Ball in the court of Ekovest minorities
Company going to shareholders for approval to take over IWC
PETALING JAYA: After a month of deliberation, the board of directors of Ekovest Bhd has agreed with major shareholder Tan Sri Lim Kang Hoo ( pic) to launch a takeover of another company he controls, Iskandar Waterfront City Bhd (IWC).
But in order to complete the buyout, Ekovest would need to secure the approval of its own minority shareholders at an EGM to be held at a later date.
In a filing with Bursa Malaysia yesterday, Ekovest said it has proposed to undertake a conditional voluntary general offer to acquire all the offer shares in IWC at RM1.50 per share.
The consideration of the offer shares will be satisfied via cash or share exchange options.
The offer excludes Lim’s 38% stake in IWC. Ekovest also said it had entered into a conditional share sale agreement with Kumpulan Prasarana Rakyat Johor Sdn Bhd to acquire its 6.4% stake in IWC for RM 80.4mil, or RM1.50 a share.
Ekovest said it intends to take IWC private. “The proposed offer represents an opportunity for Ekovest to participate in the business and prospects of IWC and access its vast land bank of approximately 1,000 acres in the Iskandar Malaysia region via increasing its equity interest in IWC at an attractive price,” said Ekovest, adding that the land had the potential for capital appreciation, which is expected to augur well for the group going forward.
IWC has interest in material properties in Plentong Land, Danga Land and Sutera Land, which collectively have a market value of RM 3.68bil.
The offer price of RM1.50 represents a discount of more than 50% to the estimated revised net asset value of IWC of RM3.03 per share.
“Based on the offer price of RM1.50 per offer share, the implied totall purchase consideration for Ekovest to acquire a 100% equity interest in IWC is RM 1.26bill, based on 837.39 million IWC shares.
“From Ekovest managemment’s perspective, this means that Ekovest willl only need to pay RM28.81 per square foot (psf) to have full access to IWC’s 1,000-acre land bank, which is currently valued at RM884.49 psf,” said Ekovest.
In addition, with the enlarged land bank following the completion of the proposed offer, Ekovest may expand its river beautification and rehabilitation concept along the Gombak River, to Johor Baaru, through the land bank of IWC along the Tebrau River, to be promoted as an iconic ddevelopment in Johor.
IWC is expected to contribute positively to the future earnings of Ekovest, backed by the land disposal to Greenland Tebrau, as well as the launch of nnew property projects.
“Barring any unforeseen completion risks, the land disposal to Greenland Tebrau is due to also enhance IWC’s cash flow streams over the next few years, up to 2020,” said Ekovest.
The balance purchase consideration of the land amounts to RM 2.09bil.
The cash consideration foor the offer shall be funded via a combination of bank borrowings and internally generated funds of Ekovest, although the breakdown has yet to be finalised.
Barring any unforeseen circumstances and subject to all approvals being obtained, the proposed offer is expected to be completed in the first quarter of 2018.