Ivory-Dijaya JV for RM10bn ‘Penang World City’ project

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Ivory Properties Group Bhd is entering into a 51:49 joint venture with Dijaya Corporation Bhd to develop 103 acres of super-prime Bayan Mutiara sea-front land that it is acquiring from PDC for RM1.1bn or RM240psf.

bayan mutiara
The Bayan Mutiara project - Graphic: Kwong Wah

More pictures in Kwong Wah.

Salient points of the deal:

  • Land area: 103 acres (including 35 acres land to be reclaimed)
  • Purchase price: RM1.1bn “arrived at following negotiations between Ivory, CMI and PDC, upon the award of acceptance through a tender exercise arising from the request for proposals exercise in respect of the purchase and development of the Land”. Works out to RM240psf.
  • Estimated gross development value: RM10bn
  • Proposal: ‘Penang World City’ mixed development: residential (high-rise and low-rise), commercial (mall, shop-houses, hotel, health care centres, office towers and leisure club)
  • Masterplan to be submitted to PDC within 3 months
  • Substantial shareholders: Ivory – Low Eng Hock and Ooi Choi Kiat; Dijaya – Tan Chee Sing

Clarifications required:

  • Is the reclaimed land going to be leasehold or freehold land? (Reclaimed land should ideally be leasehold to protect the interests of the state/public.)
  • What is the low-cost housing element required, if any? PDC must clarify.
  • Any requirements for public facilities/amenities such as green spaces?
  • What is the permissible plot ratio that would be allowed for the land?
  • Is there a requirement for a comprehensive independent EIA and an independent hydrological study?
  • Who is undertaking the traffic impact assessment? Who pays for additional transport infrastructure required in surrounding roads?
  • Why couldn’t PDC itself develop the land to maximise its revenue and provide public amenities?

Ivory’s announcement to Bursa

On behalf of the Board of Directors of Ivory, OSK Investment Bank Berhad (“OSK”) wishes to announce that the Company wishes to undertake the following corporate proposals:-

(i) Proposed purchase and development agreement with Chief Minister of Penang (Incorporation) and the Penang Development Corporation to purchase and develop all that pieces of land measuring approximately 102.56 acres in Bayan Mutiara, Northeast District of Penang (“Land”) for a total cash consideration of RM1,072,203,264 (“Proposed PDA”);

(ii) Proposed joint venture between Ivory and Dijaya Corporation Berhad, to govern a joint venture company, namely Tropicana Ivory Sdn Bhd (“TISB”), for the proposed purchase and development of the Land (“Proposed Joint Venture”);

(iii) Proposed renounceable rights issue of 186,000,000 new ordinary shares of RM0.50 each in Ivory (“Rights Share(s)”) together with 186,000,000 new free detachable warrants (“Warrant(s)”) on the basis of one (1) Rights Share and one (1) free Warrant for every one (1) existing ordinary share of RM0.50 each in Ivory (“Ivory Share(s)”) held on an entitlement date to be determined later (“Proposed Rights Issue”);

(iv) Proposed bonus issue of 46,500.00 Ivory Shares (“Bonus Share(s)”) on the basis of one (1) Bonus Share for every four (4) Rights Shares subscribed (“Proposed Bonus Issue”)

(v) Proposed provision of financial assistance by Ivory to TISB in the event TISB becomes an associated company of Ivory pursuant to the salient terms of the joint venture agreement governing the Proposed Joint Venture (“Proposed Provision of Financial Assistance”);

(vi) Proposed increase in the authorised share capital of the Company from RM100,000,000 comprising 200,000,000 Ivory Shares to RM500,000,000 comprising 1,000,000,000 Ivory Shares (“Proposed Increase in Authorised Share Capital”); and

(vii) Proposed amendments to the Memorandum and Articles of Association of the Company (“Proposed Amendments”).

The Proposed PDA, Proposed Joint Venture, Proposed Rights Issue, Proposed Bonus Issue, Proposed Provision of Financial Assistance, Proposed Increase in Authorised Share Capital and Proposed Amendments are collectively referred to as the “Proposals”.

Further details on the Proposals are set out in the attachment (below).

This announcement is dated 11 November 2011.

