Proposed Disposal of 49% Equity Interest in Cross Continental Investment ("CCI") And 813,502 Preference Shares In Palm Tech India Limited ("Palm Tech") For A Total Cash Consideration Of RM24,000,000.00 ("Proposed Disposal")
BackJul 03, 2007
| General Announcement |
| Reference No CC-070703-62359 |
| Company Name |
:
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SALCON BERHAD |
| Stock Name |
:
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SALCON |
| Date Announced |
:
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03/07/2007 |
 |
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| Type | : | Announcement |
| Subject | : | Proposed disposal of 49% Equity Interest in Cross Continental Investment ("CCI") and 813,502 Preference Shares in Palm Tech India Limited ("Palm Tech") for a total cash consideration of RM24,000,000.00 ("Proposed Disposal") |
Contents :
1. INTRODUCTION
The Board Directors of Salcon Berhad ("Salcon" or "the Company") wishes to announce that, Salcon Engineering Berhad ("SEB"), a wholly-owned subsidiary of Salcon, entered into the following agreements on 3 July 2007 to dispose of its 1,225 ordinary shares of USD1.00 each in CCI ("CCI Shares"), representing 49% of the issued and paid-up capital of CCI; and to dispose of its 813,502 preference shares of INRs100/- each ("Palm Tech Preference Shares") in Palm Tech, a subsidiary company of CCI, by way of early redemption, for a total cash consideration of RM24,000,000. SEB has also agreed to assign its advances to CCI to Blair's Finance Group Ltd (BFG) and to waive its advances to Palm Tech on completion:
(i) Sale & Purchase Agreement ("SPA") with Blair's Finance Group Limited("BFG") in relation to the proposed disposal of CCI Shares, the assignment
of advances to CCI and the waiver of advances to Palm Tech; and (ii) Early Redemption Agreement ("ERA") with Nova Trading Private Limited
("Nova") and Palm Tech, in relation to the early redemption of the Palm
Tech Preference Shares; (iii) Master Agreement with BFG in relation to the concurrent completion of the SPA
and ERA.
(collectively referred to as the "Agreements").
2. INFORMATION ON SALCON ENGINEERING BERHAD ("SEB')
SEB is a company incorporated in Malaysia under the Companies Act, 1965 on 3 April 1974 with its registered office at 15th Floor, Menara Summit, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor.
The authorized share capital of SEB is RM50,000,000/- comprising of 50,000,000 ordinary shares of RM1/- each, of which 20,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. SEB is a 100% owned subsidiary of the Company.
SEB is principally engaged in the business of design, construction, operation and maintenance of municipal potable water, sewerage and industrial waste water facilities and palm oil mill and provision of mechanical and electrical engineering services for general industries.
The authorized share capital of SEB is RM50,000,000/- comprising of 50,000,000 ordinary shares of RM1/- each, of which 20,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. SEB is a 100% owned subsidiary of the Company.
SEB is principally engaged in the business of design, construction, operation and maintenance of municipal potable water, sewerage and industrial waste water facilities and palm oil mill and provision of mechanical and electrical engineering services for general industries.
3. INFORMATION ON BLAIR'S FINANCE GROUP LTD. ("BFG")
BFG is a company incorporated under the law of British Virgin Island and having its registered address at Portcullis Trusnet (BVI) Ltd., Portcullis Trustnet Chambers, P.O.Box 3444, Road Town, Tortola, British Virgin Islands.
4. INFORMATION ON CROSS CONTINENTAL INVESTMENTS ("CCI")
CCI is a corporation duly organized and existing under and by virtue of the laws of the Republic of Mauritius with address at 1st Floor, The Manor House, Cnr St George / Chazal Streets, Port Louise, Republic of the Mauritius.
The authorized share capital of CCI is USD100,000/-, divided into 100,000 equity shares of USD1/- each. The current paid-up capital of CCI is USD2,500, consisting of 2,500 ordinary shares of USD1/- each, of which SEB ownes 49%.
CCI is an investment holding company.
The authorized share capital of CCI is USD100,000/-, divided into 100,000 equity shares of USD1/- each. The current paid-up capital of CCI is USD2,500, consisting of 2,500 ordinary shares of USD1/- each, of which SEB ownes 49%.
CCI is an investment holding company.
5. INFORMATION ON PALM TECH INDIA LIMITED ("Palm Tech")
Palm Tech is a corporation duly organized and existing under and by virtue of the laws of the Republic of India with address at 5-1-61, 1st Floor, Main Road, Surya Rao Peta, Kakinada - 533 001, Andhra Pradesh, Republic of India.
The authorized share capital of Palm Tech is INRs250,000,000/-, divided into 6,000,000 equity shares of INRs10/- each and 1,900,000 cumulative redeemable preference shares of INRs100/- each. The paid-up capital of Palm Tech as at 31 March 2007 is INRs166,019,500, divided into 5,350,000 equity shares of INRs10/- each; and as at 31 March 2007, it has 1,125,195 preference shares of INRs100/- each, of which SEB ownes 813,502 preference shares, representing 72.30% of the total preference shares issued.
Palm Tech is involved in the business of oil palm plantation and oil palm processing.
