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Sale And Purchase Agreement Between Hektar Klasik Sdn Bhd And Frasers Centrepoint Limited

Published : 05 Mar 2008
Announced : 05 Mar 2008

1. INTRODUCTION
We refer to Hektar REIT's announcements made on 16 May 2007, 13 July 2007, 15 August 2007, 14 September 2007, 11 October 2007, 16 November 2007 and 16 January 2008 in relation to a sale and purchase agreement with FCL ("SPA") for FCL to acquire 400,000 ordinary shares of RM1.00 each comprising 40% of the issued and paid-up share capital in Hektar AM ("Sale Shares"), for a total cash consideration of RM500,000.

On behalf of the Board of Directors of Hektar AM, the manager of Hektar REIT, AmInvestment Bank Berhad ("AmInvestment Bank"), a member of the AmInvestment Bank Group, wishes to announce that the Board of Hektar AM has been informed by HKSB, the holding company of Hektar AM, that HKSB had on 5 March 2008 entered into a joint venture agreement ("JV Agreement") with Frasers Centrepoint Asset Management (Malaysia) Pte. Ltd. ("FCAMM"), a nominee of FCL, in fulfillment of Clause 2.1(e) of the SPA.

The parties agreed to participate jointly in the management of Hektar REIT via Hektar AM and have entered into the JV Agreement for the purpose of regulating their relationship with each other and to set out their respective rights, duties and obligations and mutual covenants relating to their relationship inter se as shareholders of the Company.
2. Salient terms of the SPA
Save for item C below, the salient terms of the SPA as set out below, have been met:

A. The obligations of the SPA shall be conditional upon:
(i) The approval of the Securities Commission ("SC"), the Foreign Investment Committee ("FIC") and/ or any other applicable regulatory authority for the purchase of Sale Shares by the Purchaser. The SC and the Equity Compliance Unit ("ECU") of the SC had vide its letter dated 13 August 2007, approved the purchase of the Sale Shares;

(ii) The approval of this acquisition being obtained from the Board of Directors of both the Purchaser and the Vendor. The respective approval was obtained on 15 May 2007;
(iii) Satisfactory completion of due diligence and financial audit over the assets, business and records of the Company. Such due diligence and financial audit were satisfactorily completed in October 2007 by the parties engaged by the Purchaser; and
(iv) The execution of a JV Agreement between the Purchaser or its nominee and the Vendor on a date to be agreed by the parties on such terms as the parties may mutually agree upon.

B. Rights reserved by the Purchaser to procure the refund of the deposit from the Vendor in the event of non-fulfillment of conditions precedent.

C. The completion date of the SPA is a date falling 14 business days from the date on which all the conditions precedent to the SPA have been duly obtained or fulfilled or such other period as the parties may agree in writing.

3. DETAILS OF THE JVA

3.1 Information on the JV Agreement

Upon the completion of the SPA between HKSB and FCL, as mentioned in Section 2 above, FCAMM, as nominated by FCL, will hold 400,000 ordinary shares of RM1.00 each constituting 40% of the issued and paid-up share capital of Hektar AM and HKSB will hold 600,000 ordinary shares of RM1.00 each constituting 60% of the issued and paid-up share capital of the Hektar AM.

Hektar AM is the management company of Hektar REIT, a real estate investment trust established in Malaysia under the Trust Deed dated 5 October 2006 entered into between AmTrustee Berhad, as trustee for Hektar REIT unitholders ("Trustee"), and Hektar AM ("Trust Deed"), whose units are listed on Bursa Malaysia Securities Berhad ("Bursa Securities").
3.2 Commencement of Joint Venture
The JV Agreement will come into force and effect on the date of completion of the SPA ("Effective Date"). The completion of the SPA is a date falling 14 business days from the date on which all the conditions precedent have been duly obtained or fulfilled or such other period as the parties may agree in writing.