IVORY PROPERTIES GROUP BERHAD (“IVORY”OR THE “COMPANY”)
(I) PROPOSED PURCHASE AND DEVELOPMENT AGREEMENT WITH CHIEF MINISTER OF
PENANG (INCORPORATION) AND THE PENANG DEVELOPMENT CORPORATION TO
PURCHASE AND DEVELOP ALL THAT PIECES OF LAND MEASURING
APPROXIMATELY 102.56 ACRES IN BAYAN MUTIARA, NORTHEAST DISTRICT OF
PENANG (“LAND”), FOR A TOTAL CASH CONSIDERATION OF RM1,072,203,264
(“PROPOSED PDA”);
(II) PROPOSED JOINT VENTURE BETWEEN IVORY AND DIJAYA CORPORATION BERHAD
(“DIC”) TO GOVERN A JOINT-VENTURE COMPANY, NAMELY, TROPICANA IVORY SDN
BHD (“TISB”), FOR THE PROPOSED PURCHASE AND DEVELOPMENT OF THE LAND
(“PROPOSED JOINT VENTURE”);
(III) PROPOSED RENOUNCEABLE RIGHTS ISSUE OF 186,000,000 NEW ORDINARY
SHARES OF RM0.50 EACH IN IVORY (“RIGHTS SHARE(S)”) TOGETHER WITH
186,000,000 NEW FREE DETACHABLE WARRANTS (“WARRANT(S)”) ON THE BASIS
OF ONE (1) RIGHTS SHARE AND ONE (1) FREE WARRANT FOR EVERY ONE (1)
EXISTING ORDINARY SHARE OF RM0.50 EACH IN IVORY (“IVORY SHARE(S)”) HELD
ON AN ENTITLEMENT DATE TO BE DETERMINED LATER (“PROPOSED RIGHTS
ISSUE”);
(IV) PROPOSED BONUS ISSUE OF 46,500,000 IVORY SHARES (“BONUS SHARE(S)”) ON
THE BASIS OF ONE (1) BONUS SHARE FOR EVERY FOUR (4) RIGHTS SHARES
SUBSCRIBED (“PROPOSED BONUS ISSUE”);
(V) PROPOSED PROVISION OF FINANCIAL ASSISTANCE BY IVORY TO TISB IN THE
EVENT TISB BECOMES AN ASSOCIATED COMPANY OF IVORY PURSUANT TO THE
SALIENT TERMS OF JOINT VENTURE AGREEMENT GOVERNING THE PROPOSED
JOINT VENTURE (“PROPOSED PROVISION OF FINANCIAL ASSISTANCE”);
(VI) PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF THE COMPANY
FROM RM100,000,000 COMPRISING 200,000,000 IVORY SHARES TO RM500,000,000
COMPRISING 1,000,000,000 IVORY SHARES (“PROPOSED INCREASE IN AUTHORISED
SHARE CAPITAL”); AND
(VII) PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION
OF THE COMPANY (“PROPOSED AMENDMENTS”)
(COLLECTIVELY REFERRED TO AS THE “PROPOSALS”)
1. INTRODUCTION
On behalf of the Board of Directors of Ivory (“Board”), OSK Investment Bank Berhad (“OSK”)
wishes to announce the following:-
(i) On 11 November 2011, the Company had entered into the following agreements:-
a) Purchase and Development Agreement between Chief Minister of Penang
(Incorporation) (“CMI”) and the Penang Development Corporation (“PDC”) to
purchase and develop all that pieces of land measuring approximately 102.56
acres in Bayan Mutiara, Northeast District of Penang (“Land”) for a total
consideration of RM1,072,203,264 (“PDA”); and
b) Joint Venture Agreement between Ivory and Dijaya Corporation Berhad
(“DIC”), to govern a joint venture company, namely Tropicana Ivory Sdn Bhd
(“TISB”), for the proposed purchase and development of the Land (“JVA”).
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(ii) Proposed renounceable rights issue of 186,000,000 new ordinary shares of RM0.50
each in Ivory (“Rights Shares(s)”) together with 186,000,000 new free detachable
warrants (“Warrant(s)”) on the basis of one (1) Rights Share and one (1) free Warrant
for every one (1) existing ordinary share of RM0.50 each in Ivory (“Ivory Share(s)”)
held on an entitlement date to be determined later (“Entitlement Date”) (“Proposed
Rights Issue”);
(iii) Proposed bonus issue of 46,500,000 Ivory Shares (“Bonus Share(s)”) on the basis of
one (1) Bonus Share for every four (4) Rights Shares subscribed (“Proposed Bonus
Issue”);
(iv) Proposed provision of financial assistance by Ivory to TISB in the event TISB
becomes an associated company of Ivory pursuant to the salient terms of the JVA
governing the Proposed Joint Venture (“Proposed Provision of Financial Assistance”);
(v) Proposed increase in the authorised share capital of the Company from
RM100,000,000 comprising 200,000,000 Ivory Shares to RM500,000,000 comprising
1,000,000,000 Ivory Shares (“Proposed Increase in Authorised Share Capital”); and
(vi) Proposed amendments to the Memorandum and Articles of Association (“M&A”) of
the Company (“Proposed Amendments”).
The Proposed PDA, Proposed Joint Venture, Proposed Rights Issue, Proposed Bonus Issue,
Proposed Provision of Financial Assistance, Proposed Increase in Authorised Share Capital
and Proposed Amendments are collectively referred to as the “Proposals”.
2. DETAILS OF THE PROPOSALS
2.1 Proposed PDA
The Company had, on 3 March 2011, submitted an application to PDC to purchase
and develop the Land. On 25 July 2011, the Company announced that it had
received and accepted the Letter of Acceptance from PDC for the purchase and
development of the Land.
Ivory had, on 11 November 2011, entered into the PDA for the purchase and
development of the Land for a total cash consideration of RM1,072,203,264. Under
the terms of the PDA, the Land will be parcelled in accordance with the plan or the
approved master plan and the terms of the PDA. The purchase consideration for
each parcel is to be calculated based on the area of each parcel at the rate of RM240
per square feet (“sq. ft.”). Ivory may nominate TISB, subsidiaries of Ivory or whollyowned
subsidiaries of TISB (“Nominated Companies”) to accept the transfer of the
titles issued for the Land upon fulfilling the relevant salient terms of the PDA.
2.1.1 Information of the Land
The Land is located within Bayan Mutiara, a new waterfront development
located on the south-eastern foreshore of Penang Island, between
Georgetown and Bayan Lepas. It is situated at the coast way of the Tun Dr.
Lim Chong Eu Expressway and in the locality of Sungai Nibong. Tun Dr. Lim
Chong Eu Expressway forms the coastal highway, which links Georgetown at
the north and Batu Maung / Bayan Lepas at the south. The Land comprises
67.56 acres of existing land and the other remaining 35 acres of land to be
reclaimed (“Reclamation Land”). Save for certain parcels of the Land to be
reclaimed, the land is generally flat to undulating in terrain. Details of the
development of the Land are set out under Section 2.1.3 of this
announcement.
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The Land shall be acquired free from all encumbrances and with vacant
possession, but subject to conditions and restrictions in the PDA and all
conditions and restrictions implied by the National Land Code, 1965. PDC
and CMI had also given their undertaking to issue the Land with individual
freehold titles.
As the Land is to be alienated by the State Authority of Penang to CMI, Ivory
is not privy to the information on the original cost, net book value and date of
investment in the Land and as such, Ivory is unable to disclose this
information.
2.1.2 Salient features of the valuation report
The salient features of the valuation report prepared by Messrs Henry
Butcher Malaysia (Penang) Sdn Bhd (“Henry Butcher”) dated 3 October 2011
are as follows:
(i) The market value of the Land of RM1,079,500,000 as at 25 July
2011, is based on the comparison method of valuation;
(ii) The basis of valuation adopted for the Land is the market value
which is defined in the Malaysian Valuation Standard as “the
estimated amount for which an asset should exchange on the date of
valuation between “a willing-buyer and a willing-seller” in an arm’s
length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion”;
(iii) The comparison method seeks to determine the value of the Land
being valued by comparing and adopting as a yardstick, recent sale
evidences involving other similar properties in the vicinity.
Adjustments have been made to the differences in location, size and
shapes, accessibility, infrastructure available, improvements made
on the site and other value considerations; and
(iv) The market value of the Land is also based on an “As Is” basis which
provides that individual titles in respect of the Land covering a total
area of 102.56 acres are forthcoming, registrable and marketable
when issued and will be free from encumbrances, endorsements,
statutory notices and outgoings.
2.1.3 Details on the Proposed Development
The Land is intended for mixed development comprising different phases of
development of residential and commercial properties which include, among
others, the development of high rise and low rise residential properties, shop
houses, healthcare centers, office towers and a leisure club (“Proposed
Development”). The project name pursuant to the Proposed Development will
be identified as “Penang World City”. The Proposed Development will be
based on the overall development master plan of the Land which is subjected
to the approval of PDC and the relevant authorities. Pursuant to the PDA, a
proposed master plan for the Proposed Development shall be submitted for
PDC’s consideration within 3 months of entering into the PDA.
Subject to approval from the relevant authorities, the development of the first
parcel of the Land is expected to commence in the second half of 2012 and is
to be completed within 5 years from the date of the PDA. In addition to that,
the Proposed Development is required to be completed in 8 years in
accordance to the Proposed PDA.
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The Proposed Development is expected to generate an estimated Gross
Development Value (“GDV”) of RM10 billion. However at this juncture, it is
too preliminary to ascertain the exact GDV, total development cost and the
expected profit to be derived from the Proposed Development as the relevant
approvals in respect of the Proposed Development has yet to be obtained.
The funding for the development cost of the project will be through a
combination of bank borrowings and/ or internally generated funds. However,
the exact mix of bank borrowings and/ or internally generated funds has not
been determined by Ivory yet but will be based on an optimum mix after
taking into consideration of Ivory Group’s gearing level and availability of
internal funds.
2.1.4 Information of PDC
PDC is a body corporate incorporated in Malaysia under the Penang
Development Corporation Enactment 1971. PDC is the development arm of
the State Government of Penang entrusted, inter alia, to promote the
development of industrial, commercial, trading and residential areas and/ or
projects in the State of Penang.
2.1.5 Information of CMI
CMI is a body corporate incorporated under the Chief Minister of Penang
(Incorporation) Enactment, 2009.
2.1.6 Salient terms of the PDA
The salient terms of the PDA are as follows:
(i) The PDA is conditional upon the approval by shareholders of Ivory
being obtained within three (3) months from the date of the PDA or
such extended period as the parties may mutually agree;
(ii) The sum of Ringgit Malaysia Ten Million Seven Hundred Twenty Two
Thousand Two Hundred (RM10,722,200.00) shall be forfeited
absolutely to PDC in the event of Ivory failing to obtain its
shareholders approvals;
