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COUNTRY VIEW BERHAD (“CVB” OR “COMPANY”) PROPOSED ACQUISITION BY COUNTRY VIEW RESOURCES SDN. BHD. (“CVR”), A WHOLLY OWNED SUBSIDIARY OF COUNTRY VIEW BERHAD (“CVB”), OF TWO (2) PARCELS OF FREEHOLD AGRICULTURAL LAND, NAMELY: (A) PLOT E-2, COMPRISING WHOLE OF HS(D) 317248 PTD 116775, PART OF HS(D) 317247 PTD 116774 AND PART OF HS(D) 317251 PTD 116778; AND (B) PLOT E-4, FORMING PART OF HS(D) 317216 PTD 116768, ALL IN THE MUKIM OF PULAI, DAERAH JOHOR BAHRU, NEGERI JOHOR (“THE PROPERTY”) FROM BANDAR NUSAJAYA DEVELOPMENT SDN. BHD. (“BNDSB”) (FORMERLY KNOWN AS PROLINK DEVELOPMENT SDN. BHD.) FOR A TOTAL CASH PURCHASE CONSIDERATION OF RM85,994,989.00 ("PROPOSED ACQUISITION")

COUNTRY VIEW BERHAD

Type

Announcement
SubjectCOUNTRY VIEW BERHAD (“CVB” OR “COMPANY”)

PROPOSED ACQUISITION BY COUNTRY VIEW RESOURCES SDN. BHD. (“CVR”), A WHOLLY OWNED SUBSIDIARY OF COUNTRY VIEW BERHAD (“CVB”), OF TWO (2) PARCELS OF FREEHOLD AGRICULTURAL LAND, NAMELY:

(A) PLOT E-2, COMPRISING WHOLE OF HS(D) 317248 PTD 116775, PART OF HS(D) 317247 PTD 116774 AND PART OF HS(D) 317251 PTD 116778; AND

(B) PLOT E-4, FORMING PART OF HS(D) 317216 PTD 116768,

ALL IN THE MUKIM OF PULAI, DAERAH JOHOR BAHRU, NEGERI JOHOR (“THE PROPERTY”) FROM BANDAR NUSAJAYA DEVELOPMENT SDN. BHD. (“BNDSB”) (FORMERLY KNOWN AS PROLINK DEVELOPMENT SDN. BHD.) FOR A TOTAL CASH PURCHASE CONSIDERATION OF RM85,994,989.00 ("PROPOSED ACQUISITION")

Contents :

This announcement is dated 9 June 2005

1. INTRODUCTION

      1.1 AmMerchant Bank Berhad ("AmMerchant Bank"), on behalf of the Board of Directors of CVB wishes to announce that CVR had on 9 June 2005 entered into a Conditional Sale and Purchase Agreement with BNDSB in respect of the abovementioned Proposed Acquisition.

      1.2 CVR was incorporated in Malaysia on 17 August 2000, as a private limited company. The authorized capital of CVR is RM500,000 divided into 500,000 ordinary shares of RM1.00 each and the issued and paid up capital is RM300,000 divided into 300,000 ordinary shares of RM1.00 each. The principal activity of CVR is property development.


2. DETAILS OF THE PROPOSED ACQUISITION
        2.1 The Proposed Acquisition

            On 9 June 2005, CVR entered into a Conditional Sale and Purchase Agreement ("SPA") with BNDSB to acquire the Property, measuring 290.3196 acres for a total cash purchase consideration of RM85,994,989.

            Pursuant to the SPA, BNDSB shall sell the Property to CVR free from encumbrances and with vacant possession and wholly zoned for mixed housing development, but subject to conditions of title and restrictions in interest, express or implied, under the master titles where the Property is situated.
        2.2 Information on the Property
            The Property is freehold and the category of land use is “Agriculture” but BNDSB has represented that the Property shall be wholly zoned for mixed housing development. It is located at approximately 15 km south-west of the Johor Bahru City Centre, in proximity to CVR’s on-going development of Taman Nusa Indah.

