JOINT VENTURE AGREEMENT FOR COST SHARING IN RELATION TO UPGRADING OF IWSS3 (LOW ZONE) FOR SUPPLY OF WATER

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1 ABLEGROUP BERHAD JOINT VENTURE AGREEMENT FOR COST SHARING IN RELATION TO UPGRADING OF IWSS3 (LOW ZONE) FOR SUPPLY OF WATER 1. INTRODUCTION The Board of Directors ( Board ) of AbleGroup Berhad ( AB or the Company ) wishes to announce that Atlas Rhythm Sdn Bhd ( Atlas Rhythm ), a wholly-owned subsidiary of AB has on 20 June 2017 entered into a Joint Venture Agreement ( JVA ) with the following parties to jointly undertake the upgrading of IWSS3 (Low Zone) for Syarikat Bekalan Air Selangor Sdn Bhd ( SYABAS or Water Authorities ) for the supply of water to the Parties respective developments, in accordance with the terms stipulated in the JVA ( Proposed JV ): (iii) (iv) (v) (vi) Bluewater Horizon Sdn Bhd; GB Kiara Sdn Bhd; Good Axis Sdn Bhd Modern Pandora Sdn Bhd TWY Development Sdn Bhd; and Yakin Land Sdn Bhd. (the above parties shall hereinafter collective referred to as the Parties and individually as a Party ). 2. DETAILS OF THE PROPOSED JV 2.1 Background information The Parties are the registered and beneficial owners and/or developers of various pieces of land owned by the Parties respectively ( Land ) and are engaged in or intend to engage in the development of the Land respectively owned by them. The Parties are desirous of constructing and completing the proposed upgrading of IWSS3 (Low Zone) to supply water to their respective developments, except for communication pipes from the forced main to respective developments ( Upgrading of IWSS3 (Low Zone) ) which include the design, construction and completion thereof including excavation works, the supplying, installing, testing and commissioning of water supply system, obtaining of all necessary approvals from the relevant authorities and if required, the maintenance thereof until the eventual handing over to SYABAS ( Project Works ). For the limited purposes of undertaking, implementing and completing the Upgrading of IWSS3 (Low Zone), the Parties agreed to form an unincorporated joint venture which shall be known as such name to be decided by a steering committee to be formed for the purpose of coordinating and managing the Project Works. 1

2 2.2 Details of the Land Details of the Land owned/to be developed by the Parties are as follow: Parties Atlas Rhythm Sdn Bhd Bluewater Horizon Sdn Bhd GB Kiara Sdn Bhd Good Axis Sdn Bhd Modern Pandora Sdn Bhd TWY Development Sdn Bhd Yakin Land Sdn Bhd Details of Land owned/to be developed Land held under Lot 1589, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lots 2871 & 2872, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lot 2356, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lot 13752, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lots & 80664, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lots & 57503, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Land held under Lot 1579, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. 2.3 Cost Contribution and Funding Total cost contribution inclusive of estimated construction cost, project manager and stakeholders fees and goods and services tax has been estimated at RM4,529,000.00, to be shared by the Parties in accordance with respective sharing percentage pursuant to the JVA. Based on Atlas Rhythm s sharing percentage of 12.28% pursuant to the JVA, the estimated cost contribution of Atlas Rhythm is RM557,669.52, to be funded through internally generated funds. 2.4 Information on the Parties Atlas Rhythm was incorporated in Malaysia as a private limited company with its registered office at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, Kuala Lumpur. Atlas Rhythm, a wholly-owned subsidiary of AB, is principally involved in property development. 2

3 Bluewater Horizon Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at 12A-2, Jalan Teknologi 3/6C, The Core Taman Sains Selangor 1, Seksyen 3, Kota Damansara, Petaling Jaya, Selangor. Bluewater Horizon Sdn Bhd is principally involved in property development. GB Kiara Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at No. 43 (First Floor), Jalan Sarikei, Off Jalan Pahang, Kuala Lumpur. GB Kiara Sdn Bhd is principally involved in property development. Good Axis Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at Lot 3.05, Level 3, 1 First Avenue, Bandar Utama, Petaling Jaya, Selangor. Good Axis Sdn Bhd is principally involved in property development. Modern Pandora Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at ZP-10, Zest Point, Lebuhraya Bukit Jalil, BK 9, Bandar Kinrara, Puchong, Selangor. Modern Pandora Sdn Bhd is principally involved in property development. TWY Development Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at Level 9, Symphony House, Dana 1 Commercial Centre, Jalan PJU 1A/46, Petaling Jaya, Selangor. TWY Development Sdn Bhd is principally involved in property development. Yakin Land Sdn Bhd was incorporated in Malaysia as a private limited company with its registered office at B-30, 1 st Floor, Pusat Perdagangan Bukit Serdang, Jalan BS14/1, Taman Bukit Serdang, Seksyen 14, Seri Kembangan, Selangor. Yakin Land Sdn Bhd is principally involved in property development. 2.5 Appointment of Lead Developer and Project Manager The Parties agreed that TWY Development Sdn Bhd be appointed as the lead developer to sign all drawings/relevant application forms for the submission and approval procedures of SYABAS. The Parties agreed that Perunding Majucipta Sdn Bhd be appointed as project manager ( Project Manager ) to inter-alia design, implement, supervise and administer the construction of the Upgrading of IWSS3 (Low Zone), to act on behalf of the joint venture to appoint and engage consultants, contractors suppliers etc. for the performance of the Project Works and/or any part or aspect thereof. 2.6 Appointment of Stakeholder The Parties agreed that Messrs. Soo Thien Ming & Nashrah, Advocates and Solicitors be appointed as the stakeholder ( Stakeholder ) to receive, hold and deal with all monies paid or to be paid by the Parties or received pursuant to the terms of the JVA and to hold the monies on trust for and on behalf of the Parties. 3