(iii) Upon payment made according to the payment schedule, CMI shall
execute the transfer and deliver the transfer for the relevant parcels
of the Land together with the title to Ivory or to the Approved
Nominees;
(iv) Ivory shall complete the reclamation works on the Reclamation Land
within four (4) years from the date of the PDA subject to the terms of
the PDA; and
(v) In respect of the Proposed Development, Ivory shall at its own cost
and expense do all things necessary to obtain all development
approvals whilst PDC agrees to facilitate and expedite plan approvals
by the relevant authorities.
2.1.7 Basis and Justification for the Purchase Consideration
The purchase consideration for the Land is based on the selling price of
RM240 per sq. ft. as stipulated in the PDA.
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The purchase consideration of RM1,072,203,264 for the Land was arrived at
following negotiations between Ivory, CMI and PDC, upon the award of
acceptance through a tender exercise arising from the request for proposals
exercise in respect of the purchase and development of the Land.
In arriving at the purchase consideration, Ivory had considered, among other
factors, the market value of the Land amounting to RM1,079,500,000 as
appraised by Henry Butcher. Based on the valuation letter dated 3 October
2011 by Henry Butcher, the Land was valued using the comparison method
of valuation. The salient features of the valuation report are set out under
Section 2.1.2 of this announcement.
2.1.8 Terms of Payment
The purchase consideration in relation to the Land shall be satisfied fully via
cash in the following manner:-
No. Date of settlement RM
i. upon signing the PDA* 109,093,920
ii. Within a period of 4 months from the PDA 11,719,382
iii. Within a period of eighteen (18) months from the PDA 124,365,542
iv. Within a period of twenty-four (24) months from the PDA
193,082,315
v. Within a period of thirty-six (36) months from the PDA
229,170,902
vi. within a period of forty-eight (48) months from the PDA 215,392,003
vii. within a period of sixty (60) months from the PDA 188,179,200
Subtotal 1,071,003,264
Earnest Deposit 1,200,000
Total 1,072,203,264
Note:
* CMI and PDC had via a supplemental letter dated 11 November 2011,
agreed to an extension of time to pay party of the First Instalment (being the
aggregate amount of item (i) and item (ii) as follows:-
(i) to pay RM20,858,784 upon the execution of the PDA (“First Tranche)”;
and
(ii) To pay RM88,235,136 (“Balance Instalment”) within three (3) months
from the date of the PDA.
The above extension of time is granted pursuant to Clause 3.2 of the PDA
and on condition that:
(i) Ivory shall pay upfront, upon execution of the PDA, interest calculated on
the Balance Instalment at the rate of eight per cent (8%) per annum on a
365 days year basis for the three (3) months extension period. If Ivory
shall pay the Balance Instalment before the expiry of the three (3) months
extension period, PDC shall within fourteen (14) days from such payment
refund to Ivory free of interests, such interest not accrued; and
(ii) in the event Ivory fail to pay the Balance Instalment on or before the
expiry of the three (3) months extension period, PDC may at its option
treat the PDA as having been repudiated by Ivory and immediately by
notice rescind the PDA whereupon notwithstanding any provisions of the
PDA to the contrary:-
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• the two point one per cent (2.1%) of the purchase consideration and
the interest paid as aforesaid shall be forfeited absolutely to PDC as
agreed liquidated damages; and
• the provisions of the Clause 12.2 of the PDA shall apply mutatis
mutandis.
Pursuant to the PDA, the purchase consideration for the Land will be subject
to an adjustment at a rate of RM240 per sq. ft. in the event such location,
measurements, boundaries, area or other description of the Land shall be
different from the location, measurements, boundaries, or other description
as shown ultimately in the final titles to all the parcels of the Land.
2.1.9 Source of Funding for the Purchase Consideration
The First Tranche of the purchase consideration for the Land will be funded
through internally generated funds by Ivory and DIC. Subsequent payments
will be funded through a mix of internally generated funds and/ or bank
borrowings. The exact mix of internally generated funds and bank borrowings
has not been decided by Ivory yet but will be based on an optimum mix after
consideration of Ivory Group’s gearing level and internal funds availability.
2.1.10 Liabilities to be assumed by Ivory
There will be no liabilities to be assumed by Ivory pursuant to the Proposed
PDA.
2.2 Proposed Joint Venture
2.2.1 Details of the Proposed Joint Venture
Ivory and DIC (collectively the “JV Parties”) have agreed to enter into a joint
venture (“JV”) through their wholly-owned subsidiaries, namely, Ivory Utilities
Sdn. Bhd. (“IUSB”) and Tropicana Development (Penang) Sdn. Bhd.
(formerly known as Seleksi Kembara Sdn Bhd) (“TDSB”) (collectively the “JV
Shareholder(s)”) whereby IUSB and TDSB holds 51% and 49% equity
interest in TISB respectively. Pursuant to the JVA, Ivory shall appoint TISB as
the sole developer and ensure that the entire development of the Land be
solely and exclusively be awarded to TISB. Please refer to Section 2.1.1 for
the information on the Land and Section 2.1.3 for information on the
Proposed Development.
2.2.2 Information on TISB
TISB is a private limited company incorporated in Malaysia on 30 September
2011 under the Companies Act, 1965 and its intended principal activity is
property development and construction. TISB has not commenced operations
since its incorporation.
TISB’s authorised capital is RM100,000 divided into 100,000 ordinary shares
of RM1.00 each, of which 100 shares of RM1 each were issued and fully
paid-up as follows:-
JV Shareholders
Shareholdings in TISB
No. of TISB Shares %
IUSB 51 51.0
TDSB 49 49.0
100 100.0
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The issued and paid-up share capital of TISB shall be in the proportions as
above and unless otherwise varied by mutual consent of the JV Parties. The
eventual capital will depend on the capital requirements of TISB for the
Proposed Development.
Pursuant to the JVA, TISB shall also appoint either one of the JV Parties as a
builder (hereinafter referred to as “the Builder”) to undertake construction
works on the Land. As a result of that, TISB shall enter into an agreement
with the Builder. Upon execution of the Builder’s Agreement, the JV
Shareholder related to the Builder shall sell six percentum (6%) of its shares
in TISB, at a price equivalent to the par value of TISB’s shares to the other JV
Shareholder thereby resulting in a change of the equity participation in TISB.
The party buying the said shares shall (together and simultaneous with the
payment of the price for the said 6% shares to the other JV Shareholder) also
reimburse to the other JV Shareholder 6% of all of the expenses incurred by
TISB as at the date of the sale.
The Builder will, among others, be responsible on the following areas:-
(i) Management and appointment of the relevant consultants/ subcontractors
in relation to the construction activities of the Proposed
Development;
(ii) Ensure that the buildings and infrastructure to be constructed on the
Land in accordance with the approved plans by the relevant
authorities and specifications; and
(iii) Carry and complete the construction of the properties and
infrastructure with all regulations and requirements from the relevant
authorities and ensure the issuance of the certificates of completion
and compliance.
Pursuant to the Builder’s Agreement, the Builder shall be entitled to receive
the sum equivalent to 48% of the GDV for each phase of the works defined in
Builder’s Agreement. The GDV for each phase shall be determined before
the commencement of the works of such phase.
2.2.3 Salient Terms of the JVA
The salient terms and conditions of the JVA are as follows:
(i) The Proposed Joint Venture is conditional upon the fulfillment of the
following conditions precedent:-
(a) approval of the board of directors and shareholders of Ivory;
and
(b) approval of the board of directors and shareholders of DIC.
(ii) The primary objective of TISB is to purchase the Land from PDC and
to undertake development and reclamation works on the Land.
Where required, the JV Parties shall provide such financial support to
TISB in proportion to the shareholders’ respective shareholdings in
TISB;
(iii) The JV Parties shall share the development surplus in accordance to
the shareholders’ proportionate shareholdings in TISB;
(iv) The number of directors from IUSB and TDSB that shall be
appointed to the Board shall be proportionate to and in accordance
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with the percentage of their respective shareholdings in TISB as long
as each party remains a shareholder. The Chairman of the Board will
be a nominated director of the party holding the majority of shares.
The Chairman will also preside as Chairman at the general meetings
of the TISB;
(v) If and when necessary, and only where TISB is unable to secure the
required financing from the borrowings from banks and or financial
institutions, any additional capital which is required by TISB shall be
provided by the JV Shareholders on a several basis in proportion to
and to the extent of their respective shareholdings in TISB; and
(vi) TISB shall enter into a Builder’s Agreement to appoint either one of
the JV Parties as the Builder to undertake construction works on the
Land. Upon execution of the Builder’s Agreement, the JV
Shareholder related to the Builder shall sell six percentum (6%) of its
shares in TISB, at a price equivalent to the par value TISB’s shares
to the other JV Shareholder thereby resulting in a change of the
equity participation in TISB. The party buying the said shares shall
(together and simultaneous with the payment of the price for the said
6% shares to the other shareholder) also reimburse to the other JV
Shareholder 6% of all of the expenses incurred by TISB as at the
date of the sale.
2.2.4 Information on IUSB
IUSB, a wholly-owned subsidiary of Ivory, is a private limited company
incorporated in Malaysia on 6 October 2008 under the Companies Act, 1965.
The present authorised share capital of IUSB is RM100,000 comprising
100,000 ordinary shares of RM1 each and it’s issued and paid-up share
capital is RM2 comprising 2 ordinary shares of RM1 each. The intended
principal activities of IUSB are property development, construction, and
investment holding. IUSB has not commenced operations since its
