PROPOSED DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY, S P SETIA SECURITY SERVICES SDN BHD TO A DIRECTOR
1. INTRODUCTION
The Board of Directors of S P Setia Berhad (“S P Setia” or “Company”) wishes to announce that S P Setia has on 11 June 2014 entered into a Shares Sale Agreement (“SSA”) with Tun Dato’ Seri Zaki Bin Tun Azmi (“Tun Zaki”), the Independent Non-Executive Chairman of S P Setia (“Purchaser”), to dispose its entire 153,000 ordinary shares of RM1.00 each in S P Setia Security Services Sdn Bhd (“SPSSS”) (the “Sale Shares”), representing 51% equity interest, to the Purchaser for a cash consideration of RM278,000 (“Disposal Consideration”) (“Proposed Disposal”).
The Proposed Disposal is deemed a related party transaction. Upon completion of the Proposed Disposal, SPSSS will cease to be a subsidiary of S P Setia.
2. THE PROPOSED DISPOSAL
2.1 SPSSS
SPSSS was incorporated on 22 April 2000 as Darul Tahap (M) Sdn Bhd. It subsequently assumed its present name on 26 June 2003. Its principal activity is the provision of security management services. It is a holder of a private agency license issued by Kementerian Dalam Negeri (“KDN”) under the Private Agencies Act 1971 to carry on the business of private agency (“KDN License”).
The present authorised capital of SPSSS is RM500,000 divided into 500,000 ordinary shares of RM1.00 each, of which 300,000 ordinary shares have been issued and fully paid-up.
The original cost of investment of the Sale Shares was RM153,000, which was invested between 2000 and 2003. According to its last audited financial statements for the financial year ended 31 October 2013, its net tangible assets stood at RM543,475. The net carrying amount of the investment in SPSSS by S P Setia as at 31 October 2013 was RM277,172.
2.2 The Purchaser
Tun Zaki is the Independent Non-Executive Chairman of S P Setia. He currently owns 57,000 ordinary shares of RM1.00 each, representing 19% equity interest in SPSSS. There were no transactions entered into with the Purchaser for the preceding 12 months.
2.3 The Disposal Consideration
The Disposal Consideration of RM278,000 was arrived at on a ‘willing buyer-willing seller’ basis after taking into consideration the net tangible assets of SPSSS as at 31 October 2013, of RM543,475, of which the amount attributable to the Sale Shares is RM277,172.
The Disposal Consideration will be utilized for working capital purposes within 12 months. The gain from the Proposed Disposal is expected to be immaterial.
2.4 Salient Terms of the SSA
The Proposed Disposal is subject to the following conditions precedent, which shall be fulfilled within 90 days from the date of the SSA:
(i) The approval of the Board of Directors of S P Setia, which has been duly obtained;
(ii) In relation to the KDN License, the approval of KDN for the change in shareholdings in SPSSS (“KDN Approval”); and
(iii) The approval of the board of directors and shareholders of SPSSS for the change of name of SPSSS to a name that does not contain the word “S P” and “S P Setia” (“Change of Name”), which shall be subject to the KDN Approval being obtained on the same.
SPSSS shall effect the Change of Name within 3 months from the fulfilment of the conditions precedent abovementioned.
The Disposal Consideration shall be paid within 10 business days from the fulfilment of conditions precedent abovementioned.
2.5 Rationale for the Proposed Disposal
The provision of security management services is not part of the core activities of S P Setia Group. The Proposed Disposal will allow the management to focus more resources on the Company’s core business, i.e. property development.
2.6 Financial impact
The Proposed Disposal is not expected to have any material impact on the earnings, net assets, gearing and share capital of S P Setia.
3. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
Save for Tun Zaki, who is the Purchaser, who will continue to abstain from all deliberations at the Board meetings of S P Setia in respect of the Proposed Disposal, none of the directors and/or major shareholders of the Company and persons connected to them have any interest, direct or indirect in the Proposed Disposal.
4. AUDIT COMMITTEE’S STATEMENT
The Audit Committee of S P Setia, having considered all aspect of the Proposed Disposal, is of the view that the Proposed Disposal is fair, reasonable and on normal commercial terms, in the best interest of the Company, and not detrimental to the interest of the minority shareholders.
5. STATEMENT BY DIRECTORS
Save for Tun Zaki, the Board of Directors of S P Setia, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is fair and reasonable and is in the best interests of the Company.
6. HIGHEST PERCENTAGE RATIO
Based on the latest audited financial statements of S P Setia for the financial ended 31 October 2013, the highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 0.98%.
7. APPROVALS REQUIRED
The Proposed Disposal is NOT subject to the approval of the shareholders of S P Setia. It is only subject to the KDN Approval.
8. COMPLETION DATE
The Proposed Disposal is expected to be completed within three (3) months from the date of this announcement
9. DOCUMENTS FOR INSPECTION
The SSA is available for inspection during normal working hours on Monday to Friday (except public holidays) at the registered office of Plaza 138, Suite 18.03, 18th Floor, 138 Jalan Ampang, 50450 Kuala Lumpur for a period of three (3) months from the date of this announcement.
This announcement is dated 11 June 2014.
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