4 2.7 Salient terms of the JVA (a) Steering Committee The Parties shall, upon the execution of the JVA, form a Steering Committee for the purpose of coordinating and managing the Upgrading of IWSS3 (Low Zone). Each Party shall appoint one (1) official representative ("Official Representative") to be a member of the Steering Committee and such Official Representative shall attend meetings of the Steering Committee and decide on matters in relation to the Upgrading of IWSS3 (Low Zone) on behalf of the Party so appointing him. The appointment (including any replacement/re-appointment thereof) of an Official Representative shall be in the form attached in Annexure A and served on the Project Manager. The first appointment shall be made on the date of the JVA and subsequent appointment shall be made and served Three (3) days prior to the date of meeting of the Steering Committee. (iii) The Parties hereby agree and warrant that their respective Official Representative (or alternates, if applicable) shall have the full power and authority to transact on such Party's behalf all matters relating to the Upgrading of IWSS3 (Low Zone). (b) Manner of Payment of Cost Contribution The Parties agree and acknowledge that the various payments in respect of the total costs for the Upgrading of IWSS3 (Low Zone), including but not limited to the cost of upgrading the existing IWSS3 (low zone) pumps, pump house, TNB Sub-station, civil works, forced main and completion of the Upgrading of IWSS3 (Low Zone), the consulting engineers and Project Manager s fee, the Stakeholder s and the appointed surveyor s fees, excluding the construction and all related cost of any communication pipes to connect each Parties respective developments to the Upgrading of IWSS3 (Low Zone) ( Project Costs ); shall be made progressively from the stakeholders' fund and for this purpose, the Parties shall secure payment of their respective Cost Contribution to the Stakeholder with reference to the estimated Project Costs referred to in the JVA: upon the execution of the JVA, each of the Parties shall deposit with the Stakeholder a sum equivalent to ten per cent (10%) of the respective Parties' Cost Contribution as defined in the JVA ("Initial Payment"); upon determination of the second estimation cost referred to in the JVA ( Second Estimation Cost ), the Project Manager shall compute the Cost Contribution (less the Initial Payment) payable by the respective Parties and which sum shall be divided into 3 equal portion and notified by Project Manager to the Parties and the Stakeholders ( Three (3) Installments ). Within twenty one (21) days from the date of the Parties agreeing to the Second Estimation Cost, each of the Parties shall deposit in full the balance of the respective Parties' Cost Contribution in accordance with the JVA, failing which the Party who fail to fulfil the 4

5 terms of this sub-clause shall have their Initial Payment forfeited in full in favour of and for the benefit of the other Parties and the relevant provisions of the JVA shall apply to the said Party who defaulted herein; and (iii) where the Party have elected to provide the banker s guarantee in lieu of the payment in cash, the said Party shall make their Cost Contribution for the respective Three (3) Installments called upon, pay into the Stakeholders Fund within twenty one (21) days from the date of the letter from the Project Manager requesting for the said payment. (c) Late Payment Interest Without prejudice to the provisions of the JVA on termination of the joint venture, the Parties hereby agree that if payment of any sums of money required to be paid is not made or forwarded to the Stakeholder within the relevant period as provided under the JVA, the Party in default ( "Defaulting Party") shall pay interest at ten per centum (10%) per annum beginning from the date of the letter from the Project Manager requesting for the payment into the Stakeholders Fund calculated on a daily basis (before as well as after judgment) on the outstanding sum from the date immediately following the date of expiry of the relevant period on which such sum of money is required to be paid to the Stakeholder under the JVA until the date of full realisation and payment thereof ("Late Payment Interest"). In the event that the Defaulting Party's share is paid by any other Party (hereinafter referred to as the Paying Party"), the Defaulting Party hereby agrees and acknowledges that such sum together with Late Payment Interest shall be due and recoverable from the Defaulting Party by the Paying Party. (d) Final Completion of the Upgrading of IWSS3 (Low Zone) The Upgrading of IWSS3 (Low Zone) shall be deemed finally completed upon the expiry of the period of twenty seven (27) months commencing from the date of successful handing over of the Project Works to the Water Authorities and certified in writing by the Project Manager ( Defects Liability Period ) or on the handing over of the Upgrading of IWSS3 (Low Zone) to the Water Authorities, whichever is the later (`'Final Completion Date"). The Steering Committee shall dissolve on the Final Completion Date unless there are some matters outstanding as notified by the Project Manager. Such notification shall be made no later than seven (7) days prior to the Final Completion Date to the Parties. (e) Termination of the Joint Venture The joint venture created under the JVA shall terminate in either of the following events: if the Parties shall unanimously decide to terminate the joint venture but such termination shall be without prejudice to any subsisting rights of the 5