incorporation on 6 October 2008.
2.2.5 Information on TDSB
TDSB, a wholly-owned subsidiary of DIC, is a private limited company
incorporated in Malaysia on 25 November 1994 under the Companies Act,
1965. The present authorised share capital of TDSB is RM100,000
comprising 100,000 ordinary shares of RM1 each and its issued and paid-up
share capital is RM2 comprising 2 ordinary shares of RM1 each. The
principal activity of TDSB is investment holding.
2.2.6 Basis of consideration
The overall capital outlay and financial commitments required by the
respective joint venture parties will be based on their proportionate of
shareholdings in TISB after taking into consideration, among others, the
following:-
(i) Total purchase consideration of RM1,072,203,264 for the Land;
(ii) Development cost in relation to the Proposed Development; and
(iii) Potential earnings to be generated in relation to the Proposed
Development.
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2.2.7 Source of Funding
Funding for the First Tranche will be from internally generated funds of the
Ivory Group for its own portion. The subsequent payment for the remaining
tranches of payment in relation to the purchase consideration for the Land
and development cost pursuant to the Proposed Development will be funded
through the funding from financial institutions and/ or internally generated
funds. The total development cost for the Proposed Development has yet to
be identified at this juncture.
The transfer of the parcels of the Land to TISB will be based on, among
others, fulfillment of the terms of payment as set out under Section 2.1.8 of
this announcement.
2.2.8 Liabilities to be assumed by Ivory
There are no liabilities to be assumed by Ivory pursuant to the Proposed Joint
Venture.
2.3 Proposed Rights Issue
Based on the total issued and paid-up share capital of Ivory as at 31 October 2011 of
RM93,000,000 comprising 186,000,000 Ivory Shares, the Proposed Rights Issue
would entail an issuance of 186,000,000 Rights Shares together with 186,000,000
free Warrants to the shareholders of the Company on a renounceable basis of one
(1) Rights Share together with one (1) free Warrant for every one (1) existing Ivory
Share held on the Entitlement Date (“Entitled Shareholders”). The Entitled
Shareholders and/or their renouncee(s) who subscribe for the Rights Shares shall be
entitled to the Proposed Bonus Issue on the basis of one (1) Bonus Share for every
four (4) Rights Shares subscribed by the Entitled Shareholders and/or their
renouncee(s) on the Entitlement Date. Further details of the Proposed Bonus Issue
are disclosed in Section 2.4 of this announcement.
The free Warrants shall only be issued to the Entitled Shareholders of the Company
who subscribe for the Rights Shares pursuant to the Proposed Rights Issue. Although
the Rights Shares with free Warrants are renounceable in full or in part, the Rights
Shares and the free Warrants are not separately renounceable. Accordingly, the
Entitled Shareholders can only renounce or subscribe for their entitlements to the
Rights Shares with free Warrants in full or in part in the proportion allocated.
The Entitled Shareholders who renounce their entitlements to the Rights Shares
provisionally allotted to them under the Proposed Rights Issue will simultaneously
renounce their entitlements to the Bonus Shares. The free Warrants will be
immediately detached from the Rights Shares upon issuance and will be separately
traded. The Warrants will be issued in registered form and constituted by a deed poll
to be executed by the Company (“Deed Poll”).
2.3.1 Basis of determining the issue price of the Rights Shares
The issue price of the Rights Shares will be determined by the Board at a
later date, based on a discount that is deemed appropriate after taking into
consideration, amongst others, the theoretical ex-all price of Ivory Shares
(after taking into account the Proposed Bonus Issue) based on the five (5)-
day volume weighted average price (“VWAP”) of Ivory Shares immediately
preceding the price-fixing date, subject to the minimum par value of RM0.50
each.
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For illustrative purposes, the Rights Shares are assumed to be issued at an
indicative issue price of RM0.50 per Rights Share. This represents a discount
of approximately 23.0% to the theoretical ex-all price of RM0.65 per Ivory
Share (after taking into consideration of the Proposed Bonus Issue) based on
the five (5)-day VWAP of Ivory Shares up to and including 10 November
2011 of RM0.96.
2.3.2 Basis of determining the exercise price of the Warrants
The Warrants attached to the Rights Shares will be issued free to the Entitled
Shareholders who subscribe for the Rights Shares.
The exercise price of the Warrants shall be determined by the Board after
receipt of all relevant approvals but before the Entitlement Date, after taking
into consideration the par value of Ivory Shares and the five (5)-day VWAP of
Ivory Shares immediately preceding the price-fixing date for the Warrants.
For illustrative purposes, the exercise price for each Warrant is assumed to
be RM0.65, after taking into consideration of the par value of Ivory Shares of
RM0.50 each and the theoretical ex-all price of RM0.65 (after taking into
consideration of the Proposed Bonus Issue) based on the five (5)-day VWAP
of Ivory Shares up to and including 10 November 2011 of RM0.96.
2.3.3 Ranking of the Rights Shares and new Ivory Shares arising from the
exercise of the Warrants
The Rights Shares to be issued shall, upon allotment and issue, rank pari
passu in all respects with the existing Ivory Shares save and except that the
Rights Shares will not be entitled to any dividends, rights, allotments and/or
other forms of distributions that may be declared, made or paid prior to the
relevant date of allotment and issue of the Rights Shares.
The new Ivory Shares to be issued arising from the exercise of the Warrants
shall, upon allotment and issue, rank pari passu in all respects with the
existing Ivory Shares, save and except that the new Ivory Shares will not be
entitled to any dividends, rights, allotments and/or other forms of distributions
that may be declared, made or paid prior to the relevant date of allotment
date of the said new Ivory Shares.
An application will be made to Bursa Securities for the listing of and quotation
for the Rights Shares, Warrants and new Ivory Shares to be issued arising
from the exercise of the Warrants, on the Main Market of Bursa Securities.
2.3.4 Irrevocable undertaking from the substantial shareholder and
underwriting arrangements
On 10 November 2011, the Company’s substantial shareholder, Dato’ Low
Eng Hock had provided a written irrevocable undertaking to subscribe or
cause to subscribe in full his entitlements under the Proposed Rights Issue.
As at 10 November 2011, Dato’ Low Eng Hock holds 94,180,766 Ivory
Shares, representing 50.63% of the issued and paid-up share capital of Ivory.
Dato’ Low Eng Hock had also undertaken to subscribe in full for any
additional entitlements pursuant to the Proposed Rights Issue, in the event
that he has increased his shareholdings in Ivory as at the book closure date
to be determined later.
Underwriting arrangements for the balance Rights Shares will be finalised at
a later date and subject to an underwriting agreement to be entered into.
11
The Proposed Rights Issue will not be undertaken on a minimum subscription
basis.
2.3.5 Treatment of fractional entitlement
Any fractional entitlements of the Rights Shares and Warrants under the
Proposed Rights Issue shall be dealt with in such manner as the Board in
their absolute discretion deem fit and expedient, and to be in the best
interests of the Company.
2.3.6 Indicative salient terms of the Warrants
Please refer to Appendix I for information on the indicative salient terms of
the Warrants.
2.3.7 Utilisation of proceeds
The Proposed Rights Issue is expected to raise an estimated gross proceeds
totaling RM93,000,000 based on an indicative issue price of RM0.50 per
Rights Share.
The gross proceeds are expected to be utilised in the following manner:
Details of utilisation
Note RM’000 Expected
timeframe for
utilisation
Proposed PDA (1) 50,000 3 months
Working capital (2) 40,000 12 months
Estimated expenses related to the
Proposals
(3) 3,000 6 months
Total 93,000
Notes:
(1) The Group intends to utilise approximately RM50 million towards its portion
of payment for the purchase of the Land. Ivory is in discussion with various
financial institutions on financing for the purchase of the Land. No
agreement has been signed at this juncture. In the event the Group utilises
short term borrowings and/ or internal generated funds for the payment of
the purchase consideration, the proceeds from the Proposed Rights Issue
will be used to replenish the Group’s working capital and/ or repay short
term borrowings.
(2) Comprises of general working capital expenditure of the Group as follows:-
• Payment of creditors (i.e. sub-contractors and consultants) – RM15
million; and
• Financing of daily operations (i.e. purchase of raw materials,
administrative and marketing expenses) – RM25 million
(3) Include fees payable for the professional services rendered of the principal
advisers, reporting accountants, solicitors, valuer and other incidental
expenses in connection with the Proposals.
Any proceeds arising from any exercise of the Warrants in the future are
dependent on the total number of Warrants exercised during the tenure of the
Warrants as well as the exercise price of the Warrants, which will be
determined at a later date. Such proceeds will be utilised for the working
capital requirements of the Group.
12
2.4 Proposed Bonus Issue
The Bonus Shares will only be issued to the Entitled Shareholders and/or their
renouncee(s) who subscribe for the Rights Shares under the Proposed Rights Issue.
The Proposed Bonus Issue involves the issuance of 46,500,000 Bonus Shares to be
credited as fully paid-up, on the basis of one (1) Bonus Share for every four (4) Rights
Shares subscribed by the Entitled Shareholders and/or their renouncee(s) on the
Entitlement Date.
Fractional entitlements of the Bonus Shares, if any, shall be dealt with by the Board in
such manner as the Board in their absolute discretion deem fit and expedient, and to
be in the best interests of the Company.
The Proposed Bonus Issue will not be implemented in stages over a period of time.
2.4.1 Capitalisation of reserves
The Proposed Bonus Issue shall be wholly capitalised from the Company’s
share premium and retained earnings account as follows:
(i) entire share premium account of RM20,766,000; and
