GENERAL ANNOUNCEMENT EXECUTION OF A SHARE SALE AND PURCHASE AGREEMENT BETWEEN UMW CORPORATION SDN BHD, PERMODALAN NASIONAL BERHAD AND UMW DEVELOPMENT SDN BHD 1. INTRODUCTION UMW Holdings Berhad ( UMW Holdings or the Company ) wishes to announce that its wholly-owned subsidiary, UMW Corporation Sdn Bhd ( UMWC ), and its 51%-owned subsidiary, UMW Development Sdn Bhd ( UMWD ), have today entered into a Share Sale and Purchase Agreement ( SSPA ) with Permodalan Nasional Berhad ( PNB ), for the acquisition by UMWC of PNB s 780,000 ordinary shares of RM1.00 each ( PNB OS ) and 3,120,000 7.4% cumulative redeemable preference shares of RM1.00 each ( PNB CRPS ) in UMWD ( Proposed Acquisition ) for a total consideration of RM17,744,613 ( Purchase Consideration ), details of which are as follows - Type of Shares Number of Shares Nominal Value (RM) Consideration (RM) Ordinary Shares 780,000 1.00 11,549,269 7.4% Cumulative Redeemable Preference Shares 3,120,000 1.00 6,195,344 Total 17,744,613 The Proposed Acquisition is a related party transaction as it involves the interests of PNB and/or funds managed by PNB ( PNB Group ). The PNB Group is a major shareholder of UMW Holdings, having 58.09% equity interest (as at 31 st October 2016) in the Company, and is also a major shareholder of UMWD, having 39% equity interest in UMWD. 2. DETAILS OF THE PROPOSED ACQUISITION The SSPA is based on the following terms - 2.1 Basis and justification for arriving at Purchase Consideration The Purchase Consideration of RM17,744,613 was arrived at based on the unaudited adjusted Net Tangible Assets ( NTA ) of UMWD as at June 2016. The adjusted NTA was determined after taking into consideration the average market valuation of the parcels of land belonging to UMWD, measuring in total, approximately 616.218 acres, located at Mukim Bandar Serendah, District of Ulu Selangor, Selangor ( Land ), carried out by three independent valuers, namely, Messrs Khong & Jaafar, Messrs Jones Lang Wootton and Messrs 1
Raine & Horne in June 2015, pursuant to the proposed Settlement Agreement entered into between UMWC and UMWD in November 2015. The valuation had also taken into account the future development potential of the Land, market demand and the price of properties in the surrounding areas. 2.2 Payment of the Purchase Consideration The Purchase Consideration of RM17,744,613 will be paid by UMWC on or before the Completion Date, i.e., the day falling seven (7) working days from the Conditions Precedent Fulfilment Date, or such other date as may be mutually agreed upon in writing by UMWC, PNB and UMWD ( Parties ) ( Completion Date ). 3. INFORMATION ON THE PARTIES 3.1 Information on UMWC UMWC is a company incorporated in Malaysia on 8 th August 1970 with an authorised share capital of RM504,540,000 divided into 500,000,000 ordinary shares of RM1.00 each and 454,000,000 redeemable preference shares of RM1.00 each ( RPS ), of which 238,503,375 ordinary shares and 454,000,000 RPS have been issued and are fully paid up. The principal activities of UMWC are the provision of full corporate, administrative, professional, security services and financial support to its subsidiaries and associated companies. UMWC also trades in a range of light and heavy equipment. 3.2 Information on UMWD UMWD is a company incorporated in Malaysia on 30 th November 1982 with an authorised share capital of RM25,000,000 divided into 5,000,000 ordinary shares of RM1.00 each and 20,000,000 7.4% cumulative redeemable preference shares ( CRPS ) of RM1.00 each, of which 2,000,000 ordinary shares and 8,000,000 CRPS have been issued and are fully paid up. The principal activities of UMWD are investment holding and property development. 3.3 Information on PNB PNB is a company incorporated in Malaysia on 17 th March 1978 and has its registered office at Tingkat 4, Balai PNB, 201-A, Jalan Tun Razak, 50400 Kuala Lumpur. The principal activities of PNB are investment holding and provision of management consultancy services. 2
