Announcement Details/Table Section :
1. Introduction
The Board of Directors of QL Resources Berhad (“Company”) wishes to announce that its subsidiary, Chingsan Development Sdn. Bhd. (“Chingsan”) has on 30 December 2011 entered into a Sale and Purchase Agreement (“S&P”) to dispose all that of the two (2) parcels of vacant freehold industrial land, as follows:-
a. HS (D) 116843, PT54926, Mukim Kapar, Daerah Klang, Negeri Selangor - 40,587 square metres
b. HS (D) 116845, PT54928, Mukim Kapar, Daerah Klang, Negeri Selangor - 4,613 square metres
to a related party namely, RubyTech Resources Sdn. Bhd. (Formerly: Palmproses Engineering Trading Sdn. Bhd.)(“RT or Purchaser”) for a total consideration of Ringgit Malaysia: Fourteen Million Six Hundred Thousand (RM14,600,000.00) only (“Proposed Disposal”).
2. Information on Chingsan
Chingsan is a wholly-owned subsidiary of QL Feedingstuffs Sdn. Bhd. and its ultimate holding company being QL Resources Berhad ("QLR"). Its principal business is property holding.
3. Information on RT
RT is a company incorporated in Malaysia on 3 June 1982, whose registered office is at No. 16A, Jalan Astaka U8/83, Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan. Its principal business is an investment holding.
The directors and shareholder of RT as follows:
Directors
a) Chia Song Swa
b) Chia Mak Hooi
Shareholders
Wholly owned by Ruby Technique Sdn. Bhd. whose holding company is CBG Holdings Sdn. Bhd. ("CBG"). The other shareholder of Ruby Technique Sdn. Bhd. is Farsathy Holdings Sdn. Bhd.("Farsathy")
CBG is a major shareholder of QLR.
The directors and shareholders of CBG who are also directors of QLR are as follows:
a) Chia Song Kun Director Shareholder (16.88%)
b) Chia Song Swa Director Shareholder (8.00%)
c) Chia Song Kooi Director Shareholder (8.00%)
d) Chia Mak Hooi Director Shareholder (2%)
The directors and shareholders of Farsathy who are also directors of QLR are as follows:
a) Chia Seong Pow Director Shareholder (20%)
b) Chia Seong Fatt Director Shareholder (20%)
4. Details of the Proposed Disposal
This transaction is carried out on an arm’s length basis and the consideration was based on the recommended market value as stated in the Certificate of Valuation by Messrs CH Williams Talhar & Wong dated 30 December 2011.
Based on the Certificate of Valuation, the market value of the vacant freehold industrial land and free from all encumbrances is RM14,600,000.00. The method of Valuation is based on Comparison Method.
The original cost of investment of the land to the Group as at 30 May 2005 is RM4,806,508.00. Henceforth, the expected gain from disposal to the Group is RM9,793,492.00. The sale proceeds will be utilised as working capital of the Group.
There are no liabilities to be assumed by RT arising from this transaction.
5. Salient terms of the Proposed Disposal
The consideration of Ringgit Malaysia: Fourteen Million Six Hundred Thousand (RM14,600,000.00) only shall be paid by the Purchaser to Chingsan as follows:
(a) Upon signing of the S&P, the Purchaser shall pay a sum of Ringgit Malaysia: Four Million Three Hundred Eight Thousand (RM4,380,000.00) being 30% of the total purchase price only as a deposit and part payment of the consideration to Chingsan (out of this amount, a sum of Ringgit Malaysia : Two Hundred Ninety Two Thousand (RM292,000.00) equivalent to 2% of the consideration is paid to Chingsan solicitors as stakeholders, to be paid to the Director-General of the Inland Revenue Department in compliance with section 21B of the Real Property Gains Tax Act, 1976);
(b) The balance of the consideration of Ringgit Malaysia: Ten Million Two Hundred and Twenty Thousand (RM10,220,000.00) only shall be settled by the Purchaser to Chingsan by way of cash and/or loan within three (3) months from the date of S&P, with a one (1) month extension subject to an interest at the rate of 8% per annum on the unpaid portion of the balance consideration ("Completion Date"); and
(c) Chingsan shall deliver vacant possession of the land to the Purchaser upon full payment of the consideration.
6. Rationale
The Proposed Disposal is to dispose of the land that was originally meant for QL's Bio PKE project. However, this project is currently shelved and therefore the land are no longer needed. This sale is in line with our stategic review to divest the non-core and non income generating assets. Further, the price agreed upon is attractive as compared to its original cost of investment.
7. Financial Impact
There is no material effect on earnings per share, net assets, gearing, share capital and substantial shareholdings of the Company.
8. Approvals Required
No approval from the shareholders of QLR and/or relevant authorities is required for the Proposed Disposal.
9. Interests of Directors, Substantial Shareholders and Persons Connected To Them
Save as disclosed in paragraph 3 above, none of the other Directors, substantial shareholders of the Company and QLR, or persons connected to such Directors or substantial shareholders have any interest, direct or indirect in the above transaction. The interested directors have abstained from stating an opinion and voting in relation to the transaction.
10. Date of Completion
The Proposed Disposal is expected to be completed within four (4) months from the date of S&P.
11. Percentage ratio of the Proposed Disposal
The highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Main Market Listing Requirements is 1.98%.
12. Statement by the Audit Committee
The Audit Committee, having taken into consideration all aspect of the Proposed Disposal, was of the view that it is in the best interest of the Company, fair, reasonable and on normal commercial terms and not detrimental to the interest of the minority shareholders.
13. Statement by the Board of Directors
The Board of Directors (save for the interested Directors) is of the opinion that the Related Party Transaction is in the best interest of the Company.
14. The total amount transacted with RT for the preceding 12 months
There are no other transactions previously.
15. Documents for inspection
The S&P and the valuation report for the Proposed Disposal will be made available for inspection at the registered office of the Company at No.16A, Jalan Astaka U8/83, Bukit Jelutong, 40150 Shah Alam, Selangor during normal business hours for a period of one month from the date of announcement.
This announcement is dated 30 December 2011.
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