6. INFORMATION ON NOVA TRADING PRIVATE LIMITED ("Nova")The authorized share capital of Palm Tech is INRs250,000,000/-, divided into 6,000,000 equity shares of INRs10/- each and 1,900,000 cumulative redeemable preference shares of INRs100/- each. The paid-up capital of Palm Tech as at 31 March 2007 is INRs166,019,500, divided into 5,350,000 equity shares of INRs10/- each; and as at 31 March 2007, it has 1,125,195 preference shares of INRs100/- each, of which SEB ownes 813,502 preference shares, representing 72.30% of the total preference shares issued.
Palm Tech is involved in the business of oil palm plantation and oil palm processing.
Nova is a company incorporated under the law of the Republic of India and having its registered address at 51, Bharuch Steet, 7/8 Kapadia Chambers, Masjid Bunder, Mumbai-400009, India.
7. SALIENT TERMS OF THE AGREEMENTS
SPA
SEB has agreed to sell its entire equity shares of 1,225 ordinary shares of USD1/- each, representing 49% of the issued and paid-up capital of CCI and to assign its advances to CCI to BFG and to waive its advances to Palm Tech for a total cash consideration of RM17,491,984/-, subject to the terms and conditions of the SPA.
The consideration is derived from the total consideration price of RM24,000,000/- less the redemption sum for the Palm Tech Preference Shares as referred below.
ERA
Palm Tech has agreed to redeem and SEB has agreed to surrender 813,502 Preference Shares of INRs100/- each for early redemption at a total redemption sum of INRs81,350,200, equivalent to RM6,508,016/-, subject to the terms and conditions of the ERA.
The consideration is derived from the total consideration price of RM24,000,000/- less the redemption sum for the Palm Tech Preference Shares as referred below.
ERA
Palm Tech has agreed to redeem and SEB has agreed to surrender 813,502 Preference Shares of INRs100/- each for early redemption at a total redemption sum of INRs81,350,200, equivalent to RM6,508,016/-, subject to the terms and conditions of the ERA.
The completion of the ERA is:
(i) conditional upon Palm Tech and Salcon obtaining all requisite approvals and permissions as may be required for pre mature redemption of the Palm Tech Preference Shares and the compliance with all the applicable rules and regulations of Reserve Bank Of India and Foreign Investment Promotion Board of India.
(ii) inter-conditional upon the completion of the SPA.
(i) conditional upon Palm Tech and Salcon obtaining all requisite approvals and permissions as may be required for pre mature redemption of the Palm Tech Preference Shares and the compliance with all the applicable rules and regulations of Reserve Bank Of India and Foreign Investment Promotion Board of India.
(ii) inter-conditional upon the completion of the SPA.
8. RATIONALE FOR THE PROPOSED DISPOSAL AND UTILIZATION OF PROCEEDS THEREFROM
The Proposed Disposal forms part of the management's effort to divest non core business so as to redeploy the capital into SEB's core business of water and waste water.
The proceeds arising from the Proposed Disposal is intended to be used as additional working capital for the Group.
9. EFFECT OF THE PROPOSED DISPOSAL
9.1 Share Capital and Substantial Shareholders
9.2 Financial Impact
The Proposed Disposal will not have any impact on the share capital and substantial shareholders of the Company.
The Proposed Disposal is expected to be completed in 3rd quarter 2007. Based on the latest audited financial statements for the Financial Year Ended 31 December 2006, the Group is expected to record a loss on Disposal of approximately RM5.9 million.
The Proposed Disposal is not expected to have any material effect on the net assets of the Group for the Financial Year Ending 31 December 2007.
The Proposed Disposal is not expected to have any material effect on the net assets of the Group for the Financial Year Ending 31 December 2007.
10. ORIGINAL COST AND DATE OF INVESTMENT
CCI
The 49% equity shares was acquired on 5 December 2002 at a total cost of RM16,995,367.
PALM TECH
The 813,502 preference shares was subscribed on 2 January 2004 at a total subscription price of INRs81,350,200.
11. APPROVAL OF SHAREHOLDERS AND AUTHORITIES
The Proposed Disposal is not subject to shareholders and any relevant government authorities approval in Malaysia. However, a copy of the announcement would be circulated to the shareholders in pursuant to paragraph 10.05 (1) of the Listing Requirements.
None of the Directors and / or substantial shareholders of the Company and / or persons connected to them, has any interest, whether direct or indirect in the above Agreements.
13. STATEMENT BY DIRECTORS
The Board of Directors of the Company, having taken into consideration the rationale and all relevant aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of the Company and its shareholders.
14. DEPARTURE FROM GUIDELINESTo the best of its knowledge and belief, the Board of Directors of the Company confirms that there is no departure from the Policies and Guidelines on Issue/Offer of Securities issued by the Securities Commission in undertaking the Proposed Disposal.
15. ESTIMATED TIMEFRAME FOR COMPLETION
The Proposed Disposal shall be completed on 31 July 2007 or such other extended date as set out pursuant to the terms and conditions of the SPA.
16. DOCUMENTS FOR INSPECTION
The SPA and ERA may be inspected at the Company's registered office at 15th Floor, Menara Summit, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor during normal office hours from Monday to Friday (except public holidays) for a duration of 2 weeks from the date of this announcement.
This announcement is dated 3 July 2007.