PROPOSED JOINT VENTURE AGREEMENT BETWEEN CAISSE DES DEPOTS ET CONSIGNATIONS (“CDC”) and IRIS LAND SDN.BHD. (“IRIS LAND”) A SUBSIDIARY OF IRIS CORPORATION BERHAD (“ICB” OR “THE COMPANY”).


1. INTRODUCTION

The Board of Directors of ICB wishes to announce that IRIS Land, a subsidiary of ICB, had, on 1 April 2011, entered into a Joint Venture Agreement (“JVA”) with Caisse Des Depots Consignations (“CDC”) CDC for the proposed joint venture to construct and complete a mixed development of residential and commercial units in Senegal (“JV”).

2. SALIENT TERMS OF THE JVA

The salient terms of the JVA are as follows:-

(a) The JVC shall be incorporated and set up in Dakar, Senegal (“JVC”).
(b) The initial share capital of the JVC shall be CFA 131,000,000.00 divided into such number of ordinary shares equaling CFA 10,000.00.The initial paid-up capital of the JVC shall be 13,100 new ordinary shares which shall be fully paid-up. The shares of the JVC shall be ordinary shares of par value of CFA 10,000 each. IRIS Land and CDC agree to subscribe for the paid-up share capital according to the following ratio:-
Shareholder
Paid-Up Capital (CFA)
Number of Ordinary Shares to be Held of CFA 10,000 each (RM)
Percentage (%)
IRIS Land
CFA64.19 Mil

(MYR428,225)

6,419
49
CDC
CFA66.81

(MYR445,697)

6,681
51

*The exchange rate between MYR and CFA is approximately MYR1: CFA 149.9 as at today.

© Total estimated gross development value of the construction and completion of the mixed development of residential and commercial units in Senegal is estimated to be MYR 800 million ,which is expected to be funded by way of project financing to be procured by the JVC and if required, further capital contributions from the parties.

(d) CDC and IRIS Land must jointly agree on a business plan ("Conditions Precedent") as follows:-

(iii) a master plan providing an overview of the intended development on the totality of the said Land (defined in paragraph (3) below) and manner of dividing the said Land into parcels or plots for transfer to the JVC on specified timelines to enable a phased development to be undertaken by the JVC in the specified parcels or plots pursuant to agreed timelines on a project to project or parcel to parcel basis (“the Master Plan”);
(iv) a project plan providing particulars on the current intended development on the first of the specified parcels or plots to be injected into the JVC (“the Project Plan” which expression shall include any intended development required to be undertaken on any other specified parcels or plots as likely to be transferred to the JVC. from time to time);
(v) if required, costs of either the entirety of the Master Project or the Project as determined by the relevant phase or any parcel or portion or plot as the case may be (“the Project Costings”);
(vi) a financial plan to provide a basis for the financing of the Project and any costs and expenses reasonably incurred in connection with or incidental to its construction including any consultancy fees, management, financing and ancillary costs, but excluding any land costs (“the Financial Plan”);
(vii) a marketing plan for the planned advertising and sale of the units to be developed in the Project as determined by the relevant parcel(s) or plot(s) of the said Land transferred into the JVC. which will inter alia include an agreement on the sales price of the intended Project units and any sales commission(s) payable to sales agents as well as the selection of the marketing agent (“the Marketing Plan”);
(viii)the implementation of this Agreement shall be conditional upon the parties reaching a written consensus on the initial Business Plan to be drawn up by IRIS Land which shall form the basis for the operations of the JVC within six(6) months of this Agreement (“the Conditions Period”); and
(ix) in the event of any non-fulfillment or non-satisfaction of the Conditions Precedent stated above during the Conditions Period then unless extended by mutual agreement of the parties hereto, the JVA shall terminate automatically and no party shall have any claim of whatsoever nature against the other party in respect of or arising out of any such termination.
3. INFORMATION ON CDC

CDC is a Senegalese government owned trust company and the registered proprietor of a property located in the Bambilor area measuring approximately 150 hectares as obtained under the agreement for sale established on the 5th May 2010 as entered between CDC and the Land Registration and Stamp Duties Office of Senegal (“the said Land”).

4. RATIONALE AND PROSPECTS

The joint-venture is an additional opportunity for ICB to venture into the property development sector in Senegal. This proposed joint-venture represents an additional revenue stream to ICB.

5. SOURCES OF FUNDS

IRIS Land will finance its obligations via a combination of bank borrowings and internally generated funds.

6. RISK FACTORS

Business Risk

Although ICB and its Group of Companies seek to limit any risks through expansion of both existing and new markets, developing and maintaining a diversified market network, prudent financial management and efficient operating procedures and maintaining good business relationships with our customers and suppliers, no assurance can be given that any changes in the herein mentioned factors will not have any material adverse effect on the ICB Group’s business.

Political, economic and regulatory considerations

Like all business entities, changes in political, economic and regulatory conditions in Senegal could materially and adversely affect the financial and business prospects for the ICB Group. Amongst the political, economic and regulatory uncertainties are the changes in interest rates and nullification of existing contracts.

ICB Group of companies will continue to take effective measures to mitigate such risks. However, there is no assurance that adverse economic, political and regulatory conditions will not materially affect the business activities of the ICB Group.

Joint Venture Risk

The JVC potentially expose the ICB Group to new risks including those associated with the assimilation of new operations and personnel, the diversion of financial management resources from existing operations and the inability to successfully integrate the joint-venture with tis current business operations. There is no assurance that the anticipated benefits from the proposed joint-venture will be realised and that the ICB Group will be able to generate sufficient revenue from the proposed joint-venture to offset the associated joint-venture costs.

Nonetheless, the Board has and will continue to exercise due care in considering the risks and benefits associated with the proposed joint venture and will take appropriate measures in planning the successful integration of this joint-venture with its current business operations. Further, ICB Group is committed towards the close monitoring of the development of the JVC’s business in order to minimize any implementation issues or delays.

7. FINANCIAL EFFECTS OF THE JVA

The JVA will not have any effect on the issued and paid-up share capital, substantial shareholder’s shareholding earnings, earnings per share, net assets per share and gearing of ICB Group for the financial year ending 31st December 2011. Barring unforeseen circumstances the Board is of the opinion that the JVA will contribute positively to the earnings and earnings per share of the ICB Group in the future.

8. APPROVALS REQUIRED

This JVA does not require the approval of ICB’s shareholders or any other relevant government authorities in Malaysia.

DIRECTORS’ AND/OR MAJOR SHAREHOLDER’S INTERESTS

None of the Directors and /or major shareholders of the Company and/or persons connected with them have any interest, direct or indirect, in CDC and/or the JVA.

9. STATEMENT BY DIRECTORS

The Board, having considered all aspects of the proposed joint venture(including but not limited to the rationale, prospects and financial effects of the JVA), is of the opinion that the JVA is fair, reasonable and is in the best interest of the ICB Group.

10. DOCUMENT FOR INSPECTION

The JVA is available for inspection at the registered office of ICB during office hours from Monday to Friday (excluding public holiday) at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Puta, 59200 Kuala Lumpur, for a period of three (3) monts from the date of this announcement.

This announcement is dated 4 April 2011.

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Added on April 4, 2011, 8:10 pmIDK, good news?


This post has been edited by free_enuf: Apr 4 2011, 08:10 PM