IRM-Permintex-HOA Announcement-110214

IRM GROUP BERHAD (“IRM” OR “COMPANY”)
HEADS OF AGREEMENT (“AGREEMENT”) BETWEEN IRM AND PERMINTEX AUTOMOTIVE
SDN BHD (“PASB”)
1.0
INTRODUCTION
On behalf of the Board of Directors of IRM (“Board”), KAF Investment Bank Berhad (“KAF
Investment”) wishes to announce that IRM had on 11 February 2014 entered into the
Agreement with PASB to set out the basis of their co-operation with a view of achieving the
following objectives:(i)
PASB to assist IRM Solar Sdn Bhd (“IRM Solar”), a wholly-owned subsidiary company
of IRM to complete its 5 Megawatt (MW) solar energy farm in Perlis (”Solar Project”) in
the manner detailed out in Section 3.1 below. The assistance by PASB shall be in
reliance on a valid and subsisting renewable energy purchase agreement (REPA)
dated 3 September 2012 entered into between IRM and Tenaga Nasional Berhad and
Feed-in Approval granted on 21 February 2012 by the Sustainable Energy
Development Authority (SEDA).
(ii)
PASB has been identified as a potential white knight to assist IRM to regularise its
financial conditions by undertaking a comprehensive regularisation plan (“Proposed
Regularisation Plan”) comprising a reverse take-over and other ancillary restructuring
exercises in the manner set out in Section 3.2 below.
(IRM and PASB shall collectively referred to as the, “Parties” and individually as a “Party”).
2.0
BACKGROUND INFORMATION
2.1
Background Information of PASB
PASB was incorporated on 16 October 2001 in Malaysia as a private limited company under
the Companies Act, 1965. PASB is principally engaged in investment holding and provision of
management service. Through its subsidiary companies, PASB is involved in the
manufacturing and sale of precision injection moulding parts for automotive industry such as
instrument panel, dashboard and bumper and other medium and small automotive parts for
various car manufacturers.
PASB has an authorised share capital of RM10,000,000 comprising 10,000,000 ordinary
shares of RM1.00 each, of which RM5,000,000 comprising 5,000,000 ordinary shares of
RM1.00 each have been issued and fully paid-up. The directors of PASB as at the date of the
Agreement are Dato’ Md Zin Bin Baharom and Ahmad Umar Bin Alisan.
2.2
Background Information of IRM Solar
IRM Solar was incorporated on 11 June 2009 in Malaysia as a private limited company under
the Companies Act, 1965. As at the date of the Agreement, IRM Solar has yet to commence
its business operation.
IRM Solar has an authorised share capital of RM10,000,000 comprising 10,000,000 ordinary
shares of RM1.00 each, of which RM6,000,000 comprising 6,000,000 ordinary shares of
RM1.00 each have been issued and fully paid-up. The directors of IRM Solar as at the date of
the Agreement are Dato’ Abd Karim Bin Ahmad Tarmizi and Anand Bin Roslan.
IRM GROUP BERHAD
HEADS OF AGREEMENT
11 FEBRUARY 2014
3.0
SALIENT TERMS OF THE AGREEMENT
3.1
Assistance to IRM Solar
PASB is under no obligation to, but may assist IRM and IRM Solar to undertake the Solar
Project, in the following manner:-
3.2
(i)
PASB shall at its own discretion, advance to IRM Solar (“Advance”) from time to time
any amount to be paid as and when required, for the purpose of completing the Solar
Project. Such advances shall be secured by a debenture over the entire assets of IRM
Solar and, subject to such approval(s) as may be required, a pledge of the entire issued
and paid-up capital of IRM Solar;
(ii)
the Advance shall be repaid by IRM Solar and shall carry an interest amounting to eight
percent (8%) per annum or PASB’s cost of borrowings whichever is higher; and
(iii)
IRM Solar hereby agrees that from the date of the Agreement, there shall be two
signatories to all bank accounts of IRM Solar of which one such signatory to all bank
accounts of IRM Solar shall be a person nominated in writing by PASB.
Proposed Regularisation Plan
IRM together with PASB shall prepare, finalise, execute and submit a proposal and all other
relevant documents (including any agreements and related legal documents) for the reverse
take-over and regularisation plan of IRM to the Securities Commission and Bursa Malaysia
Securities Berhad (“Bursa Securities”) to sufficiently address the matter of its status as a
Practice Note 17 (“PN17”) Issuer of the Main Market Listing Requirements of Bursa Securities
(“MMLR”).
