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SEACERA TILES BERHAD (“STB” OR “THE COMPANY”) EXECUTION OF JOINT VENTURE DEVELOPMENT AGREEMENT (“JVDA”) VIA SEACERA MARKETING SDN BHD (“SMSB”)

SEACERA TILES BERHAD

Type

Announcement
SubjectSEACERA TILES BERHAD (“STB” OR “THE COMPANY”)
EXECUTION OF JOINT VENTURE DEVELOPMENT AGREEMENT (“JVDA”) VIA SEACERA MARKETING SDN BHD (“SMSB”)

Contents :

1. INTRODUCTION


The Board of Directors of Seacera Tiles Berhad (“STB”) is pleased to announce that Seacera Marketing Sdn. Bhd. (“SMSB”), a wholly-owned subsidiary company of STB had on 5 April 2005 entered into a Joint Venture Development Agreement (“JVDA”) with Duta Skyline Sdn Bhd (“DSSB” or “Landowner”) to develop all pieces of freehold land held under Geran No. 23940, Lot No. 613, Mukim of Ulu Semenyih, Daerah Ulu Langat, Negeri Selangor measuring in area approximately 501.50 acres (“Freehold Land”) subject to and upon the terms and conditions as stipulated in the JVDA.

2. BRIEF INFORMATION OF DSSB AND FREEHOLD LAND

DSSB

DSSB is a company incorporated in Malaysia on 31 March 1995 with an authorised share capital of RM25,000,000 of which RM22,055,000 have been issued and fully paid-up.

DSSB, which is principally engaged in the business of property investment holding, is the registered owner of the Freehold Land.

Freehold Land

The Freehold Land is located about 1.2 kilometres to the left side of Kajang Silk Highway from Sungai Long, Cheras, in the direction of Kajang/Seminyih, and about 2.0 kilometres from the Sungai Long Toll Plaza.

The subject property is also accessible via the old Kajang – Seminyih/Seremban road and had been approved by the relevant state authority under the category of “Building” and with pre-comp layout approval for a mix residential and commercial development project.

The Freehold Land is presently charged to Pengurusan Danaharta Nasional Berhad (“Danaharta”) and Bank Islam Malaysia Berhad (“BIMB”).

3. SALIENT TERMS OF JVDA

(i) Agreement for Development

          Upon execution of the JVDA, SMSB shall deposit a sum of RM501,500.00 (Ringgit Malaysia Five Hundred One Thousand Five Hundred Only) with DSSB’s Advocates and Solicitors (“Earnest Deposit”) and DSSB hereby agrees to and allows SMSB to develop the Freehold Land. The scope of development by SMSB shall also include the right of SMSB to sell any portion of the Freehold Land as part of its development proposal and or to co-develop any portion of the Freehold Land with any other third party.
          The Earnest Deposit shall be released to DSSB upon the fulfilment of all Conditions Precedent (as set out in item (iii) below) or to return the Earnest Deposit to SMSB in the event the Conditions Precedent are not obtained within six (6) months from the date of the JVDA or such other later date as may be agreed between the parties.
(ii) Profit Sharing
          The parties hereto agree and confirm that SMSB shall construct and complete the development project and DSSB shall be entitled to 22% of the total gross sales proceeds less the amount of Earnest Deposit paid by SMSB. The balance 78% of the total gross sales proceeds shall belong to and be owned by SMSB solely.

(iii) Conditions Precedent
          The JVDA is conditional upon the procurement and fulfilment of the approvals and consents (“the Conditions Precedent”), among others, as follows:-

(a) the approvals from Danaharta and BIMB for the restructuring of DSSB’s loans on terms and conditions acceptable to both Danaharta and BIMB, DSSB and SMSB;
    (b) the acceptance by SMSB of the feasibility report to be conducted by an independent property consultant;

    (c) the approvals of the Board of Directors and shareholders, where applicable, of DSSB and STB, if required; and

    (d) all other approvals from the relevant authorities, where applicable.

