(Unless otherwise stated, all abbreviations used herein shall have the same meaning as those mentioned in the announcements dated 14 January 2021, 19 January 2021 and 7 April 2021 (“Announcements”))

1. INTRODUCTION AND BACKGROUND

Reference is made to the announcement dated 7 April 2021, where the Board has announced that the Acquisition is deemed as a related party transaction. Consequently, Tek Seng has sought the consent of the Vendor to enter into a supplemental agreement to vary the terms and conditions of the SPA. However, the Vendor has declined to provide the consent as the SPA has become unconditional following the Vendors’ shareholders approval on 31 March 2021.

In order to address this situation, the Board wishes to announce that WISB has on even date entered into a nomination agreement with Ganjaran Wawasan Sdn Bhd (“GWSB”) to purchase the 43569 undivided shares (“54.91%”) of the Land in the said Property in place of WISB (“Nomination Agreement”). WISB has entered into the Nomination Agreement, to avoid the 10% deposit which WISB has paid to purchase the 54.91% of the Land from being forfeited in the event that the non-interested shareholders’ approval for the acquisition cannot be obtained or is rejected.

Details of the Acquisition are set out in the announcements dated 14 January 2021 and 19 January 2021. Further details of the Nomination Agreement are set out in the ensuing sections below.

2. DETAILS OF THE NOMINATION AGREEMENT

2.1 Information on the GWSB

GWSB was incorporated in Malaysia as a private limited company on 20 October 2004 under the Companies Act, 1965 having its registered address at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Pulau Pinang.

GWSB is principally involved in property development activities. The directors of GWSB are LKB and LKC. The shareholders of GWSB and their respective shareholdings are set out below:

As at the date of this announcement, GWSB has a share capital of RM500,000 comprising of 500,000 shares.

2.2 Salient terms of the Nomination Agreement

The salient terms of the Nomination Agreement are as follows:

(i) In the event, that Tek Seng’s shareholder’s approval cannot be obtained or is rejected, WISB has nominate GWSB to purchase the 54.91% of the Land/ Property in its place in order to avoid the 10% deposit which WISB has paid to purchase 54.91% of the Land/ Property from being forfeited.

(ii) Pursuant to Section 3 of the Third Schedule of the said SPA (as extracted below), WISB is entitled to nominate nominees to take the transfer:

“The Vendor shall upon the execution of this Agreement execute a valid and registrable Transfer of each Lot of the said Property in the prescribed form of the National Land Code, 1956 as well as the Stamping Proforma under Section 5 of the Stamp Act, 1949 in favour of the Purchaser or his nominee or nominees and deliver the same to the Purchaser’s Solicitors to hold as a stakeholder.”

(iii) GWSB has agreed to be nominated as purchaser to purchase the 54.91% of the Land/ Property upon the following terms :-

Operative Provisions:-

1.    GWSB agrees to be nominated by WISB to purchase 54.91% of the Land/ Property upon the terms stated in the said SPA in the event the Approval cannot be obtained or is rejected.

2.    Upon the nomination being effected, GWSB shall comply with the terms of the said SPA and shall pay the balance Purchase Consideration on or before the completion date stated in the said SPA.

3.    Upon WISB exercising their right to nominate GWSB to purchase 54.91% of the Land/ Property as provided in the said SPA and upon the nomination being effected, GWSB shall reimburse WISB the 10% deposit amounting to RM2,578,813.05 which  WISB has paid to the Vendor.

4.    Upon WISB exercising their right to nominate GWSB to purchase 54.91% of the Land/ Property, GWSB shall take the place of WISB and WISB shall cause the Vendor to execute the Memorandum of Transfer for each Lot of the said Land/Properties in favour of GWSB.

3. APPROVALS REQUIRED

The Acquisition is subject to the approvals being obtained from the following:

(i) approvals being obtained from the non-interested shareholders of Tek Seng at the extraordinary general meeting (“EGM”) to be convened; and

(ii) any other relevant parties, if required.

In the event that Tek Seng’s shareholder approval is not obtained for the Acquisition, WISB shall exercise the nomination mechanism under the Nomination Agreement. Essentially, GWSB shall take over the obligations of WISB as purchaser to complete the Acquisition.

The Acquisition is not conditional upon any other corporate exercises undertaken or to be taken by Tek Seng.

4. INTERESTS OF DIRECTORS’, MAJOR SHAREHOLDERS’ AND/OR PERSONS CONNECTED WITH THEM

Save as disclosed below, none of the Directors and/or major shareholders of Tek Seng and/or persons connected to them have any interest, either direct or indirect, in the Acquisition.

