INTRODUCTION
Linear Corporation Berhad ("Linear" or "the Company") wishes to announce that its wholly-owned subsidiary, District Cooling Systems Sdn. Bhd. (formerly known as Aseania Linear District Cooling System Sdn. Bhd.) ("DCS") had, on 25 January 2008, appointed and awarded LFE Engineering Sdn. Bhd. ("LFEE") which is a wholly-owned subsidiary of LFE Corporation Berhad ("LFE"), as main contractor to carry out the supply, installation, testing and commissioning of mechanical and electrical ("M&E") engineering works ("the Works Package") for the district cooling plant system at Bandar Baru Perda, Bukit Mertajam, Penang ("the Project") at a contract sum of RM34,700,688.00 ("the Contract").
The Contract is a recurrent related party transaction ("RRPT") and this announcement is made pursuant to Practice Note 12/2001 of Bursa Malaysia Securities Berhad.
DETAILS OF THE RRPT
- Principal Activities of Linear Group
The principal activity of Linear is investment holding whilst its subsidiaries are involved in the construction, maintenance and operation of district cooling systems for the supply of chilled water, manufacturing and trading of cooling towers, provision of water treatment services and investment holding.
- Category and Nature of the RRPT
The RRPT is within the ordinary course of business and day-to-day operations of DCS which is to contruct, own and operate district cooling plants for the supply of chilled water.
- Rationale for the RRPT and Procedure on which the Transaction Price has been determined
The RRPT is to engage LFEE, a M&E specialist which has the required implementation expertise and tract record to undertake the Works Package. It has been entered into at arm's length and on terms no more favourable to the related party than those extended to unrelated third parties. The transaction price is arrived at based on normal commercial terms consistent with the Group's usual business practices and policies.
FINANCIAL EFFECTS OF THE RRPT
The RRPT will not have any material impact on the net assets or earnings per share of the Company for the financial year ending 31 December 2008.
INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
Mr Alan Rajendram A/L Jeya Rajendram, being the Executive Chairman and substantial shareholder holding not less than 10% of the issued and paid-up share capital of Linear, and being a Director of DCS, is deemed to have interest as a related party in the RRPT by virtue of his position as a Non-Executive Director and substantial shareholder holding not less than 15% of the issued and paid-up share capital of LFE.
He has abstained and will abstain from all deliberation and voting by the Company's Board of Directors in respect of the RRPT and has undertaken that he shall abstain from voting in respect of his direct and/or indirect shareholdings in the Company, and has further undertaken to ensure that persons connected with him abstain from voting in respect of their direct and/or indirect shareholdings in the Company, on all relevant resolutions to be passed at all general meetings of the Company where shareholders' mandates are sought for the RRPT.
Save as disclosed herein, none of the other Directors and/or substantial shareholders holding not less than 10% of the issued and paid-up share capital of the Linear and/or persons connected with such Directors and/or substantial shareholders, has any interest, direct or indirect, in the RRPT.
APPROVALS
The Directors will seek shareholders' mandate for the RRPT at the forthcoming annual general meeting of the Company to be convened and held latest by 30 June 2008.
STATEMENT BY DIRECTORS
The Board, save for the interested Director, after having considered all aspects of the RRPT, is of the opinion that the RRPT is in the best interest of the Group and is not to the detriment of minority shareholders.