(ii) retained earnings of RM2,484,000.
Based on the latest audited financial statements as well as the latest
quarterly report of Ivory for the financial year ended/ ending (“FYE”) 31
December 2010, the share premium and consolidated loss of Ivory at the
Company level stood at RM20,766,000 and (RM3,214,000), respectively. In
order to provide for the shortfall, the Group shall cause its subsidiaries to
undertake the required distributions to the Company for the purpose of
facilitating the implementation of the Proposed Bonus Issue.
The Board has confirmed that the reserves required for the capitalisation of
the Proposed Bonus Issue based on the Company’s financial statements for
the FYE 31 December 2010 and as well as the latest quarterly report are
adequate and unimpaired by losses on a consolidated basis in accordance
with paragraph 6.31 of the Main Market Listing Requirements of Bursa
Securities (“Listing Requirements”).
Further, pursuant to paragraph 6.30(3) of the Listing Requirements of Bursa
Securities, the Board will obtain a confirmation from the external
auditors/reporting accountants on the adequacy of reserves for the
capitalisation of the Proposed Bonus Issue.
2.4.2 Ranking of the Bonus Shares
The Bonus Shares shall, upon allotment and issuance, rank pari passu in all
respects with the existing Ivory Shares, save and except that they shall not
be entitled to any dividends, rights, allotments and/or other distributions, the
entitlement date of which is prior to the date of allotment of the Bonus
Shares.
An application will be made for the listing and quotation for the Bonus Shares
on the Main Market of Bursa Securities.
13
2.5 Proposed Provision of Financial Assistance
Pursuant to the JVA, TISB shall enter into a Builder’s Agreement to appoint either
one of the JV Parties as the Builder to undertake construction works on the Land.
Upon execution of the Builder’s Agreement, the JV Shareholder related to the Builder
shall sell six percentum (6%) of its shares in TISB, at a price equivalent to the par
value of TISB’s shares to the other JV Shareholder thereby resulting in a change of
the equity participation in TISB. In the event that IUSB is appointed as the Builder,
IUSB’s equity interest will be reduced from 51% to 45%.
Pursuant to Paragraph 8.23 of the Listing Requirements of Bursa Securities, a listed
company is required to seek its shareholders’ approval where the aggregate amount
of financial assistance provided/ to be provided by a listed issuer of its subsidiaries to
an associated company is equal to or exceeds 5% of the net tangible asset (“NTA”).
Following the Proposed Development, Ivory may extend financial assistance to TISB
in the form of shareholders advances, guarantee, indemnity, collateral of up to
RM482,491,469 (representing 45% of the total consideration of the Land) to fund the
Proposed PDA, Proposed Development or any construction cost incurred in relation
of the Land. This represents more than 100% of the NTA of Ivory Group as at FYE 31
December 2010.
2.6 Proposed Increase in Authorised Share Capital
Ivory proposes to increase its authorised share capital from RM100,000,000
comprising 200,000,000 Ivory Shares to RM500,000,000 comprising 1,000,000,000
Ivory Shares to facilitate the implementation of the Proposals as well as any future
issuance of equity capital, including any other future corporate exercises.
2.7 Proposed Amendments
In order to accommodate the implementation of the Proposals, the Company is
required to amend the relevant clauses of the M&A to accommodate the Proposed
Increase in Authorised Share Capital.
3. RATIONALE FOR THE PROPOSALS
3.1 Proposed PDA
The Land is a prime development land located in the vicinity of Penang Island. In
recent years, property development projects in Penang Island have received strong
interest from homeowners as well as investors.
Ivory Group is expected to benefit from the Proposed Development in view that the
Land is strategically located within Bayan Mutiara. Bayan Mutiara is a new waterfront
development located on the south-eastern foreshore of Penang Island, between
Georgetown and Bayan Lepas. In addition to its sea view location, its location within
the Penang’s multimedia super corridor (MSC) affords good accessibility to civil and
information technology (IT) infrastructure and facilities.
With the Land’s strategic location, the Board believes that this will provide the Ivory
Group with an excellent opportunity to invest and co-manage a property development
project in an attractive location.
14
3.2 Proposed Joint Venture
The Proposed Joint Venture will allow Ivory and DIC to collaborate and jointly
participate, in developing, constructing, selling and managing residential and
commercial projects to be built on the Land through the joint partnership company,
TISB.
The Proposed Joint Venture will also enable Ivory to share the risks and returns of
the Proposed Development. In view of the above, the Proposed Joint Venture augurs
well for the Group and is expected to contribute positively to the future earnings and
cash flow of Ivory.
3.3 Proposed Rights Issue
After due consideration of the various options available, the Board is of the view that
the Proposed Rights Issue is an appropriate avenue for Ivory, as it will:-
(i) Enable Ivory to raise funds without incurring interest cost, as compared to
bank borrowings. The funds raised will be utilised for the purposes
highlighted in Section 2.3.7 of this announcement;
(ii) Provide the shareholders of Ivory with the opportunity to increase their equity
participation in the Company at attractive discount to the prevailing market
price;
(iii) Increase the size and strength of Ivory’s balance sheet; and
(iv) The free Warrants attached to the Rights Shares are expected to provide the
shareholders of Ivory with an incentive to subscribe for the Rights Shares.
Pursuant thereto, the Entitled Shareholders may also benefit from the
potential capital appreciation of the Warrants. In addition, the Company
would also be able to raise further proceeds as and when any of the
Warrants are exercised.
3.4 Proposed Bonus Issue
The Proposed Bonus Issue is expected to provide the Entitled Shareholders with an
incentive to subscribe for the Right Shares. The Proposed Bonus Issue is also
expected to improve the trading liquidity of Ivory Shares.
3.5 Proposed Provision of Financial Assistance
The potential financial assistance provided by Ivory will enable TISB to raise the
necessary financing expediently, for the Proposed PDA and Proposed Development.
Upon successful development and sales arising from the Proposed Development, the
earnings from TISB are expected to contribute positively to the future profits of Ivory
Group.
3.6 Proposed Increase in Authorised Share Capital
The Proposed Increase in Authorised Share Capital is required to facilitate the
implementation of the Proposals and as well as any future issuance of equity capital,
including any other future corporate exercises to be undertaken by the Company.
3.7 Proposed Amendments
The Proposed Amendments is required to accommodate the implementation of the
Proposals as the Company is required to amend the necessary clauses of the M&A to
accommodate the Proposed Increase in Authorised Share Capital.
15
4. OVERVIEW AND PROSPECTS
4.1 Overview and outlook of the Malaysian Economy
The pace of growth of the Malaysian economy moderated in the second quarter
(4.0%; 1Q 11:4.9%) following a weaker external environment. The overall weakness
in the advanced economies and the disruptions in the global manufacturing supply
chain stemming from the disaster in Japan, were reflected in the slowdown in the
manufacturing sector. Nevertheless, overall growth continued to be underpinned by
the sustained expansion of private domestic demand. This was further supported by
the strong exports of commodities and resource-based products given the favourable
regional demand and high commodity prices.
While the moderation in the global growth in the second quarter was mainly due to
temporary factors arising from global supply chain disruptions and high commodity
prices, fiscal and debt conditions in several of the advanced economies had also
contributed to increased uncertainties and heightened financial market volatilities
which affected overall confidence. Going forward, global growth is expected to remain
positive, supported by economic activity in most of the emerging economies and the
improvement in the global supply chain. The overall global recovery, however, will
continue to be constrained by the structural weakness in the advanced economies. In
addition, prolonged uncertainty in the financial markets could also weigh down on real
economic activity. In Malaysia, while the global supply disruptions affected production
and trade in the second quarter, the underlying strength of the domestic economy
remained intact as domestic demand continued to support growth. Going forward, the
downside risks to external demand have increased following heightened uncertainties
in the external environment. Nevertheless, domestic demand is expected to remain
resilient and support growth amidst sustained private consumption, strong private
investment and faster pace of implementation of public sector projects in the second
half of the year.
(Source: Economic and Financial Developments in Malaysia in the Second Quarter of 2011,
Bank Negara Malaysia)
4.2 Overview and prospects of the property and construction sector
The real estate and business services subsector recorded 7.6% growth (Q1 2011:
8.8%) led by strong capital market and real estate activities. During the quarter, the
volume of equity market transactions grew 20.4% to 65.4 billion units valued at
RM103.2 billion (Q1 2011: 65.3%; 102.1 billion units; RM131.8 billion). The FTSE
Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 20.2% to 1,579.07
points as at end-June 2011 (end-March 2011: 17%; 1,545.13 points). Meanwhile, total
volume of property transactions recorded a double-digit growth of 21% to 112,307
units (Q1 2011: 8.2%; 99,451 units), while the value surged 43.5% to RM36.2 billion
(Q1 2011: 10.4%; RM27.9 billion).
The construction sector grew marginally by 0.6% (Q1 2011:3.8%) mainly due to lower
construction activities in the civil engineering sub-sector. However, the continuous
expansion in the residential and non-residential subsectors supported the growth of
the sector. The civil engineering sub- sector declined 9.6% (Q1 2011:2.9%) due to the
contraction in the number of projects at 6.5%. However, growth in the residential subsector
posted a strong growth of 11.4% (Q1 2011:7%) on account of increased
