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Newsroom
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JOINT VENTURE AGREEMENT WITH MTU SERVICES (MALAYSIA) SDN BHD
Posted on 16th June, 2010
1. INTRODUCTION
Further to the announcement on 3 December 2009, Boustead Heavy Industries Corporation Berhad (“BHIC” or “the Company”) is pleased to announce that its wholly owned sub-subsidiary, BHIC Defence Technologies Sdn Bhd (“BHICDT”) (a subsidiary held via Boustead Penang Shipyard Sdn Bhd) has on 15 June 2010 signed a Joint Venture Agreement with MTU Services (Malaysia) Sdn Bhd. (“MSM”) (“JV Agreement”) for the purpose of forming a Joint Venture Company ("JVCo") in Malaysia (“JV”).
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BOUSTEAD HEAVY INDUSTRIES CORPORATION BHD ("BHIC" OR "THE COMPANY") – RECEIPT OF LETTER OF AWARD FROM THE GOVERNMENT OF MALAYSIA BY SUBSIDIARY COMPANY
Posted on 15th June, 2010
BHIC wishes to announce that its wholly-owned sub-subsidiary (a subsidiary held via Boustead Penang Shipyard Sdn Bhd), BYO Marine Sdn Bhd, had received a LETTER OF AWARD dated 7 June 2010 from the Government of Malaysia for the contract to design, construct and commission 10 units of Fast Interceptor Craft for Malaysian Maritime Enforcement Agency ("the Contract"). The Contract is for a period of 20 months from the effective date of the letter of acceptance of BYO at a total contract sum of RM130,700,000.00.
The Contract will have no material effect on the earnings of BHIC Group for the financial year ending 31 December 2010, but will contribute positively to the future earnings of BHIC Group.
None of the directors nor substantial shareholders of the Company, or persons connected with them, has any interest, direct or indirect, in the Contract.
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PROPOSED ACQUISITION OF 51% SHARES IN CONTRAVES ADVANCED DEVICES SDN BHD ("CAD") BY BHIC DEFENCE TECHNOLOGIES SDN BHD ("BHIC-DT" OR "Purchaser"), A WHOLLY-OWNED SUBSIDIARY OF BHIC ("Proposed Acquisition")
Posted on 11th June, 2010
Further to the announcements dated 7 June 2010 and 9 June 2010, we set out below the additional information requested for public release:
| No. | Information Requested | Our Response | 1 | Whether the Vendor's Turnover Commitment is for the purchase by Rheinmentall Air Defence AG Group from Contraves Advanced Devices Sdn Bhd ("CAD") | CAD will obtain Euro Twenty Million (EUR 20,000,000.00) worth of revenue from Rheinmentall Air Defence AG and its group of companies over a period of five (5) years commencing from 1 January 2011. | 2 |
Whether the proposed acquisition is subject to the Company's shareholders' approval and other relevent government authorities. | The proposed acquisition is not subject to the approval of the shareholders of BHIC or any relevent government authorities. |
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PROPOSED ACQUISITION OF 51% SHARES IN CONTRAVES ADVANCED DEVICES SDN BHD ("CAD") BY BHIC DEFENCE TECHNOLOGIES SDN BHD ("BHIC-DT" OR "Purchaser"), A WHOLLY-OWNED SUBSIDIARY OF BHIC ("Proposed Acquisition") (Amended Announcement)
Posted on 10th June, 2010
Further to the announcement dated 7 June 2010, we set out below the additional information requested for public release:
| No. | Information Requested | Our Response | | 1 | The quantification of the Net Tangible Assets of Contraves Advanced Devices Sdn Bhd ("CAD"). as at 30 June 2010 and whether it is based on the audited accounts of CAD. |
The Net Tangible Assets of CAD will be based on the balance sheet of CAD as at 30 June 2010 and a profit and loss account of the CAD for the period ended 30 June 2010.
