1. INTRODUCTION
The Company’s indirect wholly-owned subsidiary, Bisa Jaya Sdn Bhd (“BJSB”) had on even date given an irrevocable undertaking (“Proposed Undertaking”) to Felda Global Ventures Holding Berhad (“FGV”) pursuant to avoluntary conditional take-over offer (“Conditional Take-Over Offer”or “Offer”) by FGV to acquire all the voting shares of RM1.00 each in Pontian (“Pontian Shares”) for a cash consideration of RM140.00 per Pontian Share (“Offer Price”).
2. DETAILS OF THE PROPOSED DISPOSAL
The Proposed Disposal entails the disposal of the entire BJSB’s equity stake in Pontian representing approximately 16.17% to FGV for a total cash consideration of RM195,813,660.
The Proposed Disposal is subject to the terms and conditions set out in the Conditional Take-Over Offer, the salient terms of which are set out in Section 2.2 below.
2.1 Information on Pontian
Pontian was incorporated in Malaysia under section 15(1) of the Companies Ordinances 1940 to 1946 on 23 January 1952 and converted to a public company on 12 February 1978. The authorised share capital of Pontian is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each, of which 8,648,280 Pontian Shares have been issued and fully paid-up.
Pontian is principally involved in the cultivation of oil palm and investment holding. The principal activities of Pontian’s subsidiaries are investment holding, cultivation of oil palm, extraction of crude palm oil and palm kernel for sale, general insurance agency, property investment and money lending. Based on Pontian’s website atwww.pontianunited.com, Pontian and its subsidiaries (“Pontian Group”) have approximately 40,000 acres of oil palm plantation land located primarily in Sabah.
The directors of Pontian are Dr Chen Man Hin, Soo Lim Pang, Khoo Siong Kee, Dr Wong Shiak Sun, Wong Loi (alternate to Dr Wong Shiak Sun), Tan Kim Hai, Khoo Lian Fue @ Khoo Bing Sing, Soh Lim Chang, Chew Ah Siong, Dr Christopher Chen Li Hsian, Dr John Chen Li Tat (alternate to Dr Christopher Chen Li Hsian) and Soo Chong Veoy.
Based on the audited consolidated financial statements for the financial year ended (“FYE”) 31 December 2012, the profit after tax and non-controlling interest and net assets of the Pontian Group are approximately RM39.48 million and RM414.01 million respectively. Please refer to Appendix I for a summary of the financial information of the Pontian Group.
(Source: Companies Commission of Malaysia (“CCM”) search results dated 12 July 2013 on Pontian and audited consolidated financial statements of the Pontian Group for the FYE 31 December 2012)
2.2 Salient terms of the Conditional Take-Over Offer
2.2.1 Conditions of the Offer
The Offer is conditional upon the following:-
(a) FGV having received valid acceptances by 5.00 p.m. (Malaysian time) on the closing date of the Offer or such other extended or revised closing date(s) as may be decided by FGV (provided that they are not where permitted, withdrawn) (“Closing Date”) which would result in FGV holding in aggregate, together with such Pontian Shares that are already acquired, held or entitled to be acquired or held by FGV, more than 50% of Pontian Shares; and
(b) the consent or approval of any other relevant authorities or parties having been obtained, if required.
2.2.2 Offer Consideration
The consideration of the Offer is RM140.00 per Pontian Share shall be satisfied wholly in cash.
If Pontian declares, makes and/or pays a dividend or other distribution of any nature whatsoever (collectively, “Distribution”) on the date of the Offer notice as announced by FGV or after but prior to the Closing Date, BJSB is entitled to retain such Distribution. However, the consideration for each Pontian Share shall be reduced by the quantum of the net Distribution made per Pontian Share which BJSB is entitled to retain.
2.2.3 Basis And Justification For The Offer Price
The Offer Price was determined after taking into consideration the historical earnings of the Pontian Group for the last two (2) FYE 31 December 2011 and 2012 as well as Pontian’s assets and liabilities as detailed in its audited financial statements for the FYE 31 December 2012.
For information, Pontian’s profit after tax and non-controlling interest for FYE 31 December 2011 and 2012 are RM71.7 million and RM39.5 million respectively. The Offer Price of RM140.00 per Pontian Share represents a price-earnings multiple of approximately 21.8 times based on the average earnings per share of Pontian of RM6.43 for the past two (2) FYE 31 December 2011 and 2012.