4. SALIENT TERMS OF THE SSPA Apart from the Purchase Consideration and the payment terms set out in Section 2 above, the other salient terms of the SSPA are as follows - 4.1 Basis of Sale The PNB OS and PNB CRPS ( Sale Shares ) are sold - (i) (ii) free from all encumbrances and with full legal and beneficial title; and with all rights and benefits attaching thereto (including all dividends and distributions declared in respect thereof), with effect from the Completion Date. In consideration of PNB agreeing to sell the Sale Shares to UMWC, UMWC agrees to repay the shareholder advances granted by PNB to UMWD amounting to RM3,391,387, together with any interests accrued, which sums remained owing as at the date of the SSPA ( PNB Advances ), for and on behalf of UMWD. UMWD agrees to then repay UMWC this amount at such time and in such manner to be agreed between them. Upon settlement of the PNB Advances, the owings shall be deemed to have been fully settled and PNB will confirm and warrant that there are no other amounts or liabilities owing by UMWD to PNB. 4.2 Conditions Precedent The obligations of the Parties to complete the sale and purchase of the Sale Shares under the SSPA are conditional upon the conditions precedent being satisfied or fulfilled by both UMWC and PNB within one (1) month from the date of this SSPA or such later date as may be mutually agreed upon in writing by the Parties. UMWC shall procure the fulfilment of the following Conditions Precedent - (i) (ii) to obtain the necessary approvals from its Board of Directors and/or shareholder; to obtain any other approvals and consents, including but not limited to the written consent of financiers or lenders of UMWD, where applicable; and (iii) to obtain confirmation from Permodalan Negeri Selangor Berhad ( PNSB ), the remaining 10% shareholder of UMWD, on the waiver of pre-emption and any other rights it may have in respect of the Sale Shares or any part thereof. 3
PNB shall procure the fulfilment of the following Conditions Precedent - (i) (ii) to obtain necessary approvals from its Board of Directors and/or its Investment Committee; and to obtain any other authorisations, consents or approvals as may be required of any third party or governmental, regulatory body or competent authority. 4.3 UMWC s Obligation Upon completion of the SSPA, UMWC is to pay the Purchase Consideration to PNB in the manner stipulated in the SSPA, pay the PNB Advances to PNB and execute the share transfer form in respect of the Sale Shares to effect the transfer. 4.4 Indemnity Each Party shall indemnify and keep indemnified the other Party against any losses, costs, penalties and expenses (including reasonable legal fees) as a result of any breach of any of the indemnifying Party s warranties, covenants or obligations in the SSPA. 5. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION 5.1 Net Assets ( NA ) and Earnings Per Share ( EPS ) Barring any unforeseen circumstances, the Proposed Acquisition is not expected to have any material impact on the NA and EPS of the UMW Group for the financial year ending 31 st December 2016. 5.2 Gearing The Proposed Acquisition is not expected to have any material impact on the gearing of the UMW Group for the financial year ending 31 st December 2016. 5.3 Share Capital and Shareholdings of Substantial Shareholders The Proposed Acquisition is not expected to have any material impact on the share capital and substantial shareholders shareholdings in the UMW Group. 6. LIABILITIES TO BE ASSUMED There are no liabilities, including contingent liabilities and guarantees, to be assumed by UMW arising from the Proposed Acquisition. 4
7. SOURCE OF FUNDING The Proposed Acquisition will be financed entirely via internally-generated funds. 8. RATIONALE The Proposed Acquisition will pave the way for UMW to consolidate its shareholding in UMWD as the Group intends to consolidate its land bank in Serendah for future development. 9. PROSPECTS The Lands belonging to UMWD will offer potential realisable capital value due to its strategic location, which is expected to enhance the future earnings of the Group. Given the strategic location and the upcoming manufacturing plant for Rolls-Royce fan cases, the Lands are poised to be the catalyst for other industry players to establish operations in the proposed industrial park. In addition, the development of the Lands will have a multiplier effect on the broader Malaysian economy. In view of the above, the Board is of the opinion that the Lands have good development potential and prospects. 