6 Parties; when all of the following conditions shall have been fully satisfied: (aa) the Upgrading of IWSS3 (Low Zone) shall have been finally completed in accordance with the JVA; (bb) all accounts between the Parties or between the Parties and the Water Authorities and/or third parties in respect of the Upgrading of IWSS3 (Low Zone) shall have been settled to the satisfaction of the Steering Committee; and (iii) all obligations, duties and liabilities of the Parties have been fully discharged to the satisfaction of the Steering Committee. Upon termination of the joint venture in accordance with the JVA: the Stakeholder shall upon receipt of written notification from the Project Manager that the JVA has been terminated, refund all monies, if any, held by it to the Parties in accordance with the written instructions of the Project Manager in accordance with the JVA; all assets of the Upgrading of IWSS3 (Low Zone) shall be disposed of in accordance with the instructions of the Steering Committee and the proceeds shall be distributed to the Parties in proportion to their respective sharing percentage or the actual amount of Cost Contribution paid by them towards the purchase or acquisition of such assets. (f) Settlements of Accounts On the Final Completion Date or upon termination of the JVA, the Parties shall settle and adjust all accounts, obligations and liabilities incurred in connection with the JVA in proportion to their respective sharing percentage. In the event of any balance funds, such balance will be refunded to the Parties in proportion to their respective sharing percentage in accordance with the JVA. The Project Manager shall present the final accounts to the Steering Committee to be agreed upon by the Steering Committee prior to making a request from the Stakeholders for a refund of the surplus to the Parties and the Stakeholders shall be irrevocably authorised to return to the Parties the bank guarantees held (if any) by the Stakeholder for cancellation. 3. FINANCIAL EFFECTS ON AB 3.1 Share Capital and Substantial Shareholders Shareholdings The Proposed JV will not have any effect on the issued and paid up share capital and the shareholdings of the substantial shareholders of AB as it does not involve any issuance of new shares by AB. 6

7 3.2 Earnings per Share ( EPS ) The Proposed JV will not have any material effect on the earnings and EPS of AB and its subsidiaries ( AB Group ) for the financial year ending 31 December Net Asset per Share and Gearing The Proposed JV will not have any material effect on the Net Asset per Share and gearing of AB Group. 4. LIABILITIES TO BE ASSUMED BY AB There are no liabilities including contingent liabilities and/or guarantees to be assumed by AB pursuant to the Proposed JV. 5. RATIONALE The Group understood the cost sharing to the Proposed JVA contribute to the upgrading works of IWSS3 (Low Zone) for the beneficial owners and developers in prospect of enhancing the supply of water to their respective development of the Lands in compliance with the Water Authorities requirements. 6. RISK FACTORS The Proposed JV is subject to the terms and conditions of the JVA. There is no assurance that the Proposed JV will not be exposed to risks such as inability to fulfil the terms and conditions and/or to obtain approvals from the relevant authorities, if any. The Group will take necessary steps to mitigate the risks as and when arises. 7. APPROVALS REQUIRED The JVA is not subject to the approval of AB s shareholders. 8. INTERESTS OF MAJOR SHAREHOLDERS AND DIRECTORS None of the Directors of AB or major shareholders or persons connected with them have any interest, direct or indirect, in the JVA. 9. STATEMENT BY DIRECTORS Having considered all the relevant aspects including the rationale and benefits of the JVA, the Board is of the opinion that the Proposed JV is in the best interest of the AB Group. 10. ESTIMATED TIMEFRAME FOR COMPLETION Barring unforeseen circumstances, it is expected that the Project Works will be completed within twelve (12) months from the date of JVA. 7

8 11. HIGHEST PERCENTAGE RATIO APPLICABLE PURSUANT TO PARAGRAPH 10.02(G) OF BURSA MALAYSIA SECURITIES BERHAD MAIN MARKET LISTING REQUIREMENTS The highest percentage ratio applicable to the JVA pursuant to paragraph 10.02(g) of Bursa Malaysia Securities Berhad s Main Market Listing Requirements is 1.23%. 12. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the JVA is available for inspection at the registered office of the Company at Suite 11.1A, Level 11, Manara Weld, 76 Jalan Raja Chulan, Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 20 June