Reference is made to the Company’s announcements dated 18 July 2012, 23 July 2012 and 17 February 2014. On behalf of the Board of Directors of VVB, Hong Leong Investment Bank Berhad wishes to announce that VVB had on 25 April 2014 entered into a profit guarantee agreement with Dato’ Beh Hang Kong (“DBHK”) and LBS Bina Group Berhad (“LBGB”) (collectively herein referred to as “Guarantors” or individually as “Guarantor”) and Messrs. Bahari & Bahari (herein referred as the “Stakeholder”), to guarantee a consolidated audited profit after taxation of RM6.0 million of VVB and its subsidiaries after taking into consideration the operational profit (i.e. excluding write-off/other income/adjustments not in the ordinary course of business) (“Guaranteed Profit”) for each of the 2 financial years (“Guarantee Period”) following the successful implementation of the proposed regularisation plan of VVB (“Profit Guarantee Agreement”).
The salient terms of the Profit Guarantee Agreement are as follows:
(i) The Guarantors unconditionally and irrevocably severally but not jointly guarantee that VVB shall achieve not less than the Guaranteed Profit. Each Guarantor guarantees and shall be liable only for one half of the Guaranteed Profit;
(ii) In the event VVB records a loss during the Guaranteed Period, the Guarantors shall be liable on demand to immediately pay the amount that would be the aggregate sum of the amount of the loss recorded and the Guaranteed Profit which will when added make the Company record the Guaranteed Profit. For the avoidance of doubt the amount payable by each Guarantor shall be one half (50%) of the amounts required for the Company to achieve the Guaranteed Profit.
(iii) This Profit Guarantee Agreement shall be secured by the following securities (“Securities”), and that such Securities are to be deposited with the Stakeholder:
(a) As to LBGB – shares in the Company with a minimum value of one hundred and fifty percentum (150%) of its portion of the Guaranteed Profit (“LBGB Security Shares”) throughout the Guaranteed Period. It is LBGB’s obligation and LBGB shall ensure that the market value of the LBGB Security Shares shall be at all times during the currency of the Profit Guarantee be not less than one hundred and fifty percentum (150%) of its portion of the Guaranteed Profit for each financial year during the Guaranteed Period;
(b) As to DBHK – a basket of securities being shares in the Company with a maximum value and capped at one hundred and twenty percentum (120%) of its portion of the Guaranteed Profit AND other shares listed, quoted and freely tradeable on Bursa Securities with a minimum value of thirty percentum (30%) of its portion of the Guaranteed Profit (collectively “DBHK Security Shares”) which when aggregated the DBHK Security Shares shall at all times having a value of not less than one hundred and fifty percentum (150%) of its portion of the Guaranteed Profit for each financial year during the Guaranteed Period. It is DBHK’s obligation and DBHK shall ensure that the market value of the DBHK Security Shares shall be at all times during the currency of the Profit Guarantee be not less than one hundred and fifty percentum (150%) of its portion of the Guaranteed Profit for each financial year during the Guaranteed Period;
collectively, the LBGB Security Shares and the DBHK Security Shares shall be referred to as “Security Shares”;
and which shall be deposited with the Stakeholder:
(a) in relation to shares in the Company, directly upon issuance and allotment of such shares from the Registrar of the Company to the Central Depository Account(s) of the Stakeholder as nominated by the Stakeholder to the Guarantors;
(b) in relation to any other shares referred to in clause 3.3(b) above within fourteen (14) days upon completion of the Restructuring Scheme.
(iv) This Profit Guarantee shall be implemented from the commencement of the Guaranteed Period.
(v) The Company shall forward to the Stakeholder a copy of the audited annual accounts of the Company within fourteen (14) days of signing the audited accounts for the financial year concerned. The Company shall also within the said fourteen (14) days deliver to the Stakeholder the certification issued by the auditors of VVB as to:
(a) whether the Guaranteed Profit has been satisfied; or
(b) in the event that the Guaranteed Profit is not achieved, the Differential Sum payable by the Guarantors.
(vi) This Profit Guarantee Agreement shall be a continuing guarantee and shall remain in full force and effect for the relevant financial year, for so long as any monies in respect of the Guaranteed Profit shall remain due and owing and not satisfied or until all obligations of the Guarantors in respect of that financial year under this Agreement have been fully discharged.
(vii) In the event that the Company fails to achieve the Guaranteed Profit, each of the Guarantors hereby severally agree and undertake that within fourteen (14) days upon receipt of the certification referred to in item (v) hereinabove, each of the Guarantors shall severally carry out his obligations contained in item (i), (ii) and (iii) hereinabove.
(viii) In the event the Guarantors fails, neglects or omits to make good the obligations in items (i), (ii) and (iii) hereinabove, the Stakeholder is hereby unconditionally and irrevocably authorised and empowered to make good the difference between the Guaranteed Profit and the actual consolidated audited operational profit after taxation of VVB and its subsidiaries, without further reference or notice to the Guarantors by selling such amount of Security Shares in its sole and absolute discretion as shall be equivalent to the amount guaranteed by the Guarantors.
The Stakeholder shall immediately and without any delay pay, transmit or cause to be paid and/or transmitted the cash received pursuant to the sale of the Security Shares as abovementioned to the Company on receipt by the Stakeholder of the same and in any event not later than seven (7) days on the clearance and free usage of the said cash in the Stakeholder’s bank account.
In the event the sale of the Security Shares is insufficient to satisfy the Differential Sum as guaranteed by the Guarantors, the Guarantors shall make good and satisfy the Differential Sum on demand by the Stakeholder.
(ix) The Guarantors agree that the Stakeholder shall further be authorised and empowered to request in writing such additional security to be deposited with the Stakeholder by the Guarantors as may be required by the Stakeholder.
(x) This Agreement shall terminate upon the auditors’ written confirmation to the Guarantors of the satisfaction of the Profit Guarantee.
The Profit Guarantee Agreement is available for inspection at VVB’s registered office at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, during normal business hours from Mondays to Fridays (except for public holidays) for a period of 3 months from the date of this announcement.
This announcement is dated 25 April 2014.