| Type | Announcement |
| Subject | MALAYAN BANKING BERHAD ("MAYBANK" OR "THE COMPANY") - DISPOSAL OF 51,171,000 ORDINARY SHARES OF RM1.00 EACH IN MAYBAN ASSURANCE BERHAD ("MAB") AND 3,429,000 ORDINARY SHARES OF RM1.00 EACH IN MAYBAN LIFE ASSURANCE BERHAD ("MLA") TO FORTIS INTERNATIONAL N.V. ("FORTIS") ("DISPOSAL") |
On behalf of the Board of Directors of Maybank, Aseambankers Malaysia Berhad ("Aseambankers") is pleased to announce that Maybank had on 8 February 2001 entered into an Agreement for Sale And Purchase Of Shares ("Agreement") with Fortis for the disposal of 51,171,000 and 3,429,000 ordinary shares of RM1.00 each in MAB and MLA ("Sale Shares") respectively by Maybank to Fortis to be satisfied by cash. The Sale Shares represents 30% and 3.43% of the issued and paid-up share capital of MAB and MLA respectively.
The Disposal is part of the rationalisation of the insurance business unit of Maybank with the aim of consolidating the Company’s insurance business unit under an investment holding company and introducing a strategic partner into the insurance business of Maybank ("Rationalisation Exercise"). The Rationalisation Exercise involves the following corporate exercises:
(a) Acquisition of 88.57% of the issued and paid-up share capital of MLA by MAB from Maybank for a purchase consideration of RM88,570,000 which was satisfied entirely by cash and completed on 2 February 2001 ("Transfer of MLA"); and
(b) Transfer of the assets and liabilities of MAB to UMBC Insurans Berhad ("UMBCI") which was satisfied by the issuance of new ordinary shares of RM1.00 each in UMBCI to MAB which was completed on 2 February 2001 and UMBCI was subsequently renamed Mayban General Assurance Berhad ("MGAB"). MGAB, is currently a 94.83% subsidiary of MAB ("the Transfer of Business").
Pursuant to the Transfer of MLA and the Transfer of Business, MAB is now an investment holding company for Maybank's insurance business. Both MGAB and MLA are subsidiary companies of MAB. MAB will hold approximately 94.83% and 88.57% of the issued and paid-up share capital of MGAB and MLA respectively. Subsequent to the Disposal to Fortis, MAB is to be renamed as Mayban Fortis Holdings Berhad.
2. DETAILS OF THE DISPOSAL
2.1 Background Information on MAB and Fortis
MAB was incorporated as a private limited company in Malaysia on 8 June 1977 and is a wholly-owned subsidiary of Maybank. Currently, the company has an authorised share capital of RM500,000,000 comprising of 500,000,000 ordinary shares of RM1.00 each of which 170,570,000 ordinary shares of RM1.00 have been issued and fully paid up.
As part of the Rationalisation Exercise, MAB acquired 88.57% of the issued and paid-up capital of MLA from Maybank for a cash consideration of RM88.57 million. Pursuant to the acquisition of MLA, the issued and paid-up share capital of MAB increased from RM82,000,000 to RM170,570,000, represented by 170,570,000 ordinary shares of RM1.00 each.
MLA was incorporated on 2 March 1992 and is currently a 88.57% subsidiary of MAB . The company has an authorised share capital of RM100,000,000 comprising of 100,000,000 ordinary shares of RM1.00 each of which 100,000,000 ordinary shares of RM1.00 have been issued and fully paid up.
Based on the audited accounts of MAB for the financial year ended 30 June 2000, the net tangible asset ("NTA") and profit after taxation of the company are RM315.66 million and RM26.59 million respectively. Based on the audited accounts of MLA for the financial year ended 30 June 2000, the NTA and profit after taxation of the company are RM86.08 million and RM4.01 million respectively.
Pursuant to the Disposal, Maybank will hold 70% of the issued and paid-up share capital of MAB.
Fortis was incorporated as a private limited company in Utrecht, the Netherlands on 25 July 1983. Fortis is engaged in the provision of insurance business outside Holland, Belgium and the United States. Currently, the company has an authorised share capital of DFL1.5 billion comprising of 1.5 million ordinary registered shares of DFL1,000 each of which 385,562 ordinary registered shares of DFL1,000 have been issued and fully paid up.