10. RISKS IN RELATION TO THE PROPOSED ACQUISITION 10.1 Non-Completion of the Proposed Acquisition There is a possibility that the Proposed Acquisition may not be completed due to failure in fulfilling the Conditions Precedent as stipulated in the SSPA within the timeframe prescribed. In the event that the Conditions Precedent are not fulfilled or waived, the SSPA will lapse and UMWC will not be able to complete the Proposed Acquisition. There can be no assurance that the Conditions Precedent can be fulfilled. The management of the Company will use its best endeavours and will take reasonable steps to ensure the Conditions Precedent are fulfilled and the Proposed Acquisition is completed in a timely manner. 11. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE PROPOSED ACQUISITION The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02 (g) of the MMLR of Bursa Securities is 0.27%, computed based on the latest audited financial statements of UMW Holdings for the financial year ended 31 st December 2015. 5
12. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by 31 st December 2016. 13. APPROVAL REQUIRED The Proposed Acquisition does not require the approval of the shareholders of UMW and/or any other authorities. 14. TOTAL AMOUNT TRANSACTED BY THE RELATED PARTY To the best of the Company s knowledge, the total amount transacted between UMW and its subsidiaries and PNB and/or persons connected to them in the preceding 12 months was approximately RM19,559,009.17 15. INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS UMWC, a wholly-owned subsidiary of UMW Holdings, holds 51% equity interest in UMWD, whilst the remaining 39% and 10% equity interests in UMWD are held by PNB and PNSB, respectively. PNB and/or funds managed by PNB, is a major shareholder of UMW Holdings, having 58.09% equity interest in the Company as at 31 st October 2016. Therefore, PNB is deemed interested in the Proposed Acquisition. Y Bhg Tan Sri Asmat bin Kamaludin, Y Bhg Datuk Dr Nik Norzrul Thani bin N.Hassan Thani and Y Bhg Dato Mohd Nizam bin Zainordin, who are Directors of UMW Holdings and nominees of PNB have abstained from all deliberations on the Proposed Acquisition. Save as disclosed above, none of the other Directors of UMW, substantial shareholders of UMW Holdings and/or persons connected to them have any interest, direct or indirect, in the Proposed Acquisition. 16. STATEMENT BY THE AUDIT COMMITTEE In light of the Proposed Acquisition being a related party transaction, the Audit Committee of UMW had sought the opinion of PricewaterhouseCoopers ( PwC ) as an independent valuer in forming views in relation to the valuation of the PNB OS and PNB CRPS. Based on PwC s independent assessment, the indicative value of 100% nominal share capital in UMWD as at 30 th April 2016 approximates to its adjusted NTA of RM46.9 million whereby RM38.9 million is attributable to ordinary shares and RM8.0 million is attributable to 7.4% cumulative redeemable preference shares. The 6
valuation of PNB s equity stake proportionate to its 39% shareholding in UMWD is RM18.3 million. As such, the Audit Committee of UMW, having considered all relevant aspects of the Proposed Acquisition and the Group s strategies, is of the view that the Proposed Acquisition is in the best interests of the Company, fair and reasonable, and on normal commercial terms and are not detrimental to the interests of the minority shareholders. 17. STATEMENT BY THE BOARD OF DIRECTORS The Board of UMW, save for Y Bhg Tan Sri Asmat bin Kamaludin, Y Bhg Datuk Dr Nik Norzrul Thani bin N.Hassan Thani and Y Bhg Dato Mohd Nizam bin Zainordin, who are nominee Directors of PNB and who have abstained from all deliberations on the Proposed Acquisition, having considered all relevant aspects of the Proposed Acquisition and the Group s strategies, and after careful deliberation, is of the opinion that the Proposed Acquisition is in the best interests of the UMW Group, fair and reasonable, and on normal commercial terms and not detrimental to the interests of the minority shareholders. 18. DOCUMENT AVAILABLE FOR INSPECTION A copy of the SSPA will be available for inspection, in accordance with UMW s Document Inspection Policy, at the registered office of UMW Holdings Berhad at 3 rd Floor, The Corporate, No. 10, Jalan Utas (15/7), Batu Tiga Industrial Estate, 40200 Shah Alam, Selangor Darul Ehsan, during normal office hours from 9.00 a.m. to 5.00 p.m. on any weekday (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 20 th December 2016. cc - Securities Commission (Corporate Finance & Investments) 7