2.2.4 Liabilities to be Assumed
There is no other liability whether contingent liability or guarantee to be assumed by FGV arising from the Proposed Disposal.
2.2.5 Original Cost of Investment
BJSB’s original cost of investment in Pontian amounts to RM108.3 million, which was incurred over a period of 8 years.
3. RATIONALE
TSH invested in Pontian since 2005 and after 8 years, the Board decides to dispose off Pontian Shares held by BJSB which will allow TSH to unlock its value of investment in the Pontian Shares and the proceeds raised will be utilized for repayment of bank borrowings, future business expansion and working capital requirements.
4. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL
4.1 Share Capital and Substantial Shareholders’ Shareholding
The Proposed Disposal will not have any effect on the share capital and substantial shareholders’ shareholding of TSH as the consideration for the Pontian Shares will be satisfied entirely by cash.
4.2 Earnings Per Share (“EPS”)
Barring unforeseen circumstances, the Proposed Disposal is expected to result in a gain of RM86.4 million and an increase in EPS by approximately 10 sen.
4.3 Net Assets (“NA”) and Gearing
For illustration purpose, the proforma effects of the Proposed Disposal on the NA and gearing of TSH Group are set out below:-
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| Audited as at 31 December 2012 |
| After the Placement shares issued(a) | After the Proposed Disposal(a) |
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Shareholders’ equity / NA
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Number of ordinary shares (’000)
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Notes:
(a) After accounting for 2,000 TSH Shares purchased and retained as treasury shares since 31 December 2012 and 20,860 000 placement shares pursuant to the issuance of a 2.5% private placement.
(b) Excluding 6,882,900 TSH Shares held as treasury shares.
(c) After accounting for the estimated gain on disposal and estimated expenses in relation to the Proposed Disposal.
(d) Excluding 6,884,900 TSH Shares held as treasury shares.
(e) Net of cash and bank balances.
5. PROPOSED UTILISATION OF PROCEEDS
The Company is proposing to utilise the total cash proceeds from the Proposed Disposal to repay bank borrowings, fund its working capital requirements and defray of estimated expenses in relation to the Proposed Disposal.
6. APPROVALS REQUIRED
The Proposed Disposal does not require the approval of any authority or the shareholders of TSH. However, as set out in Section 2.2.1 of this announcement, the Proposed Disposal is conditional upon the FGV holding in aggregate, together with Pontian Shares that are already acquired, held or entitled to be acquired or held by the FGV, more than 50% of the voting shares of Pontian.
Save as disclosed above, the Proposed Disposal is not conditional upon any other corporate exercise undertaken or to be undertaken by TSH.
7. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
To the best of knowledge of the Company and its Board of Directors (“Board”), none of the Directors and/or major shareholders of TSH and/or any persons connected with them have any interest, direct and/or indirect, in the Proposed Disposal.
8. ESTIMATED TIME FRAME FOR THE COMPLETION
The Proposed Disposal is expected to be completed by the fourth (4th) quarter of year 2013.
9. PERCENTAGE RATIO
The highest percentage ratio applicable to the Proposed Disposal as per Paragraph 10.02(g) Chapter 10 of the Main Market LR is 22.13%.
10. DIRECTORS' STATEMENT
After having taken into consideration the potential benefits to be derived from the Proposed Disposal (including but not limited to the terms, rationale, prospects and financial effects), the Board is of the opinion that the Proposed Disposal is in the best interests of TSH and its subsidiaries.
11. DEPARTURE FROM THE LISTING REQUIREMENTS
The Company does not have access to information on Pontian as the Pontian Shares held by BJSB are considered solely as an investment. As such, the information on Pontian available to the Company is limited to the extent of the disclosure made in the filings with the CCM.
Accordingly, the Company is unable to disclose certain information of the Pontian Group in particular its real estate details as required under Part A and Part C of Appendix 10A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As such, information including but not limited to, identification of the real estate, age profile of plantation, planted and unplanted land area and palm oil mill capacity are not disclosed herein.
12. DOCUMENTS AVAILABLE FOR INSPECTION
The Proposed Undertaking is available for shareholders’ inspection at the registered office of the Company at Level 10, Menara TSH, No. 8 Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur during regular office hours from Mondays to Fridays (except public holidays) for a period of one (1) month from the date of this announcement.
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1354369 
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