1. Introduction
The Board of Directors of SCAN ("Board") wishes to announce that the Company (“Purchaser”) has on 28 December 2009, entered into a conditional Sale and Purchase Agreement with Amity Corporation Sdn Bhd (“Vendor”) ("SPA") to acquire a unit of shop-office identified as Unit 36 (D-Wing), Type A, 6 storey corner lot, Fraser Park Shop-office, off Jalan Yew, Kuala Lumpur (“Property”) for a total purchase consideration of RM4.80 million (“Purchase Consideration”), to be satisfied by way of cash (Proposed Acquisition”).
Set out in the ensuing paragraphs are further details of the Proposed Acquisition.
2. Details of the Proposed Acquisition
2.1 Brief Information on the Property
The Property measuring approximately 229.6 square meters was held under individual freehold title HS(D) 110454, PT No. 608, Seksyen 92, Bandar dan Daerah Kuala Lumpur, Negeri Wilayah Persekutuan, Kuala Lumpur and bearing postal address No.72A, Jalan Metro Pudu, Fraser Business Park, Off Jalan Yew 55100 Kuala Lumpur. The block title to the Property has been issued by the relevant authority. The Property is currently vacant.
The Property is strategically located in the city of Kuala Lumpur and facing main road of Jalan Loke Yew. It is widely accessible from Jalan Tun Razak, Jalan Loke Yew, Jalan Chan Sow Lin and Jalan Peel. The LRT Chan Sow Lin Station is within walking distance.
There are no liabilities, including contingent liabilities and/or guarantees to be assumed by SCAN pursuant to the Proposed Acquisition. The Property shall be acquired free from all encumbrances together with all rights attaching thereto.
2.2 Brief Information on the Vendor
Amity Corporation Sdn Bhd (Company No. 74000-D) with corresponding address at Room 401-A, Bangunan Loke Yew, No. 4, Jalan Mahkamah Persekutuan 50050 Kuala Lumpur is the registered owner of the Property. Amity Corporation was incorporated in Malaysia under the Companies Acts, 1965.
The shareholders of Amity Corporation Sdn Bhd are Dr Yeong Cheong Thye @ Yeong Yue Chai and Tan Nam Seng.
Amity Corporation Sdn Bhd acquired the Property on 31 May 2004.
2.3 Salient Terms of the SPA
The salient terms of the SPA pursuant to the Proposed Acquisition include, amongst others, the following:
The Vendor will sell and the Purchaser will buy the Property on an “as is where is basis” free from all encumbrances and with vacant possession but subject to all existing conditions of the title and category of land use, expressed or implied upon relating to or affecting the Property.
If the developer and/or proprietor agrees to transfer the Property directly to the Purchaser then the “effective date” shall refer to the date of the Purchaser’s solicitors receive the valid and registrable (unstamp) instrument of transfer duly executed by the developer/proprietor in favour of the Purchaser, or if the developer/proprietor does not agree to transfer the Property directly to the Purchaser then the “effective date” shall refer to the date the Purchaser’s solicitors receive the written notification from the Vendor’s solicitors that the valid and registrable instrument of transfer duly executed by the Proprietor in favour of the Vendor has been submitted for adjudication.
The Purchaser shall upon the execution of the SPA pay to the Vendor the sum of RM480,000 and the balance sum within three month from the effective date (“completion date”) to the Vendor’s solicitor as stakeholders and the Vendor’s solicitors are authorised to release the balance sum to the Vendor within fourteen days upon presentation of the transfer for registration provided that vacant possession of the Property has been delivered to the Purchaser.
3. Basis of Arriving at the Purchase Consideration
The Purchase Consideration of RM4.80 million was arrived at based on a willing-buyer willing-seller basis after taking into consideration the fair market value. No independent valuation was carried out.
4. Mode of Settlement
The Purchase Consideration shall be satisfied by way of cash from internally generated funds and bank borrowings of approximately 80-90% financing. A deposit sum of RM480,000 had been paid and the balance shall be paid within three months from the date the Purchaser’s solicitors receive the valid and registrable instrument of transfer.
5. Rationale/Prospects for the Proposed Acquisition
The Proposed Acquisition will provide SCAN an opportunity to own a landed property in the city of Kuala Lumpur as its Research and Development Centre cum Corporate Office. SCAN intends to relocate its operations in existing corporate office which is rented to its new office in the second quarter of 2010. The Proposed Acquisition is expected to result in cash flow savings in terms of lower loan instalment sum compared to rental expenses. It also represents an investment with good prospects for future capital appreciation.
6. Risk Factors of the Proposed Acquisition
The Board is not aware of any risk factors arising from the Proposed Acquisition other than the general risks such as the normal market and global economic risks, financing risks, interest rate and inflation fluctuation which may affect the financial and operations of the group.
7. Effects of the Proposed Acquisition
7.1 Share Capital
The Proposed Acquisition will not have any effect on the issued and paid up share capital of SCAN.
7.2 Net Assets and Gearing
The Proposed Acquisition is not expected to have any material effect on the net assets and gearing of SCAN.
| As at 31 December 2008 | After Proposed Acquisition |
| RM’000 | RM’000 |
Total equity/Net assets | 26,026 | 26,026 |
Total borrowing | 1,236 | 5,556* |
Gearing ratio (times) | 0.05 | 0.21 |
* Assuming 90% financing.
7.3 Earnings
The Proposed Acquisition is not expected to have any material effect on the earnings of the SCAN group The Proposed Acquisition is expected to contribute positively to the future earnings of the SCAN group in the long term in terms of rental savings.
7.4 Substantial Shareholders’ shareholdings
The Proposed Acquisition will not have any effect on the shareholdings of the substantial shareholders of SCAN.
8. Approval Required
The Proposed Acquisition is not subject to the approval of shareholders of SCAN and the relevant regulatory authorities. It is also not conditional upon any other corporate proposals of SCAN.
9. Directors’ and Major Shareholders’ Interest
None of the Directors or major shareholders of SCAN or persons connected to them has any interest, direct or indirect, in the Proposed Acquisition.
10. Directors’ Recommendation
The Directors of SCAN, having considered all aspects of the Proposed Acquisition, are of the opinion that the terms and conditions of the Proposed Acquisition are fair and reasonable and are in the best interest of SCAN.
11. Documents for Inspection
A copy of the SPA will be made available for inspection at the registered office of SCAN at 10th Floor, Menara Hap Seng, 1 & 3, Jalan P. Ramlee 50250 Kuala Lumpur during office hours for a period of 3 months from the date of this announcement.
This announcement is dated 5 January 2010.