Type: Announcement
Subject:
Proposed acquisition of 1,000,000 ordinary shares of RM1 each for RM1,000,000 cash in Benua Perdana Sdn Bhd by Tradewinds Hotels & Resorts Sdn Bhd. A 70% owned subsidiary of Tradewinds Corporation Berhad
 
Contents:
1. INTRODUCTION

The Board of Directors of Tradewinds Corporation Berhad ("TCB") wishes to announce that on 3 October 2007 , Tradewinds Hotels & Resorts Sdn Bhd (“THR”), a 70% owned subsidiary of TCB had entered into a Share Sale Agreement ("SSA") with Dato’ Syed Mustaffa bin Syed Abdullah Shahabudin and Shamlan bin Mohamed Hashim (“Vendors”) to acquire the Vendors’ stake in Benua Perdana Sdn Bhd (“BPSB”) of 1,000,000 ordinary shares of RM1 each representing 100% of the issued and paid up share capital of BPSB for a cash consideration of RM1,000,000 (“Purchase Consideration”)(“Proposed Acquisition”).
 

2. THE PROPOSED ACQUISITION

2.1. Information on Benua Perdana Sdn Bhd

BPSB was incorporated on 27 March 1995. The authorized share capital of BPSB is RM1,000,000 comprising of 1,000,000 ordinary shares of RM1 each. The issued and fully paid up capital of the company as at 31 December 2006 is RM1,000,000. The company is owned by two individuals, Dato’ Syed Mustaffa bin Syed Abdullah Shahabudin and Shamlan bin Mohamed Hashim BPSB is developing the two parcels of Malay reserved leasehold land in Pantai Kok, Langkawi. On one of the parcels of land located at Telaga Harbour Park, neighbouring the coast of Burau Bay in Langkawi, BPSB has erected an international class 123 rooms 5 star boutique hotel which is 67% completed. The hotel is erected on a plot of land leased from Lembaga Pembangunan Langkawi (“LADA”) for a lease period of 55 years held under Title no. HS(M) 649 Lot no. 28 (Plot 11) with an area of 11,363.2 sq meters. BPSB’s application to be classified as “Malay” for the purpose of registering the lease over the land from LADA is pending approval of the Kedah State authority. The land with the hotel will hereinafter be referred to as Pantai Kok Boutique Hotel. On the other parcel of land BPSB has built a commercial centre commonly known as Telaga Harbour Park consisting of 7 blocks of retail and commercial shops which are partially tenanted. The commercial centre plot of land measuring 21,203.5 sq meters which is also leased from LADA is held under Title no. HS(M) 648 Lot no. 27 (Plot 10) with leasehold tenure of 55 years. Similarly, BPSB’s application to be classified as “Malay” for the purpose of registering the lease over the land from LADA is pending approval of the Kedah State authority. BPSB has designated the vacant land adjacent to the retail and commercial shops for a furniture centre which is currently at piling stage.
 

2.2. Purchase Consideration

The Purchase Consideration was arrived at a willing buyer – willing seller basis after taking into consideration the market value of the properties as appraised by Rahim & Co in its valuation report dated 24 May 2007 on the hotel property and the commercial centre for RM100mil and RM11.765mil respectively on completed basis. The Purchase Consideration will be funded from internally generated funds and payable on completion.
 

2.3. Completion

Completion is subject to the satisfactory findings of a due diligence to be carried out by THR and the approvals set out in paragraph 5 below. Barring unforeseen circumstances, the Proposed Acquisition is expected to be completed by fourth Quarter of 2007. Upon completion, BPSB will become a 70% indirect subsidiary of TCB.
 


3. RATIONALE FOR PROPOSED ACQUISITION

The Proposed Acquisition is in line with the Hotel Division’s strategy of increasing its presence in Langkawi. Langkawi holds the highest average room rate for hotels in Malaysia and is increasing its profile as an international leisure destination. The Hotel Division is currently represented in the middle range of the 5 star market through Meritus Pelangi Beach and Spa Resort. With the opening of new luxury resorts, Langkawi is clearly on the map for the high end international traveller. The Proposed Acquisition will provide the Hotel Division with exposure to the growing luxury class market that has started to give Langkawi a serious look. The resort can be completed within 12 months. A new build will typically take between 2-3 years to open. The Proposed Acquisition will enable the Hotel Division to secure market share and a foothold in high end of Langkawi’s leisure accommodation in the shortest possible time.
 


4. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION AND SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDING

The Proposed Acquisition is in line with the Hotel Division's strategy of increasing its presence in Langkawi. Langkawi holds the highest average room rate for hotels in Malaysia and is increasing its profile as an international leisure destination. The Hotel Division is currently represented in the middle range of the 5 star market through Meritus Pelangi Beach and Spa Resort. With the opening of new luxury resorts, Langkawi is clearly on the map for the high end international traveller. The Proposed Acquisition will provide the Hotel Division with exposure to the growing luxury class market that has started to give Langkawi a serious look. The resort can be completed within 12 months. A new build will typically take between 2-3 years to open. The Proposed Acquisition will enable the Hotel Division to secure market share and a foothold in high end of Langkawi's leisure accommodation in the shortest possible time.
 
a) Issued and Paid-up Share Capital
The Proposed Acquisition will not have any effect on the share capital of TCB as it does not involve any issue of new securities by TCB.
 
b) Net Assets
Based on the latest audited accounts, the Proposed Acquisition will not have any material effect on the net assets per share of TCB Group.
 
c) Earnings
The Proposed Acquisition is not expected to have any material effects on TCB Group's earnings per share.
 
d) Gearing
The Proposed Acquisition is not expected to have any material effect on TCB Group's gearing.
 
e) Substantial shareholders' shareholding
The Proposed Acquisition will not have any effect on TCB's substantial shareholders' shareholding.
 

5. APPROVALS REQUIRED

The Proposed Acquisition requires:
 
a) approval of the Foreign Investment Committee;
 
b) the approval of the Ruler-in-Council of the State of Kedah to BPSB's application for BPSB to be declared a “Malay” under the Kedah Malay Reservations Enactment for the purposes of registering the lease over the lands;
 
c) the approval of the Ruler-in-Council of the State of Kedah for the sale of the shares from the Vendors to the Purchaser; if necessary, to be procured by the Vendors.
 


6. DEPARTURE FROM THE SECURITIES COMMISSION'S GUIDELINES

As the Proposed Acquisition does not involve any issue / offer of securities by TCB, the Securities Commission's Policies and Guidelines on Issue / Offer of Securities are therefore not applicable.
 


7. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS

None of the directors and substantial shareholders of TCB and persons connected with them, have any interest, direct or indirect, in the Proposed Acquisition.
 


8. STATEMENT BY THE BOARD OF DIRECTORS

The Board of Directors of TCB, having taken into consideration the rationale and all relevant aspects of the Proposed Acquisition, is of the opinion that the acquisition is in the best interest of TCB and its shareholders.
 

9. DOCUMENT AVAILABLE FOR INSPECTION

The SSA will be available for inspection at the registered office of TCB at 21st Floor, Wisma Zelan, No. 1, Jalan Tasik Permaisuri 2, Bandar Tun Razak, Cheras, 56000 Kuala Lumpur, during normal business hours from Mondays to Fridays (except public holidays) for a period of one (1) month from the date of this announcement.
 

   
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