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DEED OF REVOCATION OF JOINT DEVELOPMENT AND SHAREHOLDERS' AGREEMENT DATED 21 SEPTEMBER 2020 ("JDA") AND SUPPLEMENTAL AGREEMENT DATED 6 APRIL 2022 ("SA") BETWEEN A WHOLLY OWNED SUBSIDIARY OF MAJUPERAK HOLDINGS BERHAD ("MHB"), TENAGA DANAWA SDN BHD AND TARAF NUSANTARA SDN BHD FOR MIXED DEVELOPMENT PROJECT IN MUKIM BATANG PADANG

MAJUPERAK HOLDINGS BERHAD

Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-27062022-00002
Subject DEED OF REVOCATION OF JOINT DEVELOPMENT AND SHAREHOLDERS' AGREEMENT DATED 21 SEPTEMBER 2020 ("JDA") AND SUPPLEMENTAL AGREEMENT DATED 6 APRIL 2022 ("SA") BETWEEN A WHOLLY OWNED SUBSIDIARY OF MAJUPERAK HOLDINGS BERHAD ("MHB"), TENAGA DANAWA SDN BHD AND TARAF NUSANTARA SDN BHD FOR MIXED DEVELOPMENT PROJECT IN MUKIM BATANG PADANG
Description
MAJUPERAK HOLDINGS BERHAD ("MHB" or "the Company")

DEED OF REVOCATION OF JOINT DEVELOPMENT AND SHAREHOLDERS' AGREEMENT DATED 21 SEPTEMBER 2020 ("JDA")  AND SUPPLEMENTAL AGREEMENT DATED 6 APRIL 2022 ("SA") BETWEEN A WHOLLY OWNED SUBSIDIARY OF MAJUPERAK HOLDINGS BERHAD ("MHB"), TENAGA DANAWA SDN BHD AND TARAF NUSANTARA SDN BHD FOR MIXED DEVELOPMENT PROJECT IN MUKIM BATANG PADANG
Query Letter Contents

We refer to your Company's announcement dated 23 June 2022, in respect of the aforesaid matter.

 

In this connection, kindly furnish Bursa Malaysia Securities Berhad with the following additional information for public release:-

 

1. Based on your announcement made under the Deed of Revocation (“Deed”), it is represented that both TNSB and TDSB, at the request of TDSB (wholly owned subsidiary of your Company), has agreed on the full and final settlement of RM12,324,000 (“Final Settlement Amount”). It is noted that this Final Settlement Amount is substantially lesser than the original TDSB’s entitlement of RM26 million (Landowner’s entitlement of RM21 million + agreed profit sharing of RM5 million in in the SPV Company) under the JDA announced on 21 September 2020.    

 

In this respect, please disclose the following :-

 

(i) detailed justifications/rationale and all factors of consideration (including the urgency of entering into the Deed) that the board of directors of your Company have taken into accounts, prior to entering into the Deed; and

 

(ii) A statement by the board of directors of your Company on whether the entering into the Deed (as compared to the original JDA) is in the best interest and not detrimental to your Company and its shareholders, together with the basis of justification thereof.    

 

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

 

Yours faithfully

 

 

 

 

Listing

Regulation

 

cc:-   Market Surveillance, Securities Commission

1. INTRODUCTION

We refer to Bursa Malaysia Securities Berhad’s Query (Ref. Number: IQL-27062022-00002) dated 27 June 2022 in relation to Majuperak Holdings Berhad’s (“MHB” or “Company”) announcement dated 23 June 2022 in relation to the Deed of Revocation of Joint Development and Shareholders’ Agreement entered into between Tenaga Danawa Sdn Bhd (“TDSB”) and Taraf Nusantara Sdn Bhd (“TNSB”) dated 21 September 2020 and Supplemental Agreement dated 6 April 2022 (“Deed Announcement”). All definitions in this announcement shall refer to those made in the Deed Announcement.