housing projects in Kuala Lumpur, Penang, Selangor and Sabah.
(Source: Malaysian Economy, Second Quarter 2011, Ministry of Finance)
According to The Ministry of Finance the Penang property market in 2011 is set for a
substantial rebound on the back of a total 18,035 transactions worth RM6 billion
recorded in the 1st half of 2011. This positive momentum is expected to continue for
16
the rest of the year. The residential sub-sector dominated market activity, capturing
76.7% of the market share, followed by the commercial sector with 8.1% share.
The growth of Malaysia’s GDP moderated at 4.4% in the 1st half of 2011 and this
would augur well for the property market. With inflation generally under control and
interest rates expected to increase this year, sentiments in the market is positive. In
Penang, the current property market condition has improved since the beginning of
the 2nd half of 2009. Land for development is scarce on Penang Island. The take-up of
new properties in Penang as recorded for the whole of 2010 is generally higher than
the national average while at the same time the property overhang scenario in
Penang is reportedly much lower than Malaysia as a whole. Demand has been both
domestically and internationally driven. Malaysians working overseas have also
contributed towards the improving demand of real estate in Penang. With its recent
inscription as a world heritage site by UNESCO, Penang has now attracted more
attention as a destination for businesses, tourism, leisure, 2nd home and property
investment. Investors and developers are generally more optimistic of the market this
year.
(Source: Valuation Report dated 3 October 2011, Henry Butcher)
4.3 Prospects of the Land
Upon completion of the Proposed PDA, the Board is of the view that the proposed
development on the Land will enhance Ivory’s future earnings. The Board expects
growing demand for property development surrounding Penang given the renewed
interest in prime development land within Penang Island and underlines the value of
such prime development land in the area.
Located further of Bayan Mutiara are two major mixed developments identified as
Gold Coast Resort and Queensbay. Gold Coast Resort is presently completed with
various blocks of condominiums, apartments and flats. There is also a commercial
project comprising retail commercial properties and the proposed development of
Gold Coast Mall will be in the area. Queensbay is an on-going integrated township
which is presently completed with a commercial complex known as Queensbay Mall
(the longest and largest shopping mall in the northern region) and comprises mixed
retail and commercial development projects.
Upon the completion of the Propose Development over an eight (8) years horizon, the
Land is expected to be developed into residential areas, commercial hubs as well as
medical and recreational centers. This will further enhance the development value in
the area through higher enhancement of real estate value, increase in employment
opportunities and tourism attractions in the vicinity area.
(Source: Management of Ivory)
4.4 Prospects of the Proposed Joint Venture
The strengths and the expertise of the JV Parties are complementary in nature given
the credentials and the financial strength of DIC Group as well as the experience of
Ivory in turnkey property development/ contracting is essential for the successful
execution of the Proposed Development. At present, both parties are enjoying a
successful partnership in the development of residential project, Aston Villa (Phase 2
and Phase 4) in Penang with a GDV of approximately RM64 million. Through the
Proposed Joint Venture, both parties could continue to collaborate as well as to
leverage on the existing strong foundation of its present partnership to the Proposed
Development.
(Source: Management of Ivory)
17
5. RISK FACTORS
Risk relating to the Proposed PDA and Proposed Joint Venture
The risks factors (which may not be exhaustive) pertaining to the Proposed PDA and
Proposed Joint Venture are set out below:-
(i) Transaction Risk
The completion of the Proposed PDA and Proposed Joint Venture is conditional
upon, inter-alia, the conditions precedent of the PDA and JVA as stated in Section
2.1.6 and Section 2.2.3, respectively of this announcement being satisfied and/or
waived as the case maybe.
There can be no assurance that the Proposed PDA and Proposed Joint Venture will
not be exposed to risks such as the inability to fulfill the conditions precedent and/or
inability to obtain the approvals from the shareholders of the Company and/or
relevant authorities, if any. However, Ivory will take and continue to take all
reasonable steps to ensure completion of the Proposed PDA and Proposed Joint
Venture.
(ii) Risk of default of obligations under the JVA
The obligations of Ivory and DIC under the JVA have been set out to promote and
develop the Proposed Development to the best advantage in accordance with good
business practice. As this is a joint venture between two separate entities, each
company may have a distinct management style as well as different priority areas in
relation to the daily operations of TISB. As such, disputes may occur arising from
these differences and unresolved disputes may potentially lead to risk of default by
either party. In the event of such default, TISB’s financials and future profitability may
be affected. As a result of this, this may lead to negative publicity as well as the loss
of confidence in Ivory by customers, suppliers and investors.
(iii) Delays in Commencement and Completion
The timely completion of property development projects pursuant to the Proposed
Development are dependent on many external factors, including inter-alia obtaining
the necessary approvals from land offices, planning authorities and local councils as
scheduled, securing construction materials in adequate amounts and the satisfactory
performance by our appointed building contractors.
It has consistently been Ivory Group’s commitment to closely monitor the progress of
the development projects and endeavor to promptly rectify any setback in order to
ensure the Group’s performance is not adversely affected.
However, there can be no assurance that there will not be any delays in the
completion of a project which could adversely affect Ivory Group’s business, financial
condition, results of operations and prospects.
6. EFFECTS OF THE PROPOSALS
The effects of the Proposals on the Company’s issued and paid-up share capital,
consolidated net assets (“NA”) and gearing, consolidated earnings and substantial
shareholders’ shareholdings are set out below:
6.1 Share capital
The proforma effects of the Proposals on the issued and paid-up capital of the
Company are set out in Section 1 of Appendix II.
18
6.2 Earnings
The Proposals are expected to contribute positively to the future earnings of the
Company and the proforma effects of the Proposals on the earnings per share
(“EPS”) of the Company are set out in Section 3 of Appendix II.
6.3 NA and gearing
The proforma effects of the Proposals on the NA and gearing of the Company are set
out in Section 3 of Appendix II.
6.4 Substantial shareholders’ shareholdings
The proforma effects of the Proposals on the substantial shareholders’ shareholdings
of the Company are set out in Section 4 of Appendix II.
6.5 Existing convertible securities
As at the date of this announcement, Ivory does not have any existing convertible
securities.
7. PERCENTAGE RATIO
The highest percentage ratios for the Proposed PDA and the Proposed Joint Venture
pursuant to Paragraph 10.02(g) of the Listing Requirements are exceeding 100%,
respectively, based on the latest audited financial statements of Ivory for the FYE 31
December 2010.
8. APPROVALS REQUIRED
The Proposals are subject to the following approvals:-
(i) Bursa Securities
(a) for the admission of the Warrants to the Official List of Bursa Securities; and
(b) for the listing of and quotation for the Rights Shares, Warrants, Bonus
Shares, as well as the new Shares to be issued arising from the exercise of
Warrants, on the Main Market of Bursa Securities.
(ii) Controller of Foreign Exchange (via Bank Negara Malaysia), for the issuance of
Warrants to non-resident shareholders pursuant to the Proposed Rights Issue;
(iii) the shareholders of the Company, for the Proposals at an extraordinary general
meeting to be convened;
(iv) Shareholders of DIC for the Proposed Joint Venture;
(v) Securities Commission for the abridged prospectus for the Proposed Rights Issue;
and
(vi) any other relevant authority, where required.
The Proposed Joint Venture is conditional upon the Proposed PDA. The Proposed Rights
Issue is not conditional upon the Proposed PDA and Proposed Joint Venture. The Proposed
Bonus Issue is conditional upon the Proposed Rights Issue. The Proposed Provision of
Financial Assistance is conditional upon the Proposed PDA and Proposed Joint Venture.
19
The Proposed Rights Issue and Proposed Bonus Issue are inter-conditional with the
Proposed Increase in Authorised Share Capital and the Proposed Amendments. The
Proposed Increase in Authorised Share Capital and the Proposed Amendments are interconditional
upon each other.
Save for the above, the Proposals are not conditional upon any other corporate proposals of
the Company.
9. INTERESTS OF DIRECTORS, SUBSTANTIAL SHAREHOLDERS AND/OR PERSONS
CONNECTED
None of the Directors, substantial shareholders and/or persons connected with them have
any interest, direct or indirect, in the Proposals.
10. DIRECTORS’ STATEMENT
The Board having considered all aspects of the Proposals is of the opinion that the Proposals
are in the best interest of the Company.
11. ADVISER
OSK has been appointed by the Company to act as Adviser for the Proposals.
12. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances and subject to all approvals being obtained, the
Proposals are expected to be completed by 1st half of calendar year 2012.
13. APPLICATION TO THE AUTHORITIES
The relevant applications to the regulatory authorities in relation to the Proposals will be made
within three (3) months from the date of this announcement.
14. DOCUMENTS AVAILABLE FOR INSPECTIONS
The following documents are available for inspection at the registered office of Ivory at Suite
2-1, 2nd Floor, Menara Penang Garden, 42-A Jalan Sultan Ahmad Shah, 10050 Penang,
Malaysia during normal office hours from Monday to Friday (except public holidays) for a
period of three (3) months from the date of this announcement:-
(i) The PDA;
(ii) The JVA; and
(iii) The valuation report and the valuation certificates in relation to the Land prepared by
Henry Butcher.
This announcement is dated 11 November 2011.