    (iv) Danaharta and BIMB Loan Restructuring
            DSSB and SMSB shall negotiate and obtain the loan restructuring approvals from Danaharta and BIMB within two (2) months from the date of JVDA. In the event the loan restructuring cannot be obtained within the said stipulated period, DSSB shall grant to SMSB an extension of one (1) month from the date of expiry of the said two (2) months period or such further extended period as required by SMSB to obtain the same.
    (v) Feasibility Acceptance
            SMSB shall be entitled to appoint an independent property consultant to conduct a feasibility study on the development project and submit the feasibility report for SMSB’s acceptance within two (2) months from the date of the JVDA. In the event the feasibility study cannot be obtained within the stipulated period, the parties hereby agree to grant an extension of one (1) month from the date of expiry of the said two (2) months or such further extended period as required by SMSB to obtain the same.

    (vi) Developer’s Responsibilities
            (a) SMSB shall be solely responsible for financing, management, technical skill, expertise, consultancy service and such other things necessary for the successful implementation, development, construction and completion of the development project on the Freehold Land.
    (b) SMSB shall be responsible to pay and bear all cost and expenses incurred on or arising out of or in connection with the development of the Freehold Land including payment of premiums, survey fees, architect’s fees, conversion, subdivision and issuance of separate and individual titles to the Freehold Land and quit rents.

    4. RATIONALE
        The proposed development of the Freehold Land is expected to spread over a period of some ten (10) years. As such, the JVDA presents to the STB Group an attractive opportunity to broaden the group’s income base over the medium and longer term.

    5. FINANCIAL EFFECTS
        The JVDA is not expected to have any effect on the share capital, earnings, net tangible assets and substantial shareholders’ shareholding in STB as the financial commitments to be incurred by SMSB has yet to be finalised.

        However, upon finalisation of SMSB financial commitments under the JVDA, STB will make subsequent announcements on the financial effects of the JVDA on the STB Group.
    6. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST
        None of the Directors and/or substantial shareholders and/or persons connected to the Directors or substantial shareholders of STB and/or its subsidiary companies has any interest, direct or indirect, in the JVDA.
    7. ADDITIONAL INFORMATION RELATING TO THE JOINT VENTURE
        Save for the Earnest Deposit and the profit sharing arrangements as setout in item 3(ii) above, other cost details of the joint venture project will be disclosed and announced after the completion and acceptance of the feasibility report.

    8. DIRECTORS’ RECOMMENDATION
        Save for Dato’ Samsudin Abu Hassan, the Board of Directors of STB, after having considered all aspects of the JVDA are of the opinion that the terms and conditions of the JVDA are fair and reasonable and are in the best interest of the STB group.

        The primary reasons cited by Dato’ Samsudin Abu Hassan for his objection are detailed below as per extracts of his letter to the Board on 23 March 2005:-

        “I hereby put on record that, after making my own research and making enquiries with some third party consultants, personally I am of the view that the proposed project is NOT in the best interests of the Company. I must admit that the primary reasons cited are the location of the 500 acres of land are unsuitable and may not be that marketable as envisaged. The conditions of the said land are rocky and contains plenty of huge boulders. Furthermore the Group lacks the experience in property development and there is doubt that the current management resources can be, made available to be redeployed to such project. The Group’s financial resources, too, are not great at the moment.”
    9. DOCUMENTS AVAILABLE FOR INSPECTION
        A copy of the JVDA will be available for inspection at the Registered Office of STB at 3rd Floor, No. 17 Jalan Ipoh Kecil, 50350 Kuala Lumpur during normal working hours from Monday to Friday (except public holidays) within fourteen (14) days from the date of this announcement.

    This announcement is dated 6 April 2005

    c.c. Issues and Investment Division
    Securities Commission


    Announcement Info

    Company NameSEACERA TILES BERHAD  
    Stock Name SEACERA    
    Date Announced6 Apr 2005  
    CategoryGeneral Announcement
    Reference NoCM-050406-8F675

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