BURSA ANNOUNCEMENTS

1. Introduction

The Board of Directors of Taliworks is pleased to announce that Taliworks has on 26 February 2015, accepted the offer to acquire 1,538 ordinary shares of RM1.00 each representing 15.38% of the ordinary share capital of PMSB and 26,916,218 redeemable preference shares of RM0.01 each in PMSB from Mercu Majujaya Sdn Bhd (Company No. 1037289-K) (“Mercu”) for a cash consideration of RM22,851,538 (“PMSB Acquisition”). PMSB is currently 84.62% owned subsidiary of Taliworks. Following the acquisition, PMSB will become a wholly-owned subsidiary of Taliworks.

The Board of Directors of Taliworks also wishes to announce that TEI Sdn Bhd (formerly known as Pinggiran Infrastructure Sdn Bhd) (“TEI”) a 51% indirect subsidiary of TCB (with the balance 49% being held by the Employees Provident Fund Board), has on 26 February 2015 accepted the offer to acquire 208,250 ordinary shares of RM1.00 each representing 35% of the issued and paid-up share capital of Cerah Sama Sdn Bhd (Company No. 315282-P) (“CSSB”) from SEASAF Highway Sdn Bhd (Company No.  767038-M) (“SEASAF Highway”) for a total cash consideration of RM80,000,000 (“CSSB Acquisition”). Following the acquisition, CSSB will become a wholly-owned subsidiary of TEI.

A diagrammatic representation of the corporate structure and shareholding percentages for the relevant companies within Taliworks group before and after the PMSB Acquisition and CSSB Acquisition is enclosed herewith as Annexure 1.

(CSSB Acquisition and PMSB Acquisition hereinafter be referred to as “the Acquisitions”)

2. Background Information  

2.1   PMSB

PMSB was incorporated as a private company limited by shares on 7 March 2013 with the principal activity as an investment holding company. The authorised share capital of PMSB is RM400,000divided into 100,000 ordinary shares of RM1.00 each and 30,000,000 Redeemable Preference Shares of RM0.01 each of which the issued and paid-up share capital is RM279,162.18 comprising 10,000 ordinary shares of RM1.00 each and 26,916,218 Redeemable Preference Shares of RM0.01 each. Based on the latest audited financial statements, the company incurred a loss of RM3,490 for the financial period from 7 March 2013 (date of incorporation) to 31 December 2013, and the Statement of Financial Position  showing a capital deficiency of RM3,488 as at 31 December 2013.

Taliworks had previously acquired 2 ordinary shares of RM1.00 each and thereafter subscribed for 8,460 new ordinary shares of RM1.00 each, with the total number of shares acquired and subscribed representing 84.62% shareholding in PMSB.

2.2   CSSB

CSSB was incorporated as a private company limited by shares on 12 September 1994 with the principal activity as an investment holding company. The authorised share capital of CSSB is RM2,000,000-00 divided into 1,500,000 ordinary shares of RM1.00 each and 50,000,000 Redeemable Non- Cumulative Preference Shares of RM0.01 each of which the issued and paid-up share capital is RM595,000 comprising 595,000 ordinary shares of RM1.00 each. The latest audited net profit and net assets of CSSB as at 31 December 2013 is RM18.304 million and RM228.4 million respectively.

TEI had previously acquired 327,250 ordinary shares of RM1.00 each representing 55% shareholding in CSSB and 100,000 ordinary shares in Trinitywin Sdn Bhd which holds 59,500 ordinary shares of RM1.00 each representing 10% shareholding in CSSB.

3.      Basis of Consideration

      The total consideration of RM22,851,538.00 (“PMSB Offer Price”) and RM80,000,000.00 (“CSSB Offer Price”) are arrived at on a willing buyer-willing seller basis based on earnings potential of  CSSB.  

The PMSB Offer Price and CSSB Offer Price were made separately by the respective offerors. In Taliworks’ previous announcements, Taliworks’ partnership with EPF is focused on acquiring operating infrastructure assets in developed markets.

Mercu and SEASAF Highway are minority shareholders in PMSB and CSSB respectively.

SEASAF Highway offered the CSSB Offer Price in its transfer notice required under the shareholders’ agreement with TEI under which TEI has a pre-emption rights.

