The Board of Directors of Esthetics International Group Berhad (“EIG” or “the Company”) wishes to announce that EIG Global Pte. Ltd. (“EIGPL”), a wholly-owned subsidiary of EIG had on 3 March 2015 entered into an Option to Purchase Agreement (“OTP”) with Aquila Hotel & Resorts Pte. Ltd. (the “Vendor”), for the purpose of acquiring one unit of office space with approximately 1,356 square feet of floor area at Paya Lebar Square, 60 Paya Lebar Road, Singapore (the “Property”) for a total consideration of S$3,102,528.00 (the “Acquisition”).
2. INFORMATION ON THE ACQUISITION
2.1 Details of the Acquisition
The Property comprises one parcel of commercial office space under unit #09-27, with total floor area of 1,356 square feet at the building known as Paya Lebar Square at 60 Paya Lebar Road, Singapore 409051. The Property is 99 years’ leasehold commencing from 25 July 2011 and construction of Paya Lebar Square was completed in November 2014.
2.2 Information on the Vendor
2.2.1 Name of Vendor: Aquila Hotel & Resorts Pte. Ltd.
2.2.2. Registered address of Vendor: 29 Pioneer Sector 1, Singapore 628434
2.2.3 Principal activity of Vendor: Hotel management consultancy services (management of hotel and resorts)
2.2.4 Director and Shareholder of the Vendor: Sujith Sekharan (Identity no. S6965584Z)
2.3 Basis of the purchase consideration
The purchase consideration for the Property was arrived at on a willing buyer, willing seller basis after taking into consideration EIGPL’s requirements, the strategic location of the Property being adjacent to EIGPL’s existing four units at Paya Lebar Square, the features of the Property and alternative office space for sale at Paya Lebar Square. In assessing the Proposed Acquisition, the purchase price was assessed against the selling price and recent transactions for other units at Paya Lebar Square. No valuation was carried out on the Property
2.4 Salient terms of the OTP
2.4.1 Property to be purchased by EIGPL with vacant possession and free from encumbrances on an “as is where is” basis
2.4.2 Terms of payment of the purchase price are as follows:-
i) Option Money of S$31,025.28 (1% of the purchase price) was paid to the Vendor on 17 February 2015;
ii) An option exercise fee of S$124,101.12 (4% of the purchase price), which together with the Option Money shall form the Deposit, was paid to the Vendor on 3 March 2015 upon signing of the OTP;
iii) The remaining S$2,947,401.60 (95% of the purchase price) shall be paid to the Vendor upon completion on 6 July 2015.
2.4.3 The sale and purchase of the Property is subject to the Singapore Law Society’s Conditions of Sale 2012 as applicable to a sale by private treaty.
2.4.4 The sale and purchase is by way of an assignment of the Vendor’s rights, title, benefit and interest in the Vendor’s original sale and purchase agreement with the Developer of Paya Lebar Square.
2.5 Liabilities to be assumed by EIGPL
There are no liabilities, including contingent liability and encumbrances, to be assumed by EIGPL arising from the Acquisition.
2.6 Source of funding
It is intended that the Acquisition will be funded by existing cash balances and bank borrowings to be procured in Singapore, whereby it is currently intended that at least 50% will be funded through bank borrowings.
3. FINANCIAL EFFECTS OF THE ACQUISITION
The Acquisition is not expected to have any material impact on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholdings of EIG for the financial year ending 31 March 2015. While EIG reported cash and cash equivalents of RM59.7 million as at 31 December 2014, the gearing of EIG will increase to the amount of borrowings undertaken to finance the Acquisition.
4. RISK FACTORS
The Board of Directors of EIG is not aware of any risk factors arising from the Acquisition other than the ordinary property market and global economic risks.
5. PERCENTAGE RATIOS
The highest percentage ratio applicable for the Acquisition pursuant to Chapter 10 of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements based on the Total Consideration of S$3,102,528 is 6.5%.
6. APPROVAL REQUIRED
The Acquisition is not subject to EIG’s shareholders approval.
7. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
The Directors and major shareholders of EIG and persons connected to the Directors and major shareholders do not have any interest, direct or indirect, in the Acquisition.
8. RATIONALE AND PROSPECTS
The Property shall be integrated with EIGPL’s existing adjacent four office units at Paya Lebar Square to form EIG’s corporate office. The Acquisition of the Property, once completed will hence provide additional area to cater for the future growth of EIG’s activities in Singapore.
The Property is strategically located in Paya Lebar Central which is proximate to the Central Business District and targeted to be the regional commercial hub for the South-East Zone in Singapore under the Urban Redevelopment Authority (URA)’s decentralisation plan. The Property is linked to the Paya Lebar MRT interchange station providing access to two MRT lines (the East-West Line and Circle Line) and also has good connectivity with the major expressways.
9. STATEMENT BY DIRECTORS
The Board of Directors of EIG is of the opinion that the Acquisition is in the best interests of EIG.
10. ESTIMATED TIME FRAME FOR THE COMPLETION OF THE ACQUISITION
The expected date of delivery of vacant possession and completion of the sale and purchase of the Property shall be no later than 6 July 2015.
11. DOCUMENTS AVAILABLE FOR INSPECTION
The OTP may be inspected at EIG’s registered office at Lot 11, Jalan Astaka U8/88, Bukit Jelutong, Seksyen U8, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia during office hours from 9am – 5pm on Monday to Friday (except on public holidays), for a period of three (3) months from the date of this announcement.
This announcement is dated 3 March 2015.