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APPENDIX I
Indicative salient terms of the warrants
The indicative salient terms of the Warrants are set out below:-
Issue size – 186,000,000 new detachable Warrants to be issued in conjunction with the
Proposed Rights Issue to the Entitled Shareholders of Ivory on the basis of
one (1) free Warrant for every one (1) Rights Share successfully subscribed.
Form – The Warrants which are to be issued with the Rights Shares are immediately
detachable upon allotment and issuance of the Rights Shares and will be
separately traded. The Warrants will be issued in registered form and
constituted by a Deed Poll to be executed by the Company.
Exercise price – The exercise price of the Warrants shall be determined by the Board at a
later date after the receipt of all relevant approvals, after taking into
consideration the theoretical ex-price of Ivory Shares immediately preceding
the price-fixing date to be determined by the Board.
Exercise period – The Warrants may be exercised at any time within five (5) years commencing
on and including the date of issuance of the Warrants. Any Warrants, which
have not been exercised during the exercise period will thereafter lapse and
cease to be valid.
Exercise rights – Each Warrant carries the entitlement, at any time during the Exercise Period
to subscribe for one (1) new Ivory Share at the Exercise Price, subject to the
adjustments in accordance with the provisions of the Deed Poll.
Board lot – For the purposes of trading on Bursa Securities, one (1) board lot of Warrants
shall comprise of 100 units of Warrants carrying the rights to subscribe for
100 new Ivory Shares at any time during the Exercise Period, or such
denomination as determined by Bursa Securities.
Ranking of new
Ivory Shares
– The new Ivory Shares to be issued arising from the exercise of the Warrants
shall, upon allotment and issue, rank pari passu in all respects with the
existing Ivory Shares, save and except that the new Ivory Shares will not be
entitled to any dividends, rights, allotments and/or other forms of distribution
where the entitlement date precedes the relevant date of allotment and
issuance of the new Ivory Shares.
Listing status – An application will be made to Bursa Securities for the admission of the
Warrants to the Official List of Bursa Securities, and for the listing of and
quotation for the Warrants and new Ivory Shares arising from the exercise of
the Warrants.
Rights of the
warrant
holder(s)
– Warrant holders are not entitled to vote in any general meeting of Ivory or to
participate in any distribution and/or offer of further securities in the Company
unless and until the warrant holder becomes a shareholder by exercising
his/her Warrants.
Adjustments in
the exercise
price and/or
number of
Warrants
– The Exercise Price and the number of Warrants in issue shall be adjusted in
the event of alteration to the share capital of the Company, capital distribution
or issue of shares in accordance with the provisions of the Deed Poll.
Governing law – Laws and Regulations of Malaysia.
21
APPENDIX II
EFFECTS OF THE PROPOSALS
1. Issued and paid-up capital
The proforma effects of the Proposals on the total issued and paid-up share capital of the
Company are set out below:-
RM No. of shares
Existing issued and paid-up share capital as at 31 December
2010
93,000,000 186,000,000
To be issued pursuant to the Proposed Rights Issue 93,000,000 186,000,000
Enlarged issued and paid-up capital after Proposed Rights
Issue
186,000,000 372,000,000
To be issued pursuant to the Proposed Bonus Issue 23,250,000 46,500,000
Enlarged issued and paid-up capital after Proposed Bonus
Issue
209,250,000 418,500,000
To be issued pursuant to the full exercise of warrants 93,000,000 186,000,000
Enlarged issued and paid-up share capital 302,250,000 604,500,000
2. Earnings
The Proposals are not expected to have any material effect on the earnings of the Ivory
Group for the FYE 31 December 2011. However, there may be a corresponding dilution in the
Group’s EPS as a result of the increase in the number of Ivory Shares arising from the
Proposed Rights Issue and Proposed Bonus Issue.
In addition, the EPS of the Company in the future may be diluted as a result of the increase in
the number of Ivory Shares in issue as and when the Warrants are exercised into new Ivory
Shares.
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22
3. NA and gearing
Based on the audited consolidated financial statements of Ivory as at FYE 31 December 2010, and on the assumption that the Proposals had been
effected as at that date, the proforma effects of the Proposals on the consolidated NA and gearing of Ivory Group are as follows:-
Proforma I Proforma II Proforma III
As at
31 December 2010
After the Proposed Rights
Issue(1)
After Proforma I and
Proposed Bonus Issue
After Proforma II and full
exercise of the Warrants(3)
(RM’000) (RM’000) (RM’000) (RM’000)
Share capital 93,000 186,000 209,250
302,250
Reserves 98,799 95,799(2) 72,549 100,449
Shareholders’ equity/ NA 191,799 281,799 281,799 402,699
EPS(4) (RM) 0.19 0.10 0.09 0.06
NA per share (RM) 1.03 0.76 0.67 0.67
Borrowings(5) (RM) 105,125,000 105,125,000 105,125,000 105,125,000
Gearing ratio(6) (times) 0.55 0.37 0.37 0.26
Notes:-
(1) Assuming the indicative issue price of RM0.50 per Rights Share
(2) After deducting the estimated expenses of RM3,000,000 relating to the Proposals
(3) Assuming an indicative exercise price of RM0.65 per Warrant
(4) EPS = PAT for FY2010/ total no. of shares
(5) No adjustment had been made to the borrowings amount as the borrowings for the Proposed PDA and Proposed Development has not been determined at this juncture. In
theevent borrowings are incurred, the gearing ratio will increase correspondingly.
(6) Gearing ratio = Total borrowings/ Shareholders’ equity
23
4. Substantial Shareholders’ shareholdings
Based on the Register of Substantial Shareholders of the Company as at 31 October 2011, the effects of the Proposals on the substantial
shareholders’ shareholdings of the Company are as follows:-
Substantial
Shareholders
As at 31 October 2011
Stage I
After the Proposed Rights
Issue
Stage II
After Stage I and Proposed
Bonus Issue
Stage III
After Stage II and full
exercise of Warrants
Direct* Direct* Direct* Direct*
No. of shares
(‘000)
% No. of shares
(‘000)
% No. of shares
(‘000)
% No. of shares
(‘000)
%
Dato’ Low Eng Hock 94,181 50.63 188,362 50.63 211,907 50.63 306,087 50.63
Ooi Choi Kiat 13,759 7.40 27,519 7.40 30,958 7.40 44,718 7.40
* The substantial shareholders above do not have any indirect interest in the Company