TEI and Taliworks considered the CSSB Offer Price as reasonable and accretive to Taliworks group’s financial position moving forward.

Taliworks also considered the PMSB Offer Price as reasonable and accretive to Taliworks group’s financial position moving forward.

The CSSB Acquisition and PMSB Acquisition are not inter-conditional upon each other.

4.      Financial effect of the Acquisitions on Taliworks

The following are the financial effect arising from the Acquisitions:-

(a)    there will be no effect on the issued and paid-up share capital and shareholding structure of Taliworks as the Acquisitions will be satisfied wholly by cash.

(b) the Acquisitions are expected to contribute positively to the earnings of the Group for the financial year ending 31 December 2015 onwards.

(c)  based on the unaudited net assets of TCB as at 31 December 2014 as announced on 12 February 2015, the Acquisitions will result in the proforma net assets per share to increase from RM1.95 to RM2.31 as a result of the reduction in the amount of non-controlling interests (minority interest) and the gearing of Taliworks to decrease from 0.87 times to 0.79 times.

(d)  the Acquisitions will increase Taliworks’ effective equity interest in CSSB from 28.05% to 51%.

5.      Source of funds 

The Acquisitions are expected to be funded from internally generated funds and bank borrowings of up to RM60 million.

6.      Liabilities to be assumed

There are no liabilities to be assumed by Taliworks arising from the Acquisitions, including contingent liabilities and guarantee.

7.      Rationale and Future prospects of the Acquisitions

The  Acquisitions will enable Taliworks to consolidate its ownership of its tollroad subsidiary, CSSB, to reduce the complexity of its ownership structure and unlock the value of this asset and strong ongoing cash flow generation and repositions CSSB as a contributor to our dividend policy announced on 25 September 2014.

The Acquisitions will provide an opportunity for the Taliworks to broaden and expand its earnings base, thus improving Taliworks’s long-term growth and earnings base. The future earnings from PMSB and CSSB are expected to contribute positively to the Taliworks’s earnings in the future years.

8.      Risk factors

The Acquisitions will not materially change the risk profile of Taliworks’ business as Taliworks will continue to be exposed to similar business, financial, operational and investment risks. These risks include those associated with changes in the economic and political conditions, changes in the rates of inflation, interest, taxation, currency fluctuations, legislative and regulatory policy changes.

9.      Approvals 

The Acquisitions are not subject to the approval of shareholders and any other relevant authority.

10.  Directors and major shareholders’ interest

Mr. Vijay Vijendra Sethu (“Vijay”) is a director of TCB and a director in TEI. He is deemed to be interested in the CSSB Acquisition by virtue of him being an investor investing 3.4% of the total funds raised under the South East Asian Strategic Assets Fund (“SEASAF”) which owns 100% of SEASAF Highway. Vijay is also formerly the Chief Executive Officer of the manager of SEASAF, Capital Advisory Partners Sdn Bhd and is entitled to a share of the profits of SEASAF. His interests in SEASAF as limited partner together with entitlement to a share of profits do not exceed 5% of the total funds raised by SEASAF.

The CSSB Acquisition is not deemed to be a related party transaction in view that there are no other interested relationships except for Vijay having shareholdings in SEASAF which is less than 10% other than via Taliworks.

Vijay had voluntarily abstained from deliberation and voting in respect of the CSSB Acquisition at Taliworks and TEI boards respectively.

Save for Vijay, none of the other directors or major shareholders of the Company, or persons connected with them, have any direct and indirect interest in the Acquisitions.

11.  Directors’ recommendation

The Board of Directors, having considered all aspects of the Acquisitions, is of the opinion that the Acquisitions are in the best interest of Taliworks. 

12.  Percentage ratio

The highest percentage ratio applicable to the CSSB Acquisition pursuant to paragraph 10.02(g) of the Main Market Listing Requirements is 9.9%.

The highest percentage ratio applicable to the PMSB Acquisition pursuant to paragraph 10.02(g) of the Main Market Listing Requirements is 15.5%.

13.     Estimated time to completion

The Acquisitions are expected to be completed within 3 months from the date of this announcement.

14.     Documents for inspection

The offer notices for the Acquisitions are available for inspection at Taliworks’ office at Level 20, Menara LGB, No. 1, Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur during the normal business hours from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 26 February 2015.