EVERGREEN FIBREBOARD BERHAD ("EFB" or the "Company")SALE AND PURCHASE ASSETS AGREEMENT ("SPAA") BETWEEN P.T. HIJAU LESTARI RAYA FIBREBOARD ("HLR"OR "the Purchaser") , P.T. HUTRINDO JAYA FIBREBOARD MFG. CO. ("HUTRINDO") AND P.T. UFORIN PRAJEN ADHESIVE INDUSTRY ("UFORIN") OR COLLECTIVELY KNOWN AS ("the Sellers")
Reference No CI-070803-47CDC
||EVERGREEN FIBREBOARD BERHAD
||Reply to query
|Reply to Bursa Malaysia's Query Letter - Reference ID
||EVERGREEN FIBREBOARD BERHAD ("EFB")
SALE AND PURCHASE ASSETS AGREEMENT ("SPAA") BETWEEN P.T. HIJAU LESTARI RAYA FIBREBOARD ("HLR"OR "the Purchaser") , P.T. HUTRINDO JAYA FIBREBOARD MFG. CO. ("HUTRINDO") AND P.T. UFORIN PRAJEN ADHESIVE INDUSTRY ("UFORIN") OR COLLECTIVELY KNOWN AS ("the Sellers")
(1) PURCHASE CONSIDERATION IN RINGGIT MALAYSIA
The purchase price for the Assets is United States Dollars Twenty One Million (USD21,000,000) equivalent to Ringgit Malaysia Seventy Two Million Four Hundred and Fifty Thousand (RM72,450,000).Based on EFB's shareholding of 51% of the equity interest in P.T. Hijau Lestari Raya Fibreboard, the total amount assumed by EFB would be approximately USD10,710,000 (equivalent to RM36,949,500).
(2) TERMS OF ARRANGEMENT FOR PAYMENT
2.1 The purchase price shall be paid by the Purchaser to the Sellers in the following manner:
(a) In exchange for the Discharge Documents,
(i) the Purchaser shall pay to the Sellers a sum of USD3,213,000 equivalent to Ringgit Malaysia Eleven Million Eighty Four Thousand Eight Hundred and Fifty (RM11,084,850) in cash;
(ii) issuance of 2,058 shares in the Purchaser having a nominal value of USD1,000 equivalent to Ringgit Malaysia Seven Million One Hundred Thousand and One Hundred (RM7,100,100) for each share as fully paid-up; and
(iii) the Purchaser shall issue an acknowledgement of indebtedness to the Sellers clarifying that a sum of USD1,029,000 equivalent to Ringgit Malaysia Three Million Five Hundred Fifty Thousand and Fifty (RM3,550,050) will be treated as a shareholders' loan from the Sellers to the Purchaser.
(b) On 20 October 2007 or on Completion, whichever is the later,
(i) the Purchaser shall pay to the Sellers a sum of USD4,284,000 equivalent to Ringgit Malaysia Fourteen Million Seven Hundred Seventy Nine Thousand and Eight Hundred (RM14,779,800) in cash ("Second Payment"); and
(ii) the Purchaser shall issue an acknowledgement of indebtedness to the Sellers clarifying that a sum of USD4,116,000 equivalent to Ringgit Malaysia Fourteen Million Two Hundred Thousand and Two Hundred (RM14,200,200) will be treated as a shareholders' loan from the Sellers to the Purchaser.
(c) On 20 April 2008 subject to Completion,
(i) the Purchaser shall pay to the Sellers a sum of USD3,213,000 equivalent to Ringgit Malaysia Eleven Million Eighty Four Thousand Eight Hundred and Fifty (RM11,084,850) in cash ("Third Payment"); and
(ii) the Purchaser shall issue an acknowledgement of indebtedness to the Sellers that a sum of USD3,087,000 equivalent to Ringgit Malaysia Ten Million Six Hundred Fifty Thousand and One Hundred and Fifty (RM10,650,150) will be treated as a shareholders' loan from the Sellers to the Purchaser.
Completion of sale and purchase of the Assets ("Completion") shall comprise of the following:
(3) INFORMATION OF HUTRINDO & UFORIN
(a) the fulfilment of the Essential Conditions Precedent as setforth in the JVA
(b) the fulfilment of the Subsequent MAtters to Essential Conditions Precedent as set forth in the JVA
Directors and Substantial Shareholdersof Hutrindo and Uforin
The Director of HUTRINDO and UFORIN is Aki Setiawan holding 98.93 percent and 98.67 percent shareholdings respectively.
(4) PARTICULARS OF ALL LIABILITIES
The liability of the Purchaser and Sellers shall be limited in case either parties breaches the terms and conditions that are stipulated in this SPAA, the liability shall be limited to only United States Dollars One Million (USD1,000,000) equivalent to Ringgit Malaysia: Three Million Four Hundred Fifty Thousand (RM3,450,000).
