Contents :
1. INTRODUCTION
Malayan Banking Berhad ("Maybank") wishes to announce that it has today entered into two conditional Sale and Purchase Agreements ("SPAs") for the sale of two tranches of long standing corporate non-performing loans ("NPLs") ("Sale").
One tranche of the NPLs was sold to Gale Force Sdn Bhd, which is a special purpose vehicle ("SPV"). SBIC Investments SA, which is part of Standard Bank of South Africa Group, is a substantial shareholder of the SPV.
The other tranche of the NPLs was sold to Popular Ambience Sdn Bhd, also an SPV, to be jointly owned by Standard Chartered Bank (Hong Kong) Limited and Standard Chartered Bank Malaysia Berhad.
The 2 tranches of the NPLs were sold for a total cash consideration of about RM424.8 million.
2. DETAILS OF THE SALE
The Sale was made by way of a bid process. After qualified bidders have conducted their due diligence on the assets to be sold, they submitted their respective bids to Maybank on 12 January 2007. Maybank awarded the bids to the successful bidders on the same day. Bank Negara Malaysia was kept informed of the sale process.
3. SALIENT TERMS OF THE SALE AND PURCHASE AGREEMENTS
Each SPA is conditional upon Maybank and the SPV named therein obtaining the approval of the Minister of Finance to the sale (or in the case of the SPV, the purchase) of the NPLs being given under Section 49 of the Banking and Financial Institutions Act 1989 ("BAFIA") read in conjunction with applicable guidelines issued by Bank Negara Malaysia.
Each SPA provides for remedies in the event of a breach of representation by either party thereto. It also provides for the SPV to be given the right to rescind the purchase of any applicable NPL within a defined time frame if there should be a material breach of warranty in relation to that NPL.
4. BASIS OF THE SALE CONSIDERATION
Prior to the bid date, Maybank had conducted its own due diligence using external consultants and a steering committee consisting of members from Maybank’s senior management. The steering committee was established to oversee the sale process. The committee determined and set reserve prices for each of the 2 tranches.
The consideration for the sale of the NPLs was arrived at by way of a competitive and confidential bid process. The bids submitted to Maybank were above the reserve prices set by the steering committee.
5. PAYMENT TERMS
The successful bidders have paid a deposit equivalent to 20% of their respective bid prices.
The balance of purchase price will be paid by the SPVs after the Minister of Finance approves the sale and purchase and the amount shall be released to Maybank on transfer of the NPLs to the SPVs.
6. RATIONALE FOR THE SALE OF NPL
Following the issuance of “Guidelines on the Disposal/Purchase of Non-Performing Loans by Banking Institutions” dated 28 December 2005 by Bank Negara Malaysia, Maybank chose to pursue this avenue to complement the various recovery strategies within Maybank to facilitate the reduction of NPLs.
7. FINANCIAL EFFECTS
Maybank is expected to realise an estimated gain of about RM230 million on completion of the disposal of the 2 tranches of the NPLs.
8. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST
None of the Directors and major shareholders of Maybank and persons connected with them have any interest, direct or indirect, in the Sale.
9. TIME FRAME FOR COMPLETION
Barring any unforeseen circumstances, the Sale is expected to be completed by 30 June 2007.
This announcement is dated 17 January 2007.
Announcement Info
| Company Name |
MALAYAN BANKING BERHAD |
| Stock Name |
MAYBANK |
| Date Announced |
17 Jan 2007 |
| Category |
General Announcement |
| Reference No |
MB-070117-65394 |