            The Property is located within Bandar Nusajaya, which is one of the largest township developments in the south-western part of Peninsular Malaysia.
        2.3 Salient Terms of the SPA

            2.3.1 Purchase Consideration
                The total purchase consideration for the Property is RM85,994,989 (“Purchase Price”).

            2.3.2 Settlement of Purchase Consideration
                The total cash purchase consideration shall be settled as follows :-
                (i) a deposit of RM4,299,749.45 immediately upon execution of SPA ("Earnest Deposit");
                (ii) a deposit of RM4,299,749.45 within fourteen (14) days from the date of SPA ("Balance Deposit"); and
                (iii) the balance of RM77,395,490.10 ("Balance Purchase Price") on or before the Completion Date (as defined hereunder).
                The Completion Date means:-
                (i) The date falling one (1) month after the date on which the SPA becomes unconditional; or
                (ii)
                The date falling five (5) months from the date of the SPA

                whichever is the later.
                BNDSB further grants an extension of two (2) months from the Completion Date to CVR to pay the Balance Purchase Price subject to interest payment of eight percent (8%) per annum calculated on a daily basis on the outstanding sum.
            2.3.3 Conditions Precedent
                The SPA is conditional upon:-
                (a) the approval of the shareholders in a general meeting of CVR and its ultimate holding company, CVB, within five (5) months from the date of the SPA;
                (b) the approval of the Foreign Investment Committee of the Economic Planning Unit of the Prime Minister’s Department (“FIC”) being obtained by CVR for the purchase of the Property within five (5) months from the date of the SPA;
                (c) the approval of the State Authority of Negeri Johor Darul Ta’zim (“State Authority”) being obtained by BNDSB for the transfer of the Property to CVR within nine (9) months from the date of the SPA;

                (d) the consent of Khazanah Nasional Berhad (“Khazanah”) or such substituted party as may be agreed between Khazanah and BNDSB to the sale of the Property being obtained by BNDSB within nine (9) months from the date of the SPA; and

                (e) the approval of such other relevant authorities (if required) to the sale of the Property being obtained by BNDSB, within nine (9) months from the date of the SPA.
                (hereinafter known as the “Conditions Precedent”).
                The SPA shall become unconditional on the day upon which all of the Conditions Precedent are satisfied.

            2.3.4 Representations and Warranties of BNDSB
                In disposing the Property, BNDSB represents and warrants, among others, that it has full power and authority to enter into the SPA and that the Property shall be wholly zoned for mixed housing development by the relevant authorities.

                If any part of the Property cannot be zoned as mixed housing development, then the said part shall be excluded from the SPA, whereby BNDSB shall refund to CVR a sum calculated at the rate of RM 6.80 per square foot, in respect of the part so excluded.
        2.4 Basis of arriving at the Purchase Price
            The purchase consideration for the Proposed Acquisition of RM85,994,989.00, calculated at the rate of RM 6.80 per square foot, was arrived at on a willing buyer and willing seller basis after taking into consideration the open market value of the Property as appraised by Messrs Jones Lang Wootton (“JLW”), an independent firm of professional valuer, as set out in their valuation letter dated 27 May 2005.

            JLW has determined the open market value of the Property to be RM 88,500,000 on 27 May 2005, on the basis that the Property is wholly zoned for mixed residential development, using the Comparison Method in carrying out the valuation of the Property.

        2.5 Rationale for the Proposed Acquisition
            The Property has immediate development potential and is part of CVB Group’s on-going identification of suitable land located in strategic locations to add to the CVB Group’s land bank. Its location in proximity to CVR’s existing Taman Nusa Indah project will enable the CVB Group to derive synergies in terms of project mobilisation, sales and marketing and other cost-savings. It will be an extension of CVR’s on-going development of Taman Nusa Indah.
          2.6 Original cost of investment
              CVB is unable to obtain the original cost of investment of the Property.
            2.7 Source of funding
                The Proposed Acquisition is expected to be funded via internally generated funds and borrowings.
              2.8 Liabilities to be assumed
                    CVR is not expected to assume any liabilities pursuant to the Proposed Acquisition.