(5) ORIGINAL COST OF INVESTMENT AND DATE OF INVESTMENT
The original cost of of investment of HUTRINDO is approximately USD 51,000,000 in the year 1993 whilst the original cost of of investment of UFORIN is approximately USD 21,000,000 in the year 1986.
(6) SALIENT FEATURES OF THE SPAA AND DOCUMENTS FOR INSPECTION
6.1 Salient Features of the SPAA
The salient features of the SPAA are the same as the salient features of the JVA and were announced on the 20 April 2007 and are reproduced as follows:
(i) Essential Conditions Precedent
(a) Shareholding of fifty one percent (51%) by EFB is legally permitted by BKPM;
(b) Required licenses and certificates from BKPM for the New Co (now hereinafter known as the Purchaser) to operate in the Company's location are permitted;
(c) The licenses for the New Co (now hereinafter known as the Purchaser) to engage in fibreboard, glue and resin manufacturing are granted by BKPM;
(d) LOCAL PARTNER (now hereinafter known as the the Sellers) shall arrange to obtain necessary approval from BKPM for New Co (now hereinafter known as the Purchaser) , other approvals required for the establishment of the New Co (now hereinafter known as the Purchaser) (including the approval of Minister of Law and Human Rights ("MOLHR"), the licenses for the Company to engage in fibreboard, glue and resin manufacturing, and permit to employ the expatriates;
(e) Discharge letters/certificate(s) and redemption statement(s) from the holder(s) of mortgage and security over LOCAL PARTNER (now hereinafter known as the the Sellers) Assets shall be obtained.
(ii) Subsequent Matters To Essential Conditions Precedent
Subsequent to the Essential Conditions Precedent being fulfilled the LOCAL PARTNER (now hereinafter known as the the Sellers) and the New Co (now hereinafter known as the Purchaser) shall enter into the Sale and Purchase Agreement of assets on terms to be agreed ("Sale and Purchase Agreement") for the purchase of LOCAL PARTNER (now hereinafter known as the the Sellers) Assets which shall be free from all encumbrances.
6.3 Documents for Inspection
The SPAA is available for inspection following the date of this announcement for a period of one (1) month at EFB's registered office at Suite 6.1A, Level 6, Menara Pelangi, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru between Mondays to Fridays during the hours of 9.00am to 5.00 pm except on public holidays.
(7) PROSPECTS & RISKS ARISING FROM THE PROPOSED ACQUISITION
The Board of Directors of EFB are of the opinion that there is a strong demand for medium density fibreboard ("MDF"), other building applications and furnitures such as mouldings, panels and cabinets. These products tend to have higher margins and have also benefited from a general growth in the global building and furniture industries. With the acquisition of assets, EFB would be able to penetrate into new markets, which will help strengthen and consolidate the EFB's Group objective of becoming one of the most comprehensive producers of MDF in this region.
The acquisition of assets will allow EFB to broaden its market share with its extra capacity available from HLR and would provide EFB with immediate access into other markets/ countries.
The business of HLR is subject to similar business and commercial risk experienced by the EFB Group given that both are in the reconstituted wood-based panel board industry. However, entering into a new foreign country and market will definitely exposed the Group to new sovereign risks such as changes in government etc. There is no assurance that EFB will be able to maintain the same presence as EFB in the new country.
(8) ESTIMATED TIME FRAME FOR COMPLETION
The estimated time frame for completion of SPAA is the same as the estimated time frame of the JVA and was announced on the 20 April 2007 that is 4th quarter of 2007.
(9) COMPLIANCE WITH SECURITIES COMMISSION ("SC") GUIDELINES
As announced on the 20 April 2007, the acquisition is in compliance with and there has been no departure from the Policies and Guidelines on Issue/ Offer of Securities by the SC.
Query Letter content :
We refer to your Company's announcement dated 31 July 2007, in respect of the
In this connection, kindly furnish Bursa Securities with the following
additional information for public release:-
1. The purchase consideration in Ringgit Malaysia;
2. The terms of any arrangement for payment on a deferred basis. If it was
based on net assets, the year the net assets was taken into consideration,
quantifying the net assets and stating whether it was based on audited
3. The names of directors and substantial shareholders of HUTRINDO and UFORIN;
4. Particulars of all liabilities, including contingent liabilities and
guaranteed to be assumed by the Company, arising from the Proposed Acquisition;
5. The original cost of investment to the Vendors and the date of such
investment (if any);
6. The salient features of the SPAA, if any, and the time and place where it is
available for inspection;
7. The prospects and risks arising from the Proposed Acquisition;
8. The estimated time frame for the completion of the Proposed Acquisition; and
9. A statement whether the Proposed Acquisition has departed from the
Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
Please furnish Bursa Securities with your reply within one (1) market day from
the date hereof.
CHONG FUI TZY
copy to:- Mr. Chung Tin Fah, Securities Commission (via fax)