 

2. DETAILED JUSTIFICATIONS/RATIONALE OF THE DEED

Below are the detailed justifications/rationale that the Board of Directors of MHB have taken into account prior to entering into the Deed:

 

a) Full Settlement Is Within Market Valuation of The Said Land

As set out in the Deed Announcement, the Company would like to reiterate that the Full Settlement amounting to RM17,047,145 (as calculated in Section 5.2 of the Deed Announcement) is within the valuation of the Said Land conducted by Suleiman & Co. ranging from RM16,980,000 to RM18,570,000 as mentioned in Section 5.3 of the Deed Announcement.

 

b) Final Settlement of RM12,324,000 Took into Consideration Time Value of Money

As set out in the Deed Announcement, the Final Settlement of RM12,324,000 is at 48% discount from RM23,700,000 which comprises the balance of TDSB’s Landowner’s Entitlement of RM18,700,000 plus the agreed profit-sharing of RM5,000,000. Kindly refer to Section 2.6 (i) of the Deed Announcement for the calculation of the balance of TDSB’s Landowner’s Entitlement and Section 2.5 (ii) of the Deed Announcement for the mention of the profit-sharing.

 

The 48% discount rate takes into consideration the time value of money for the balance of TDSB’s Landowner’s Entitlement of RM18,700,000 plus the agreed profit-sharing of RM5,000,000 over the period of the development of the Project for 5 years. The Net Present Value of the above at a discount rate of 12% per annum would be RM12,507,257. The 12% rate used in our NPV calculation is within the range that the Company applied in recent transactions.

 

c) Deed Of Revocation – Arms’ Length Transaction

As set out in Section 5.2 of the Deed Announcement, the Full Settlement amounting to RM17,047,145 translates into RM1.70 per square foot (psf). For information, TNSB’s holding company, Lagenda Properties Berhad on 25 August 2020 announced the acquisition of 5 parcels of land located in the vicinity of the Said Land at a rate of RM1.10 psf. Another comparison is the sale of a parcel of land on 12 March 2021 and 20 April 2021 located in the vicinity of the Said Land at a rate of RM1.84 psf and RM 1.46 psf respectively. The price psf may be varied due to the size and location of the land. Therefore, the Deed of Revocation is deemed fair and reasonable for both parties.

 

d) Growth Effect

The Board of Directors also is of the opinion that the proceeds from the Deed may further contribute to the success of other projects/businesses that could drive the Company’s revenue to a higher level, thus providing a compounding growth effect from the proceeds the Company received now.

 

In particular, this will help to partly finance the acquisition of Nexusbase Development Sdn Bhd which was announced on 31 March 2022 and the upcoming acquisition of Allied Group Property Services Sdn Bhd and Allied Group Property Services (Penang) Sdn Bhd of which its Term Sheet was announced on 30 March 2022. Both acquisitions are important to drive revenue of the Company and subsequently leverage synergistic benefits for the Company.

 

f)  Risk Factor

As set out in Section 8 of the Deed Announcement, the entering of the Deed is set to remove all risks in the JDA and SA which includes amongst others the potential business risk arising from the non-saleability of the properties from the Project. Given the economic backdrop in the endemic stage, potential buyers of the Project namely among affordable homebuyers may be affected and impact TNSB’s targeted launching and completion of the Project. This would affect the Company’s future cash flow and hence the Deed is a business decision that the Company would want to make at this present time.

 

3. DIRECTORS’ STATEMENT

The Board of Directors of MHB, after having considered the above detailed justifications/rationale in addition to all other factors set out in the Deed Announcement, is of the opinion that the entering into the Deed as compared to the original JDA is in the best interest and not detrimental to the Company and its shareholders.

 

This announcement is dated 28 June 2022.





Announcement Info

Company Name MAJUPERAK HOLDINGS BERHAD
Stock Name MJPERAK
Date Announced 28 Jun 2022
Category General Announcement for PLC
Reference Number GA1-28062022-00022


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