            3. Intended Development
                CVR intends to develop the Property into a mixed housing development.

                The proposed development is projected to generate a Gross Development Value (“GDV”) of approximately RM590 million when fully completed. However, it is too preliminary to ascertain the total development cost and the sources of funding, the expected commencement and completion dates of the development, and the expected profits to be derived from the development of the Property.

            4. INFORMATION ON BNDSB

                BNDSB is a subsidiary of UEM Land Sdn. Bhd. which in turn is a subsidiary of UEM World Berhad, a company listed on Bursa Malaysia Securities Berhad.


            5. EFFECTS OF THE PROPOSED ACQUISITION
                5.1 Share capital and Major Shareholders
                    The Proposed Acquisition will not have any effect on the share capital and major shareholders of CVB as it will be satisfied in cash.
                5.2 Earnings

                    Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by the first quarter of 2006. As such, the Proposed Acquisition is not expected to have any material impact on the earnings of CVB and its subsidiary companies ("CVB Group") for the financial year ending 30 November 2005. However, the Proposed Acquisition is expected to contribute positively to the CVB Group's future earnings.
                5.3 Net Tangible Assets ("NTA")

                    The Proposed Acquisition is not expected to have any material effect on the NTA of CVB Group.


            6. PROSPECTS AND RISK FACTORS IN RELATION TO THE PROPOSED ACQUISITION
                Prospects
                The growth prospects for Malaysia is expected to remain favourable in 2005, albeit a slight moderation early in the year, as the expansion of the global economy is expected to sustain at a steady pace. The economic impact of the Tsunami tragedy on Malaysia was insignificant and temporary. The Malaysian Institute of Economic Research (“MIER”) reported that the Business Conditions Index (“BCI”), that tracks confidence in the business sector, decreased by 12.9 points to 97.3 points in the fourth quarter of 2004 due to the expected slowdown in the global and domestic economies, and higher energy costs and highway toll rates. The Consumer Sentiment Index (“CSI”), the consumption indicator, was at 109.3 points. The CSI remained above the critical 100-point mark indicating that consumer confidence remained positive.

                Bank Negara Malaysia had assured that the monetary policy stance would continue to be supportive of economic expansion by ensuring that interest rates remained consistent with domestic economic activities.

                (Source: Property Market Report, 2004, Ministry of Finance, Malaysia)

                The prospects for the Malaysian economy in 2005 remain sound. Real gross domestic product is expected to expand by 5-6%.

                Activities in the residential and non-residential segments are expected to remain firm. Growth in the residential segment is expected to continue to be driven by sustained demand for houses, encouraged mainly by the continued favourable economic conditions. In the non-residential segment, growth is envisaged to be supported by rising demand for office and retail space, amidst the strong expansion in service-related business activities.

                (Source : The 2004 Bank Negara Malaysia Annual Report)

                Residential Property in Johor

                The residential sub-sector continued to propel the property industry in the state. There were 31,807 transactions worth RM4.48 billion for the year, an increase of 27.1% in activity and 30.3% in value respectively. The Stamp Duty waiver had benefited the sub-sector as more than 31.6% (10,060) of the total residential transactions fell under this category.

                The majority of the transactions were in the affordable price range of RM100,000 to RM200,000, accounting for 40.2%. Johor Bahru District dominated the market with 67.6% of the total transactions. Buyers’ preference remained inclined towards single-storey and double-storey terraced houses as recorded by the 29.7% and 47.3% increases in transactions compared to last year. In terms of dominance, double-storey terraced units accounted for 34.9% of the total transactions, followed by single-storey terraced and low-cost houses with 31.5% and 11.3% market share respectively.

                In the primary market, 22,224 residential units were launched during the year, comprising 17,003 units of landed properties and 5,221 units of stratified types. The overall sales performance was moderate at 42.0%, higher than 34.2% recorded last year. Terraced units formed 62.9% of the total launches, receiving a 44.9% market response of the 13,974 units launched.

                (Source: Property Market Report, 2004, Ministry of Finance, Malaysia)
                Risk Factors

                Business Risk

                The proposed mixed housing development for the Property is subject to the general risks inherent in the property development sector. These risks include, inter-alia, competition, changes in demands of buyers for residential and commercial units coming on stream from existing and future projects, supply of labour and raw material, changes in raw material prices, changes in general economic business and credit conditions, timely completion of development projects, the cost of financing and risks of purchaser default.