HKSB and FCAMM (collectively as "the Parties" or individually as "the Party") further agree that within ten (10) business days from the Effective Date, HKSB shall take all necessary steps to pass the appropriate resolutions to effect the new composition of the Board in accordance with the provisions of clause 7 of the JV Agreement.
3.3 Obligations of the Parties
Without limiting the generality of this clause, the Parties undertake and agree that (amongst others) they will jointly and severally:

(a) provide their resources, capabilities and experience to develop a business plan for the Company and Hektar REIT; and
(b) provide their resources, capabilities and experience to develop a further investment policy for Hektar REIT.
3.4 Shareholdings of the Parties and Change of Name

Save as expressly provided or authorised under the JV Agreement, the participation of the Parties in the shareholding in the Company shall be as follows:-
Shareholder
No. of Ordinary Shares in the Company
Percentage of Issued and Paid Up Capital of the Company/ %
HKSB
600,000
60.00
FCAMM
400,000
40.00
Total
1,000,000
100.00


The paid up capital may be gradually increased according to the business plan and financing requirements of the Company.

Upon execution of the JV Agreement, the name of the Company and Hektar REIT shall, if so requested by FCAMM within a period of 12 months from the date of the JV Agreement or such longer period as may be mutually agreed between the parties, and subject to the prior approval(s) of the Trustee, the Registrar of Companies, Bursa Securities and/or the SC, as well as amendments to the Trust Deed, as may be required, be changed to include the word "Frasers" or any of its derivatives, and the Parties shall promptly take all necessary steps to effect the same, including without limitation, the entry of an agreement with Fraser and Neave, Limited for the grant of licence, at no fee or cost to the Company or HKSB and/or any other subsequent party to the JV Agreement, to use the word "Frasers" or any of its derivatives, if so required by FCAMM, in a form to be agreed between FCAMM and the Company.
3.5 Disposal of Shares and Pre-emption Rights

Restriction Against Transfer

Save as otherwise expressly provided in the JV Agreement, no Party shall transfer or otherwise dispose of or deal with any or all of the shares in the Company or any interest in such shares without the prior written consent of the other Party.

First Right of Refusal of Existing Parties

Save as otherwise expressly provided in the JV Agreement, any Party who intends to transfer or otherwise dispose of any or all of its shares in the Company or any interest in such shares whether pursuant to an offer for those shares by another Party or third party or otherwise, shall deposit with the Company the relevant share certificates duly endorsed for transfer, together with the duly executed application for registration of share transfer, and give the Company notice in writing specifying the number of shares to be transferred or disposed of.

Where HKSB intends to sell its shares ("Offered Shares") to a third party ("Proposed Buyer") after first offering to the other Party, HKSB shall serve a notice in writing ("Sale Notice") to FCAMM informing them of the same. Upon receipt of such written notice, FCAMM shall, in giving its consent to the sale, have the right, by providing a written notice to HKSB within 7 Business Days after the date of service of the Sale Notice, to also sell to the Proposed Buyer for the same consideration per share and upon the same terms and conditions as those to be paid and given by the Proposed Buyer to HKSB ("Tag Along Right").

HKSB shall procure that the Proposed Buyer shall not be entitled or permitted to purchase the Offered Shares from HKSB unless and until the Proposed Buyer shall have made an offer in writing to FCAMM to purchase the shares to be sold by FCAMM in exercising its Tag Along Right. FCAMM shall respond to such offer in writing within seven (7) Business Days from its receipt of the same from the Proposed Buyer. In the event FCAMM does not respond within the said seven (7) Business Day period, FCAMM shall be deemed to have rejected such offer, and HKSB shall forthwith be entitled to proceed with its sale of the Offered Shares to the Proposed Buyer.
3.6 The Board of Directors

Each Party shall have the right to appoint such number of non-independent directors to the Board proportionate to their respective percentages of shareholding as set out in Section 3.4 above, provided always that at least one-third of the composition of the Board at any one time shall comprise of Independent Directors in compliance with the Applicable Requirements (as defined in the JV Agreement) for the appointment of Independent Directors.
Subject Always to the above, the total number of directors on the Board shall be eight (8), of which HKSB shall be entitled to nominate three (3) non-independent directors and FCAMM shall be entitled to nominate two (2) non-independent directors and the remaining three (3) shall be Independent Directors.
The Chairman of the Board shall be a nominee of the single largest shareholder. The first Chairman of the Board shall be Dato' Jaafar Abdul Hamid.

This announcement is dated 5 March 2008.