1.0 Introduction
The Board of Directors of TDM Berhad (“TDM” or “Company”) wishes to announce that the Company has entered into a conditional Share Sale Agreement (“Agreement”) with Terengganu Incorporated Sdn Bhd (Company No. 725242-P)(“Terengganu Incorporated” or “Vendor”) to acquire 50,000 ordinary shares of RM1.00 each, representing 10% of the issued and paid-up share capital in TDM Capital Sdn Bhd (Company No. 92641-U) (“TDM Capital”), a subsidiary of the Company, for a total purchase consideration of RM17,600,000.00 (“Acquisition”).
Upon completion of the Acquisition, TDM Capital will become a wholly-owned subsidiary of the Company.
The Acquisition is a related party transaction pursuant to Paragraph 10.08 of the Listing Requirements in view of the interests of Terengganu Incorporated, a major shareholder of the Company.
2.0 Background Information
2.1 Information of TDM Capital
TDM Capital is a company incorporated in Malaysia under the Companies Act, 1965 and having its registered office atLevel 5, Bangunan UMNO Terengganu, Lot 3224, Jalan Masjid Abidin, 20100 Kuala Terengganu, Terengganu Darul Iman. It is involved principally in cultivation of oil palms and trading of fresh fruit bunches, crude palm oil, palm kernels and other related products in Terengganu.
TDM Capital has an authorised share capital of RM20,000,000.00 divided into 20,000,000 ordinary shares of RM1.00 each of which 500,000 ordinary shares of RM1.00 each have been issued and fully paid-up.
2.2 Information of the Vendor
Terengganu Incorporated is a company incorporated in Malaysia under the Companies Act, 1965 and having its registered office at Lot PT 3071, Kawasan Perindustrian Chendering, 21080 Kuala Terengganu, Terengganu Darul Iman. Terengganu Incorporated is the registered and legal owner of 50,000 ordinary shares of RM1.00 each, representing 10% of the issued and paid-up share capital of TDM Capital (“Sale Shares”).
Terengganu Incorporated has an unsettled debt of RM5,000,000.00 owed to Kumpulan Ladang-Ladang Trengganu Sdn Bhd (“KLLT”), a wholly owned subsidiary of the Company.
3.0 Purchase Consideration and the Justification of the Consideration
The total purchase price for TDM Capital’s Sale Shares of RM17,600,000.00 (“Purchase Consideration”) was arrived at on a willing buyer willing seller basis, after taking into consideration, amongst others, the following:
a) The audited net assets (NA) as at 31 December 2012 of TDM Capital of RM176.3 million;
b) The audited profit before tax for the year ended 31 December 2012 of TDM Capital of RM18.6 million;
c) The benefits from potential rationalization of TDM’s plantation assets.
The Sale Shares are acquired free from all claims and encumbrances together with all rights attaching thereto now or hereafter attaching thereto, including without limitation all bonuses, rights, liabilities, dividends and other distributions declared, paid or made in respect of the Sale Shares with effect from the date of completion of the Agreement (“Completion Date”) and upon the terms and conditions and stipulations contained in the Agreement.
The Purchase Consideration to be paid and settled by TDM is as follows:
(a) Subject to the fulfilment of the conditions precedent, be deemed to have paid and settled part of the Purchase Consideration of RM5,000,000.00 by way of setting-off the Debt;
(b) Pay to Terengganu Incorporated a refundable deposit amounting to RM1,000,000.00, which shall be treated as part payment of the Purchase Consideration; and
(c) The balance purchase consideration of RM11,600,000.00 shall be paid and settled by the Company within the completion period, PROVIDED THAT each of the condition(s) precedent remain satisfied and none of the approvals granted or events which had accounted for the satisfaction of a condition precedent has been revoked, varied, suspended or cancelled.
3.1 Salient features of the Share Sale Agreement
3.1.1 Conditions Precedent:
(a) the Company obtaining the written approval of its Board of Directors for the purchase of the Sale Shares and authorising the execution, delivery and performance of the Agreement, including payment of the Purchase Consideration to the Vendor, and the affixation of the common seal of the Company (in accordance with the Company’s Memorandum and Articles of Association) on the Transfer and all other relevant documents in respect of the sale and transfer of the Sale Shares to the Company;
(b) the Vendor obtaining written approval of its Board of Directors for the sale of the Sale Shares and authorising the execution, delivery and performance of the Agreement and the affixation of the common seal of the Vendor (in accordance with the Vendor’s Memorandum and Articles of Association) on the Transfer and all other relevant documents in respect of the sale and transfer of the Sale Shares to the Company;
(c) the Vendor obtaining written approval of its Board of Directors for the settlement of part of the Purchase Consideration by way of setting-off the Debt and authorising the execution, delivery and performance of the Letter of Settlement and all other relevant documents in respect of the settlement of the Debt; and
(d) the Vendor shall issue a Letter of Settlement, duly stamped, to the Company and KLLT, the terms and conditions of the Letter of Settlement to be mutually agreed by the Parties, evidencing the full and total settlement of the Debt. Upon issuance of the Letter of Settlement, the Company shall be deemed to have settled part of the Purchase Consideration of RM5,000,000.00 in accordance with the terms and conditions set out in the Agreement.
(e) Concurrently, the Company shall obtain from KLLT a Letter of Confirmation, duly stamped, issued to and delivered to the Vendor confirming that the Debt has been fully settled by the Vendor in accordance with the terms and conditions set out in the Agreement.
4.0 Rationale for the Acquisition
The acquisition is part of TDM’s rationalization plan of its plantation assets. The Acquisition is also expected to be earning accretive as set out in item 6.0 of this Announcement. In addition, the Acquisition will also involve the settlement ofunsettled debt of RM5,000,000.00 owed to KLLT by Terengganu Incorporated.
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1253801 
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