2.2 Purchase Price and Basis of Valuation
2.2.1 The Purchase Consideration shall be the sum of RM291 million, taking account of all the assets and liabilities of MAB and MLA as of 30 June 1999, and shall be adjusted on a Ringgit-for-Ringgit basis in the following manner :-
(a) Upwardly, for Fortis' shareholding percentage of 30% of any new capital subscribed in MAB and MLA, between 30 June 1999 and the Completion Date, being the date which payment is made and shares are exchanged ("Capital Increase"); and
(b) Downward, for Fortis' shareholding percentage of 30% of any dividends paid out ("Dividend") and capital return by MAB and MLA between 30 June 1999 and the Completion Date ("Capital Return").
2.2.2 The Purchase Consideration, Capital Increase, Dividends and Capital Return shall be adjusted by a carrying cost equal to the 3-month KLIBOR.
2.2.3 If the waiver in favour of MGAB by the relevant authorities from the restriction in Section 93 of the Insurance Act 1996 for payment of dividends ("Waiver") has not been gazetted and is not in full force and effect by the Completion Date, Maybank shall receive the Purchase Consideration less RM28,000,000 (the "Deferred Amount") from Fortis on the Completion Date and the Deferred Amount shall be deposited in an escrow account.
2.2.4 If the Waiver is:-
(a) gazetted and is in full force and effect on a date (the "Effective Date") falling before 30 September, 2003, Fortis shall pay the Deferred Amount (including all interest earned and paid thereon) less Fortis' costs arising from the delay in payment of dividends to Maybank.
(b) not gazetted and is not in full force and effect before 30 September, 2003, Fortis shall retain the Deferred Amount.
2.2.5 As at 31 January 2001, the Purchase Consideration after taking into account the adjustments as stated in 2.2.1 and 2.2.2 above, is approximately RM340 million. The Purchase Consideration is still subject to adjustments up to Completion Date.
3. RATIONALE FOR THE DISPOSAL
The Disposal will result in Fortis holding a substantial stake in MAB. The proposed strategic partnership will bring together Fortis, one of the world’s most successful practitioners of bancassurance and Maybank, with the formation of a strategic partnership to further develop bancassurance business in the Malaysian market. Bancassurance is the conduct of life and non-life insurance marketed and distributed through banking channels. Bancassurance is a business pioneered in Europe where it is among the fastest growing financial services.
4. FINANCIAL EFFECTS OF THE DISPOSAL
The financial effects of the Disposal on the share capital, earnings and NTA of the Maybank group are illustrated below.
4.1 Issued and Paid up Share Capital
The Disposal will not have any effect on the issued and paid-up share capital of the Maybank .
4.2 Earnings
The Disposal would have a positive effect on the earnings of Maybank group for the financial year ending 30 June 2001.
4.3 NTA
The Disposal will increase the NTA per ordinary share of the Maybank Group based on the financial year ended 30 June 2000 from RM4.43 per share to RM4.53 per share.
5. COST OF INVESTMENT
The cost of investment in the Sale Shares by Maybank as at 31 December 2000 is approximately RM79 million. The gain from the Disposal is approximately RM261 million.
6. APPROVALS REQUIRED
The Disposal is subject to the approvals from the following authorities:
a. Foreign Investment Committee (obtained on 22 November 2000); and
b. Bank Negara Malaysia (obtained on 4 December 2000).
The Disposal is not conditional upon the approval of the shareholders of Maybank.
7. UTILISATION OF PROCEEDS
The proceeds arising from the Disposal will be utilised for working capital purposes of the Maybank Group.
8. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS’ INTEREST
None of the Directors and substantial shareholders of Maybank as well as persons connected with them have any interest, direct or indirect in the Disposal.
9. DIRECTORS' RECOMMENDATION
The Board of Directors of Maybank, having taken into consideration all aspects of the Disposal, is of the opinion that the Disposal is in the best interest of the Company and its shareholders.
10. DOCUMENTS FOR INSPECTION
The Conditional SPA can be inspected at Maybank’s Registered Office situated at 14th Floor, Menara Maybank, 100, Jalan Tun Perak, 50050 Kuala Lumpur on Monday to Fridays from 9.00 a.m to 12.00 noon and from 2.00 p.m. to 5.00 p.m.
The Press Release made Maybank is attached herewith.
| Company Name | MALAYAN BANKING BERHAD |
| Stock Name | MAYBANK |
| Date Announced | 8 Feb 2001 |
| Category | General Announcement |
| Reference No | CU-001010-35364 |