                Although the CVB Group seeks to limit these risks through, inter-alia, undertaking feasibility studies prior to undertaking a development, having a mixed range of property development for the different target groups of customers and prudent management policies, no assurance can be given that any change to these factors will not have a material adverse effect on the CVB Group's business.

                Political, Economic and Regulatory considerations

                Since property development projects are subject to various governmental and regulatory approvals, the timely completion of a development project is dependent on various external factors, such as obtaining the relevant approvals as scheduled and securing construction materials in adequate amount. Additionally, property development projects are also susceptible to economic and political changes. Any adverse developments or uncertainties could materially and adversely affect the scheduled completion of development projects.

                While certain factors are beyond the control of CVB, the management of CVB will monitor the progress of the development project closely against the planned construction schedules. Corrective measures will be taken by the management of CVB to identify the cause of delay in order to mitigate the risks of any major delay in completion of projects.

                Notwithstanding the above, there can be no assurance that these factors will not lead to delays in the commencement and completion of the development of the Property or changes in the proposed development of the Property. These delays, if any, may have a direct impact on CVB's future profitability.
            Risk of Non-Completion of the Proposed Acquisition
                If any of the Conditions Precedent is not fulfilled within the stipulated period, this will result in the termination of the SPA, whereby all other monies paid by CVR towards account of the Purchase Price shall be refunded by BNDSB. Consequently, BNDSB shall be at liberty to sell or otherwise deal with the Property in such manner and to such persons as BNDSB shall deem fit, without prejudice to any other rights or remedies of either party under the SPA for any antecedent breach under the SPA.

                In addition, if the Balance Purchase Price is not paid by CVR within the stipulated time-frame, BNDSB is entitled to terminate the SPA, whereby the Earnest Deposit and Balance Deposit will be forfeited.

            7. APPROVALS REQUIRED
                The Proposed Acquisition is subject to the approvals being obtained from the following:-

                (a) the shareholders of CVB at an extraordinary general meeting to be convened;

                (b) the FIC;

                (c) the State Authority;

                (d) Khazanah or such substituted party as may be agreed between Khazanah and BNDSB; and

                (e) such other relevant authorities (if required).

            8. DISCLOSURE OF MAJOR SHAREHOLDERS' AND DIRECTORS' INTERESTS
                None of the directors and/or major shareholders and/or persons connected with a director or major shareholder of CVB has any interest, direct or indirect, in the Proposed Acquisition.


            9. DIRECTORS' RECOMMENDATION
                The Board of Directors of CVB, having considered the rationale for the Proposed Acquisition and after careful deliberation, are of the opinion that the Proposed Acquisition is in the best interest of CVB.


            10. ESTIMATED TIMEFRAME FOR COMPLETION OF THE PROPOSED ACQUISITION
                  The Proposed Acquisition is expected to be completed within five (5) months from the date of the SPA or one (1) month from the date of fulfilment of all the Conditions Precedent, whichever shall be the later.


              11. ADVISER
                    AmMerchant Bank has been appointed as Adviser to CVB for the Proposed Acquisition.


                12. DOCUMENTS FOR INSPECTION
                      The SPA and the valuation letter will be made available for inspection one (1) week after the date of SPA, 9 June 2005 at the registered office of CVB at Suite 5.11 & 5.12, 5TH Floor, Menara TJB, 9 Jalan Syed Mohd. Mufti, 80000 Johor Baru, Johor during normal working hours from Mondays to Fridays (except public holidays) for a period of three (3) months.

                  13. COMPLIANCE WITH THE SECURITIES COMMISSION'S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES ("SC GUIDELINES")
                        To the best knowledge of the directors of CVB, the Proposed Acquisition has not departed from the SC Guidelines.



                    Announcement Info

                    Company NameCOUNTRY VIEW BERHAD  
                    Stock Name CVIEW    
                    Date Announced9 Jun 2005  
                    CategoryGeneral Announcement
                    Reference NoMM-050609-60569


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