LKB and LKC are the directors and major shareholders of Tek Seng, holding 20.55% and 20.48% equity stake in Tek Seng. They are also the directors and shareholders of TPSB, acquiring the balance 35774 undivided shares (45.08%) of the Land/Property. LKB and LKC are also the shareholders and directors of GWSB (a party of the nomination agreement). As such, LKB and LKC are deemed interested in the Acquisitions.

Loh Joo Eng (“LJE”) and Loh Eng Chun (“LEC”) are the persons connected to LKB and LKC and they are also the directors of Tek Seng. As such, LJE and LEC are also deemed interested in the Acquisitions.

LKB, LKC, LJE and LEC collectively, “Interested Parties”.

Accordingly, the Interested Parties will continue to abstain from deliberating and voting at the Board meetings and the EGM of Tek Seng pertaining to the Acquisition. In addition, the abovementioned Interested Parties shall undertake to ensure that persons connected to them shall abstain from voting in respect of their direct/indirect shareholdings in Tek Seng, on the resolutions to be tabled at the EGM to be convened.

As at the date of this announcement, the direct and indirect shareholdings of Interested Parties in Tek Seng are set out below:

Note:

(1)  Indirect shareholdings held through spouse, daughter and son.

5. INDEPENDENT ADVISER AND VALUER

In view of the interests of the Interested Parties as set out in Section 4 above, the Acquisition is deemed a related party transaction pursuant to Paragraph 10.08 of the MMLR. Accordingly, M&A Securities Sdn Bhd has been appointed by the Board (save for the Interested Parties) to act as the Independent Adviser to undertake the following:

(i) Comment whether the Acquisition is fair and reasonable insofar as the non-interested shareholders of Tek Seng are concerned;

(ii) Comment as to whether the Acquisition is detrimental to the non-interested shareholders of Tek Seng; and

(iii) Advise the non-interested shareholders of Tek Seng whether they should vote in favor for the Acquisition at the EGM to be convened.

Consequently, the Board has also appointed Savills Penang Sdn Bhd (“Valuer”), an independent firm of registered valuers to re-appraise the Land/Property. Based on the valuation letter dated 14 April 2021, the Valuer is of the opinion that the market value of the Land/Property in its existing condition, with vacant possession and subject to its title being free from encumbrances and registrable is RM47,000,000. In arriving at the market value, the Valuer has adopted the comparison method of valuation and has valued the Land/Property based on RM55 per square foot.

6. DIRECTORS’ STATEMENT

The Board (save for the Interested Parties), after having considered all aspects of the Acquisition and after careful deliberation, is of the opinion that Acquisition is in the best interest of Tek Seng and the Acquisition is fair and reasonable and not detrimental to the interest of the non-interested shareholders of the Company.

The views of the Board (save for the Interested Parties) was arrived at after having considered, inter-alia, the terms and conditions of the SPA, the Nomination Agreement, and the rationale of the Acquisition, prospects of the Land/Property, the effects of the Acquisition on the Group and the advice of the Independent Adviser.

In addition, the view of the Board (save for the Interested Parties) has also taken into consideration of the fact that the market value of the Land/ Property as appraised by the Valuer.

7. AUDIT & RISK MANAGEMENT COMMITTEE’S STATEMENT

The Audit & Risk Management Committee, after taking into consideration the advice of the Independent Adviser and the legal counsel and having considered all other relevant aspects, such as rationale, salient terms of the SPA and Nomination Agreement, risk factors and rationale and prospects of the Land/Property, is of the opinion that the Acquisition is:

(i)   in the best interest of the Company;

(ii)  fair, reasonable and is not detrimental to the interest of the non-interested shareholders of the Company; and

(iii)  on normal commercial terms.

In addition, the view of the Audit & Risk Management Committee was also arrived at after taking into consideration of the fact that the market value of the Land/Property was appraised by the Valuer.

8. TOTAL AMOUNT TRANSACTED WITH THE SAME RELATED PARTIES FOR THE PRECEDING TWELVE (12) MONTHS

There are no other transactions with the same related party for the preceding 12 months prior to the date of this announcement.

9. ESTIMATED TIMEFRAME FOR COMPLETION

Barring any unforeseen circumstances, the Acquisition is expected to be completed by the 2nd half of 2021.

10. DOCUMENTS AVAILABLE FOR INSPECTION

The Nomination Agreement and the valuation letter dated 14 April 2021, will be available for inspection at the registered office of Tek Seng at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang during normal office hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 22 April 2021.