Reference is made to the Company’s previous announcement dated 29 January 2024 (“Announcement”) and query from Bursa Malaysia Securities Berhad (“Bursa Securities”) vide its letter dated 5 February 2024 in relation to the Proposed Disposal of 163 Retail Park.

(Unless otherwise stated, the definitions set out in the Announcement shall apply herein.)

Asia Equity Research Sdn Bhd, on behalf of the Company, would like to provide the following responses to Bursa Securities:-

Background summary

The Company had decided to enter into Deed of Termination to terminate the Proposed Disposal of 163 Retail Park to ALX Asset (“Proposed Disposal 1”) as announced on 29 January 2024, as the Proposed Disposal 1 and the propose disposal of AEON Seri Manjung’s main objective was to undertake a Proposed ABS issue, which was not completed since its first announcement on 17 November 2022, as explained in our announcement dated 5 February 2024.

1. To elaborate the rationale for the Company to terminate the Disposal of 163 Retail Park to ALX Asset for disposal consideration of RM270.5 million (which was supported by the market valuation at the material date on 1 September 2022) and entered into a new SPA to dispose of the same assets to RHB Trustee for RM215 million.

The Company has decided to dispose of 163 Retail Park to RHB Trustee, being the trustee of Sunway Real Estate Investment Trust (“Sunway REIT”) (“Proposed Disposal 2”), following the termination of Proposed Disposal 1. Although, the disposal consideration for 163 Retail Park under Proposed Disposal 1 is for RM 270.5 million as compared to Proposed Disposal 2 of the same asset for RM 215.0 million, the Company views the timelines and certainty of completion is of upmost priority as it allows the Company to realise the benefit from the interest cost savings by utilising the sales proceeds that is allocated for the repayment of bank borrowings.

2. Given that there is a reduction of the disposal consideration from RM270.5 million (involving ALX Asset) to RM215 million under the current Proposed Disposal, and taking into consideration the audited NBV as at 30 June 2023 of RM234,963,931, please provide a detailed and comprehensive disclosure of the basis and justification in arriving at the Disposal Consideration of RM215 million, other than on a “willing buyer willing seller” basis.

Following the termination of Proposed Disposal 1, the Company’s basis and justification for the disposal of 163 Retail Park to Sunway REIT is the timing and certainty of completion. Hence, even though the Proposed Disposal 2 is at a discount of approximately 20.5% of the disposal consideration of Proposed Disposal 1, the settlement of the Proposed Disposal 2 could be completed within three (3) months from the unconditional date, being the date when all the condition precedents in the conditional Sale and Purchase Agreement are fulfilled.

3. To disclose the details of the identified borrowings to be repaid as part of the utilisation of proceeds and the expected amount of interest savings arising thereof.

The details of the identified borrowings to be repaid as part of the utilisation of proceeds is as follows:-

For clarity, the balance of the disposal proceeds of RM 51.1 million is allocated for working capital and is further explained under item 4 below.

Note 1

163 Retail Park was charged to Public Bank Berhad and the estimated amount owing was approximately RM 110.9 million.

Note 2

Immediately to be used for repayment of bank overdrafts and shall then be used for loan installments and partial repayment of revolving credit.

The expected amount of interest savings arising thereof is approximately RM 8,884,000 per annum.

4. To provide the breakdown details of the utilisation of proceeds for working capital.

As at the date of this announcement, the Company has decided to vary the utilisation of proceeds for working capital from RM74.0 million to RM51.1 million. The breakdown details of the utilisation of proceeds for working capital is as follows:-

The working capital allocation is based on current estimate and may adjust based on actual needs during the disbursement period. For the further details of the utilisation of proceeds, please refer to the Circular to Shareholders to be issued prior to the EGM held for approving the Proposed Disposal 2.

5. To set out the details of previous transaction(s) that was entered by the Group with Sunway Group of Companies and the respective highest percentage ratio.

The details of previous transaction that was entered by the Group with Sunway Group is as follows:-

(a) Pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Securities.

Note 1

On 16 May 2023, YNH had announced that its wholly owned subsidiary, Kar Sin Berhad (“KSB”) had entered into a conditional sales and purchase agreement to dispose a freehold vacant land held under the individual title H.S.(D) 47941 P.T. 48632 in the Mukim of Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur measuring approximately 20,630.47 square meters (approximately 5.098 acres) (hereinafter referred to as “the Property-1”) with vacant possession free from all encumbrances and subject to the terms and conditions of the sales and purchase agreement dated 12 May 2023, for a total consideration of RM170.00 million only, to Sunway Living Space Sdn Bhd (“SLSB”). KSB shall be entitled to an additional consideration of RM 50.0 million (“Additional Consideration”) subject to KSB is able to obtain the revision of the development order with a plot ratio of 5 to a new development order with a plot ratio of 7 before 12 May 2024. The highest percentage ratio, applicable to the proposed disposal of Property-1 as per Paragraph 10.02(g) MMLR is 18.44% based on the aggregate of proposed disposal consideration of RM 170 million and Additional Consideration, determined as on LPD.

Note 2

Proposed Disposal of 163 Retail Park to Sunway REIT (b)

The percentage ratio of the Proposed Disposal 2 and the Percentage Ratio of Property-1 were aggregated pursuant to 10.12(2)(a) of the MMLR as SLSB(a) and Sunway REIT(b) are deemed connected:-

(a) SLSB is a wholly owned subsidiary of Sunway Berhad.

(b) Sunway Berhad through its wholly owned subsidiary, Sunway REIT Holdings Sdn Bhd owns 40.89% in Sunway REIT.

6. It is noted that your Company has engaged an independent market valuer, VPC Alliance to value the 163 Retail Park at RM270.5 million at the material date of valuation on 1 September 2022. In this regard, please advise and disclose whether your Company has undertaken any independent valuation prior to agreeing to the Disposal Consideration of RM215 million. You are reminded to ensure compliance with Paragraph 10.04 of the Main Market Listing Requirements.

The Company does not engage in any independent valuation save for the valuation done by VPC Alliance (Kajang) Sdn Bhd (“VPC Alliance”). Copy of the valuation report by VPC Alliance dated 1 September 2022 and the extension letter dated 29 September 2023, shall be made available for inspection at the Registered Office of our Company during normal office hours from Mondays to Fridays (except for public holidays) for the period commencing from the date of the Circular to be issued to shareholders for approving the Proposed Disposal of 163 Retail Park up to the date of the EGM.

This announcement is dated 6 February 2024.