of ASB Group by approximately 1.37 sen for the financial year ending 31 December 2006 due to provisions on taxation. However, the Proposal is expected to have future positive effects on the earnings of ASB Group arising from savings in interest.
The Proposal is not expected to have a material impact on the net tangible assets per stock unit of ASB Group for the financial year ending 31 December 2006.
The Proposal will enable ASB Group to reduce its bank borrowings and re-invest when the opportunity arises. Meanwhile, through the leaseback arrangement, ASB Group will continue to operate and maintain its presence in Alor Setar, Cherating and Langkawi.
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 February 2006.