The Parties shall endeavour to enter into a conditional definitive agreement (“Definitive
Agreement(s)”) for, among others:(i)
IRM to acquire the entire issued and paid-up capital of PASB, its subsidiaries and other
related companies (“PASB Group”) to affect reverse take-over exercise via issuance of
new ordinary shares in IRM to the vendor of PASB;
(ii)
IRM to undertake all necessary ancillary restructuring exercises (including but not
limited to a capital reduction and issuance of new securities), to be proposed and
mutually agreed between the Parties;
(iii)
if the following events occur, PASB shall have the first right of refusal to acquire IRM
Solar from IRM at a price to be agreed on or, failing which, at a fair market value to be
determined by an independent consulting engineering company involved in the field of
solar energy,
(a) if the Proposed Regularisation Plan of IRM cannot be completed for whatsoever
reason including but not limited to approval of stakeholders or authorities, or
(b) if the Definitive Agreement remains conditional beyond certain reasonable time
frame to be agreed in the Definitive Agreement, or
(c) if and upon any other terms and conditions to be agreed between the Parties in
the Definitive Agreement; and
(iv)
if the Parties fail to reach agreement on the acquisition of IRM Solar within three (3)
months from any of the events mentioned in Section 3.2 (iii) above, IRM is free to enter
into arrangement with any third party provided that the Advance and all interests
accrued shall be repaid prior to the completion of the sale and purchase transaction.
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IRM GROUP BERHAD
HEADS OF AGREEMENT
11 FEBRUARY 2014
In addition to the terms of Section 3.2 above, the Definitive Agreement shall also provide for
customary representations and warranties typical of such transaction, including:(i)
IRM’s title to the issued and paid up share capital in IRM Solar is free from
encumbrances;
(ii)
there are no adverse changes to IRM Solar or its balance sheet that may affect its
value; and
(iii)
IRM shall indemnify and hold harmless PASB from and against any and all damages
suffered by it directly resulting from any breach of any representation or warranty or
covenant or obligation contained in the Definitive Agreement or in any agreement,
certificate or other document delivered pursuant to or in connection with the Definitive
Agreement and any liability or reduction in the value of the assets for events prior to the
completion of the Definitive Agreement.
The Company will announce its Requisite Announcement i.e. details of the Proposed
Regularisation Plan upon finalising and signing of the terms of the Definitive Agreement(s), by
11 March 2014 or any other date to be mutually agreed by both Parties. Pursuant to
paragraphs 8.04(3) and PN17 (paragraph 5) of the MMLR, within twelve (12) months from the
date of the first announcement of the PN17, the Company is required to submit a
regularisation plan to the relevant authorities by 30 May 2014.
3.3
Duration
The Agreement shall be effective for a period of six (6) months from the date hereof or upon
completion of the Definitive Agreement, whichever is later. The Parties may extend such
duration for such periods as are mutually agreed from time to time.
4.0
EFFECT OF THE AGREEMENT
The Agreement will not have any effect on the issued and paid-up share capital, substantial
shareholders’ shareholdings, net assets per share, gearing and earnings per share of IRM for
the financial year ending 31 December 2014.
The proforma effects of the Proposed Regularisation Plan on the share capital, net assets,
dividend, gearing and substantial shareholdings of the Company can only be determined
upon finalisation of the terms of the Proposed Regularisation Plan vis-a-vis the Definitive
Agreement(s).
5.0
RATIONALE OF THE AGREEMENT
IRM was classified as a Practice Note 1 Issuer of the MMLR on 25 February 2013 and as a
PN17 Issuer on 31 May 2013. Whilst work on the Solar Project was on-going, IRM’s cashflow
position was strained mainly due to suppressed margin from its resins and compound
businesses. These events have led to the financial institutions recalling all the facilities
granted to IRM Group Berhad and its subsidiary companies (“Group”).
IRM has taken necessary measures to cease its resins and compound operations. The Solar
Project remains to be an attractive proposition of the Group. However, the Group’s financial
position has made it difficult for the Group to continue its work on the Solar Project without
financial assistance.
PASB has been identified as the potential white knight to assist IRM with its Solar Project and
at the same time, its listing status.
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IRM GROUP BERHAD
HEADS OF AGREEMENT
11 FEBRUARY 2014
The Agreement spells out the terms of assistance by PASB on the Solar Project. It also
outlines the basic parameters for PASB to continue negotiation with all IRM’s stakeholders
namely the Board and its creditors.
The Agreement thus paves the way for IRM to draw a comprehensive Proposed
Regularisation Plan which is expected to return IRM to a better and sustainable financial
standing and profitability through the injection of a profitable business via PASB, thereby
benefiting all stakeholders.
6.0
INTEREST OF THE DIRECTOR AND/OR MAJOR SHAREHOLDERS AND/OR PERSONS
CONNECTED TO THEM
None of the Directors of IRM and/or substantial shareholders of IRM and persons connected
with the Directors of IRM and substantial shareholders have any interest, direct or indirect, in
the Agreement.
7.0
APPROVALS REQUIRED
The Agreement is not subject to the approvals of the shareholders of IRM and any relevant
authorities.
8.0
STATEMENT BY THE BOARD OF DIRECTORS
The Board is of the opinion that the Agreement is in the best interest of the Company.
9.0
ADVISER
KAF Investment has been appointed as the Company’s Principal Adviser in relation to its
Proposed Regularisation Plan.
10.0
DOCUMENT FOR INSPECTION
The Agreement will be made available for inspection at the Company’s registered office at
Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights,
50490 Kuala Lumpur, Wilayah Persekutuan during normal office hours from Monday to Friday
(except public holidays) for a period of three (3) months from the date of this announcement.
This announcement is dated 11 February 2014.
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