READ MORE:  Tanjung Bungah landslide: Penang government, council must explain why DoE objection ignored
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Zuan
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Zuan

If you do not have active income, then it is better to move away from Penang island to a more iddylic place where there is no traffic congestion, no high human density, no high price, no hustle-bustle lifestyle, no constant harrassment from mat rempit (and that Komtar menace), etc.

There are many cheaper alternative on the mainland. Just make sure you can have a decent speed internet connection to link up to alternative media and AnilNeto.com!!!

Anne
Guest
Anne

Agreed fully.

I am living in a small town in the mainland where I could stretch my retirement ringgit without having to resort to the cheap stuff in KR1M.

Better to live a low key live to avoid detection by the potential criminals. With internet access I can read about the plight of Penangites struggling with barang naik while I enjoy my afternoon tea!

jk
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jk

http://www.thesundaily.my/news/207021

Subject to EIA? Will the developer truly comply to the report if there were any requirements to change its plan?

kingkong
Guest
kingkong

Where does the sediments and mud comes from? If it is from the Tanjung Tokong land reclamation, then UMNO/Gerakan Government has allowed shoddy job. The soil are leaking! It is simple as laws of conservation and energy.

wira
Guest
wira

Looks like it is going to be worse when an island off Gurney Drive starts to take shape as a result of land reclamation, courtesy of the previous state government.

kee
Guest
kee

HongKong and Singapore, all on reclaimed land, and they are successful, no mud like Gurney Drive…

Buat la apa yang sepatutnya !!!

wira
Guest
wira

I don’t think it is fair to blame all the dark mud in Gurney Drive shore line to the Strait Quay project.

I remember Gurney was already mostly muddy and black some 30 years ago when we participated in the dragon boat race there. The better or sandy stretch was at the other far end, where 1 Persiaran is. I wonder how that stretch is today.

tunglang
Guest
tunglang

In the 60’s, I could just jump with eyes closed into the high-tide sea of Gurney Drive without a concern of jelly fish, mud, broken glass or even rocks in the bottom of the sea. There just weren’t any of them. Visibility of sea water was good for seeing one’s feet under two feet of water! Siput was abundant in the sands for one to dig up and take home in plastic pails (not one pail but many!). Not only could one walk on the seashores from one end (Gurney One) to the other, only interrupted by drainage walls jutting… Read more »

wira
Guest
wira

PDC is selling the land for RM240 per sq ft.
I wonder how often our previous government could get market price income for selling state land. (How much was Kampung Buah Pala sold? A mere RM20/sq ft?)

With the kind of money, PDC will have the seed money to build more houses and infrastructures for the poor and the medium income earners in mainland Penang like what Tun Lim did in the ’70s and ’80s.

Ong Eu Soon
Guest
Ong Eu Soon

If the plot ratio is 2.8, then the total built up area is 103 x43560x2.8=12562704 sq ft. For an stimated gross development value of RM10bn, the price per sq ft is 10,000,000,0000/12562704=RM 796 per sq ft. This is a super luxury properties development for whom? The LMC is target to be above RM75,000 which the low income earners will not be able to afford, the monthly payment of installment will be about RM400 for 20 years. The cheapest of the apartment is supposed to be RM350,000 which the total family income should be more than RM8000 in order to be… Read more »

kittykat46
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kittykat46

Large pieces of land reclamation “Always” disturb the flow of sea currents in the surrounding area, and there is a high possibility of a negative impact on the environment. The Gurney Mud bank is just one obvious result of the land reclamation off Tanjong Tokong.. The off-shore artificial islands in the artist’s rendering, if that’s the plan, is very troubling. The rest of the project which is built on existing reclaimed land, well, what damage was already done back in 2005-2008. Blame it on Palm Island, Dubai, I suppose. Now everybody with the necessary deep pockets , wants their home… Read more »

SamG
Guest
SamG

I suspect the boom in high end property construction is due to the CAT PR Government.
Developers can work without any paying off any of the politicians. Easier to work with MPPP compared to the time of the Boh Hood Government.
With no “palms to grease”, it is a SUPER time for developers and property investors.
How long before the bubble burst? Hopefully soon…

LoonG
Guest
LoonG

well the 3D tends to hypnotise people that in the end there will be clear blue sea and sandy beach, I had a bad feeling that the mud sedimentation problem is going to be worse than the one we have in Gurney Drive…by the way, we still have a potential disaster awaiting to happen at Tanjung Pinang Phase 2..EIA?do they care?god bless Penang

Ooh La La
Guest
Ooh La La

Bayan Mutiara land reclaimation for such mentioned venture will affect sea water movement & flow; and we shall (probably) see the replication of muddy & smelly Gurney drive shorelines at Bayan Indah Penang Gold Coast area.

Sorry to the residents there.

Sptay
Guest
Sptay

Good work Mr. Netto. I really like the word CASH in the agreement. Many times the payment is in “warrants” or ICULs or whatever…which is simply pieces of paper which can become useless.

I wonder whether we can get Agreements for other stuff not only for projects in Pg by the Pakatan Govt but from BN Govt. Case in pt is the loan agreement between NFC & the Company involved. Interesting to see whether the loan agreement allows the Company to invest in other things besides of course (cows).

jk
Guest
jk

Some pics:

http://www.kwongwah.com.my/news/2011/11/12/14.html

Worried that the land reclaimation will cause sedimentation to surrounding areas, just like what Seri Tanjung Pinang by E&O (appears to have done) to Gurney Drive

tunglang
Guest
tunglang

No need to wonder, but fear the worst. Sea environment is different from land in the sense that it involves sea water, undercurrents, temperature and depths of sea that connect directly to other bodies of water flowing in masses of what we call oceans. With the added factor of sea life, the ecosystem is sensitive enough to cause havocs in the events of imbalances to Nature’s original scheme of things. Who would or can rectify Gurney Drive seafront in the name of development (for the rich and famous)? No need to wonder whether such environmental disaster can only happen during… Read more »

Ong Eu Soon
Guest
Ong Eu Soon

LGe claimed that the land reclamation fulfill the requirement of EIA while Gerakan claimed hat the old EAI for Bayan Mutiara is against the EIA requirement. It seem like we need to use the FOI to find out the truth.

tunglang
Guest
tunglang

Here’s a ‘Keep Up With The Joneses’ experience of following the wildebeest crowd of rainy green horned of property chase USA: We borrowed 100 percent of the purchase price. In fact, I was told I could borrow even more if I wanted. I had perfect credit and a solid income that was growing. But even so, when the lender approved us at 100 percent, it was more than I had expected. I remember thinking something like “Wow. I guess if they’re willing to lend it to us it must be O.K.” I knew a builder of custom homes who urged… Read more »

Pritam
Guest
Pritam

Property bubble in Penang is getting bigger with no sign of bursting?

I think KJ will use his excess or idle fund (loan from government of course) for such property investment? Better return than cow rearing!