As at this date, we are not in the position to quantify the value of the net tangible assets of CAD as at 30 June 2010. Based on the management's estimate, the net tangible assets as at 30 June 2010 is estimated to be about RM42, 990 million. | | 2 | Whether the Vendor's Turnover Commitment is for the purchase by Rheinmetall Air Defence AG Group from CAD. | Vendor's Turnover Commitment is defined as the commitment from Rheinmetall Air Defence AG that it shall procure from its group of companies turnover worth Euro Twenty Million (EUR20,000,000.00) to CAD over a period of five (5) years commencing from 1 January 2011. | | 3 | Whether the Net Assets and Profit Before Tax of CAD for the financial years 2007 to 2009 are based on the audited accounts of CAD. | We confirm that the Net Assets and Profit Before Tax of CAD for the financial years 2007 to 2009 are based on the audited accounts of CAD. | | 4 | Whether the proposed acquisition is subject to the Company's shareholders' approval and other relevant government authorities. | As per stated in our announcement under Section 3.5, the proposed acquisition is subject to the following conditions precedent:
1.the Purchaser shall obtain the following:
a) approval of the board of directors of the Purchaser;
b) the approval of the shareholders of the Purchaser (if required); and
c) approval(s) of any other relevant authority(ies) which may be necessary for the completion of the purchase of the Sale Shares by the Purchaser (if required);
and
2. the Vendor shall obtain the following:
a) approval of the board of directors of the Vendor;
b) the approval of the shareholders of the Vendor (if required); and
c) the approval(s) of any other relevant authority(ies) which may be necessary for the completion of the sale of the Sale Shares by the Vendor (if required).
Approval period is defined as the period starting from the date of the Share Sale Agreement and ending on 30 June 2010, or such additional required time extension, or to which both Parties may agree in writing. | | 5 | The prospects of CAD | The prospects of CAD is positive given the following factors:
The Company will focus on its existing customers as well as securing new customers for the commercial electronics businesses. Being a niche company, CAD specialises in fabrication of circuit boards, cable trees and electronic submodules customised for the automotive, plant engineering, IT and defence technology sectors.
CAD will benefit from Rheinmetall Defence's expertise in weapon munitions and defence systems and BHIC's know-how in naval technology in pursuit to supply the region's armed forces with advanced capabilities
The collaboration between BHIC and Rheinmetall will set out the framework of the strategic alliance to serve new markets as well as enable a technology transfer that will substantially benefit CAD and the Malaysian defence and electronics sectors. This could also open additional opportunities for exports. |
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BOUSTEAD HEAVY INDUSTRIES CORPORATION BERHAD ("BHIC" or "the Company") - PROPOSED ACQUISITION OF 51% SHARES IN CONTRAVES ADVANCED DEVICES SDN BHD ("CAD") BY BHIC DEFENCE TECHNOLOGIES SDN BHD ("BHIC-DT" OR "Purchaser"), A WHOLLY-OWNED SUBSIDIARY OF BHIC ("Proposed Acquisition")
Posted on 8th June, 2010
1. Introduction
BHIC wishes to announce that its wholly-owned subsidiary, BHIC-DT, has on 7 June 2010, entered into a Share Sale Agreement ("SSA") with Rheinmetall Air Defence AG ("RHAD" or "Vendor"), for the proposed acquisition of two million five hundred and fifty thousand (2,550,000) ordinary shares of Ringgit Malaysia One (RM1.00) each in CAD (a wholly-owned subsidiary of RHAD) representing fifty one percent (51%) of the total issued and paid-up capital of CAD (Sale Shares). The investment in CAD is in line with BHIC's strategy to expand its existing business activities.
2. Total Consideration
The total consideration is fifty one percent (51%) of:
(a) The net tangible assets of CAD as at 30 June 2010; and
(b) Euro Two Million (EUR2,000,000) being ten percent (10%) of the Vendor's Turnover Commitment. RHAD will commit not less than Euro Twenty Million (EUR20,000,000.00) over a period of five years for the export of Malaysian manufactured defence electronics into the RHAD's global supply chain.
The estimated purchase consideration of the Proposed Acquisition is RM26 million.
3. Details of the Proposed Acquisition
3.1 Proposed Acquisition
BHIC, through BHIC-DT, will acquire a 51% stake in CAD, whilst RHAD will retain a 49% share in CAD and maintain operational management.
3.2 Background Information on CAD
CAD was established in 1983 and has been manufacturing electronic products for over 25 years in Malaysia. Its principal activities include manufacturing of industrial Printed Circuit Board Assemblies (PCBAs) and box-build assemblies, production of modules, electronic sub-assemblies, antenna and electronic time relays for the automotive industry, assembly of semi-rigid and flexible RF cables and service and maintenance of military and defence equipment. It is certified ISO 9001:2000 under Swiss Association for Quality and Management Systems (SQS).
3.3 Details of the Vendor
RHAD was founded in 1889. It is a key player in the defence and security industry. Its principal activity is to supply army technology with the primary focus on land systems, weapon and munitions, propellant, air defence, C4ISTAR and simulation and training.
