Reference is made to the Company's Annoucement on 10 April 2018 in relation to  Avillion Hotels International Sdn Bhd (AHI), a wholly-owned subsidiary of Avillion Hotel Group Sdn Bhd (AHG) signed a Memorandum of Undertaking (MOU) with Bintang Kencana Sdn Bhd (Bintang Kencana), a company intending to build a 153-room hotel in Bandar Baru Uda, Johor Bahru.

The Board of Directors of  Avillion Berhad (“Avillion” or “the Company”) wishes to announce that AHI had on 5 July 2018 entered into an Hotel Management Agreement (HMA) with Bintang Kencana in which AHI is to be given a fixed 10 years lease to operate and manage the new hotel. AHI will operate and provide direct day-to-day management and operations of the hotel once it opens.

INFORMATION ON THE PARTIES TO THE HMA

Avillion Hotels International Sdn Bhd (“AHI”)

Avillion Hotels International Sdn Bhd (Company No. 302949-V) is a private company incorporated in Malaysia and having its registered office at Unit 8E, Level 8, Wisma YPR, No. 1, Lorong Kapar Off Jalan Syed Putra, 58000 Kuala Lumpur.

The principal activities of AHI is principally engaged in the operation of hotels and are experienced and have the expertise in the various phases of hotel development, operation and management.

Bintang Kencana Sdn Bhd (“Bintang Kencana”)

Bintang Kencana Sdn.Bhd. (Company No: 183733-U) is  a private company incorporated in Malaysia and having its registered office, 39A, Jalan Putra Permai 1A, Taman Equine, 43300 Seri Kembangan, Selangor.

The principal activities of Bintang Kencana is as developer.

SALIENT INFORMATION ON THE HMA

1) Operating Period

The term of the HMA Agreement shall commence immediately and the operating period shall commence after the Hotel has been completed and has received all the required business licences to operate (“Handover Date”) and expire at the end of tenth (10th) Full Operating Year following the Handover Date. 

2) Option to Renew Operating Period

    2.1  The Bintang Kencana, on a written notice to the AHI at least twelve (12) months before the expiration of the Operating Period and if there shall not be at the time of such request any existing breach or non-observance of any of the convenants on the part of AHI, grant to AHI a further term of five (5) years from the expiration of the Operating Period or such other duration as agreed by Bintang Kencana ("Extended Operating Period"), for AHI to render its services in connection with the operation of the Hotel upon the terms and conditions to be mutually agreed upon by the parties at the time of extension, including the management fees for the Extended Operating Period. 

3) Termination

     The HMA can be terminated by either Bintang Kencana or AHI or by mutual consent. 

RATIONALE OF HMA

The HMA is in line with Avillion Group’s strategy to grow the chain of Avillion-managed hotels.

FINANCIAL EFFECTS OF THE HMA

The HMA is not expected to have any material effect on the share capital, net assets, gearing and substantial shareholders’ shareholdings of Avillion for the current financial year ending 31 March 2019.

However, the Appointment by Bintang Kencana is expected to contribute positively to the future earnings of Avillion Group, particularly during the operating period and the extended period, if granted.

 APPROVALS REQUIRED FOR THE HMA

The HMA is not subject to the approval of the shareholders of the Company or any regulatory authorities.

 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

To the best of the Board’s knowledge and belief, none of the Directors and/or substantial shareholders and/or person connected to them has any direct or indirect interest in the said HMA.

STATEMENT BY DIRECTORS

The Board is of the opinion that the HMA is in the best interest of the Company.

DOCUMENTS MADE AVAILABLE FOR  INSPECTION

A copy of the HMA is available for inspection at the registered office of the Company at Unit 8E, Level 8, Wisma YPR, No. 1, Lorong Kapar Off Jalan Syed Putra, 58000 Kuala Lumpur during office hours 8.30 a.m. to 5.30 p.m. from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement.

 
This announcement is dated 5 July 2018.