Bursa Announcements

1. INTRODUCTION

The Board of Directors of Tan Chong Motor Holdings Berhad (“TCMH” or “the Company”) is pleased to announce that TCMSC (Labuan) Pte. Ltd. (“TCMSC Labuan”), a wholly-owned subsidiary of TC Management Services Corporation Sdn Bhd which in turn is a wholly-owned subsidiary of TCMH, has on 26 July 2018 entered into a Joint Venture and Operating Agreement (“JV Agreement”) with MAT (Labuan) Pte. Ltd. (“MAT Labuan”), a wholly-owned subsidiary of Warisan TC Holdings Berhad (“WTCH”), to regulate the relationship of the parties in a joint venture company to be incorporated in New York under the name of “Tan Chong Warisan Resources Management Inc.” or any other name agreed in writing by the parties and approved by the New York State Department of State (“JV Co”) with regard to the management, operations and affairs of the JV Co and the rights and obligations of the parties as members of the JV Co (“Joint Venture”).

2. INFORMATION ON TCMSC LABUAN

TCMSC Labuan was incorporated on 30 March 2012 in Labuan Federal Territory, Malaysia as a private limited company. TCMSC Labuan has a paid up capital of USD2,420,001 comprising 2,420,001 ordinary shares.  TCMSC Labuan’s principal activity is investment holding.

3. INFORMATION ON MAT LABUAN

MAT Labuan was incorporated on 2 December 2010 in Labuan Federal Territory, Malaysia as a private limited company. MAT Labuan has a paid up capital of USD190,000 comprising 190,000 ordinary shares. MAT Labuan’s principal activity is investment holding.

4. TERMS OF THE JV AGREEMENT

(a) Purpose and Business

Both TCMSC Labuan and MAT Labuan are desirous of collaborating and cooperating exclusively with each other by jointly incorporating the JV Co as the joint venture vehicle to pursue the following businesses:

(i)  To develop and source for business opportunities in USA and Canada for TCMH Group and WTCH Group which includes but not limited to distribution, marketing and sales by          TCMH Group and WTCH Group in other countries, in particular countries where TCMH Group and WTCH Group have presence in;

(ii) To source for new and innovative products, technologies and/or services which can be commercially developed or commercialised by TCMH Group and WTCH Group in other            countries; and

(iiI) Any other business related to the above. 

(b) Capital Structure of JV Co

The JV Co will have a paid up capital of USD100,000 divided into 1,000 Units to be subscribed by the parties in cash based on the following proportion:

The investment in the JV Co by TCMSC Labuan will be financed through internally generated funds.

(c) Parties’ Roles in JV Co

(i) TCMSC Labuan is to provide its experience, skills and expertise in the fields of automotive, trading, manufacturing, financing, information technology and renewable energy.

(ii) MAT Labuan is to provide its experience, skills and expertise in the fields of tour, travel, consumer products and industrial machinery.

5. RATIONALE FOR THE JOINT VENTURE

TCMH Group is involved in diverse businesses which include assembly and manufacturing of motor vehicles, sales and distribution of motor vehicles, after-sales services, financial services, and property investment.

The Joint Venture will provide an opportunity for TCMH Group to expand its revenue sources by identifying and developing new distribution channels in USA/Canada for export from South East Asia; sourcing new products, ideas and technologies in USA/Canada which can bring value to TCMH Group; identifying new business opportunities on export to USA/Canada; sourcing established brand products from USA/Canada for retail/distribution in South East Asia and any other potential business development.

6. RISK FACTORS AND PROSPECTS

The Proposed Joint Venture is not expected to materially change the business risk profile of the TCMH Group as it involves sourcing for new opportunities and/or resources to/from USA and Canada which are similar to our existing business.

However, as with any business venture, the Joint Venture is subject to inherent risk in business and industry including but not limited to those associated with the changes in the economic, political and regulatory conditions in which the JV Co operates. In addition, there is no assurance that the anticipated benefits of the Joint Venture will be realised or that the JV Co will be able to generate sufficient revenues from its business to offset the associated costs incurred.

Nevertheless, the TCMH Group will continue to exercise due care in considering the risks and benefits associated with the Joint Venture and will undertake appropriate measures to mitigate the various business risks identified.

7. EFFECTS OF THE JOINT VENTURE

(a) Share Capital

The Joint Venture will have no effect on the share capital of TCMH.

(b) Net Assets and Gearing

The Joint Venture will not have any material effect on the consolidated net assets per share and gearing of TCMH Group for the financial year ending 31 December 2018.

(c) Earnings

The Joint Venture will not have any material effect on the consolidated earnings per share of TCMH Group for the financial year ending 31 December 2018. The Joint Venture is expected to contribute positively to the future earnings of TCMH.

(d) Substantial shareholders’ shareholdings

The Joint Venture will have no effect on the shareholdings of the substantial shareholders of TCMH.

8. APPROVAL REQUIRED

The Joint Venture is not subject to the approval of the shareholders of TCMH or any other relevant regulatory authorities.

9. ESTIMATED TIME FRAME FOR COMPLETION

Barring unforeseen circumstance, the Joint Venture is expected to be completed by the 3rd quarter of 2018.

10. INTEREST OF DIRECTORS AND MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO THEM

Save as disclosed below, none of the Directors or major shareholders of TCMH and/or persons connected to them, has any interest, direct or indirect, in the Joint Venture:

(i) Tan Chong Consolidated Sdn Bhd (“TCC”) is a major shareholder of TCMH and WTCH. By virtue of their respective shareholdings in TCC pursuant to Section 8(4) of the Companies Act 2016 (“Act”), Dato’ Tan Heng Chew, a Director of TCMH and WTCH, and Mr Tan Eng Soon, a brother of Dato’ Tan Heng Chew, are major shareholders of TCMH and WTCH.

(ii) Dato’ Khor Swee Wah @ Koh Bee Leng, a Director of TCMH, is a person connected with Dato’ Tan Heng Chew pursuant to Section 197 of the Companies Act, 2016.

(iii) Mr Ho Wai Ming is a Director of TCMH, TCMSC Labuan and MAT Labuan.

(iv) Mr Lee Min On is an Independent Director of TCMH and WTCH.

Being Directors who are deemed to be interested in the Joint Venture, Dato’ Tan Heng Chew, Dato’ Khor Swee Wah @ Koh Bee Leng, Mr Ho Wai Ming and Mr Lee Min On  have abstained and will continue to abstain from deliberating and voting on the resolution(s) in respect of the Joint Venture at the relevant meetings of the respective Boards of TCMH and TCMSC Labuan (where applicable).       

11. DIRECTORS’ STATEMENT

The Board of TCMH (except for the interested Directors as disclosed above) having considered all aspects of the Joint Venture, is of the opinion that the Joint Venture is in the best interests of the TCMH Group.

12. DOCUMENT FOR INSPECTION

The JV Agreement is available for inspection at the registered office of the Company situated at 62-68 Jalan Sultan Azlan Shah, 51200 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 26 July 2018.