With over 9,300 employees, RHAD has offices in North America and Canada, Europe (France, Switzerland, UK, Scandinavia), Middle East – Abu Dhabi, Asia & Oceania – Australia, Malaysia (Malacca), Singapore, Korea and India.
3.4 Basis of arriving at the purchase consideration and source of funding
The purchase consideration is based on 51% value of CAD’s net tangible assets shown in its Completion Accounts as at 30 June 2010, plus 51% of the Euro 2 Million (EUR2,000,000) (equivalent to RM7.94 million) premium which is based on 10 percent (10%) of the Euro Twenty Million (EUR20,000,000) sales committed by the Vendor from 2011 to 2015.
The purchase consideration for the Proposed Acquisition will be funded by bank borrowings. The repayment of the bank borrowings shall be internally generated.
3.5 Principal Terms
(1) Conditions Precedent
Completion of the Proposed Acquisition is conditional upon following:
BHIC-DT shall obtain the following:
(a) approval from the Board of Directors of BHIC-DT;
(b) the approval of the shareholders of the BHIC-DT (if required); and
(c) approval(s) of any other relevant authority(ies) which may be necessary for the completion of the purchase of the Sale Shares by BHIC-DT (if required); and
RHAD shall obtain the following:
(a) approval of the Board of Directors of RHAD;
(b) the approval of the shareholders of RHAD (if required); and
(c) the approval(s) of any other relevant authority(ies) which may be necessary for the completion of the sale of the Sale Shares by the RHAD (if required).
(2) Purchase Consideration
The total consideration for the Sale Shares is fifty one percent (51%) of:
a. the net tangible assets of the Company based on the Completion Accounts; plus
b. EUR2,000,000 being ten percent (10%) of RHAD’s commitment that it shall procure from its group of companies turnover worth EUR20,000,000.00 over a period of five (5) years commencing from 1 January 2011.
3.6 Shareholders’ Agreement between BHIC-DT and RHAD
Upon completion of the SSA, BHIC-DT and RHAD will enter into a shareholders' agreement to reflect the long-term relationship and strategic cooperation between BHIC-DT and RHAD in relation to their shareholding interests in CAD.
3.7 Percentage Ratio
The highest percentage ratio applicable to the transaction pursuant to paragraph 10.02(g) of the Bursa Malaysia Listing Requirements is 11.66% (based on an estimated purchase consideration of RM26 million).
4. Rationale of the Proposed Acquisition
BHIC, through BHIC-DT, and RHAD intend to collaborate further to serve new markets as well as enable a technology transfer that will substantially benefit the Malaysian industry, specifically the Malaysian commercial and defence industry. It is the intention for both BHIC and RHAD to enter into a collaboration agreement that will set out the framework of the strategic alliance.
This partnership seeks to foster the growth of high-tech production in Malaysia to strengthen the country's defence technology industrial base and open additional opportunities for exports.
5. Financial Information
The net assets and profit after tax of CAD for the last three financial years is as follows:
| RM' million | 2007 | 2008 | 2009 | | Net Assets | 46.911 | 52.942 | 56.417 | | Profit after tax | 4.568 | 6.031 | 3.475 |
6. Liabilities
Save for the trade liabilities, there are no other liabilities to be assumed by BHIC-DT pursuant to the Proposed Acquisition.
7. Financial Effects of the Proposed Acquisition
The Proposed Acquisition is not expected to have a material impact on the consolidated earnings per share of BHIC for the financial year ending 31 December 2010.
The Proposed Acquisition is not expected to have a material impact on the gearing and the net assets per share of the BHIC Group.
The Proposed Acquisition will not have any effect on the share capital of and substantial shareholders' shareholdings in BHIC.
8. Directors' and Major Shareholders’ Interest
To the best of our knowledge, none of BHIC nor BHIC-DT's Directors and/ or major shareholders and/or persons connected to them has any interest, direct or indirect in the Proposed Acquisition.
9. Directors' Statement
The Board of Directors, after careful deliberation, is of the opinion that the Proposed Acquisition is in the best interest of the BHIC Group.
10. Document for Inspection
The SSA is available for inspection at the registered office of BHIC at Level 17, Menara Boustead, 69, Jalan Raja Chulan, 50200 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.
11. Risk factors
The Proposed Acquisition is subject to normal acquisition and business risks.
12. Estimated timeframe of completion
The Proposed Acquisition is estimated to be completed by 30 September 2010.
13. Announcement Date
This announcement is dated 7 June 2010.
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