IWC minority holders advised to accept share offer

PETALING JAYA: Iskandar Waterfront City Bhd’s (IWC) minority shareholders have been advised to accept the takeover offer from Ekovest Bhd at RM1.50 per share.

In a circular to minority shareholders filed with Bursa Malaysia, BDO Capital Consultants Sdn Bhd – the independent adviser to IWC – advised and recommended that shareholders accept the offer.

“Based on our evaluation, we are of the opinion that the cash option is not fair but reasonable while the share exchange option is fair and reasonable to the holders,” BDO said in the circular.

The independent adviser said the share exchange option was more favourable due to the exchange ratio of more than one ranging from 1.26 to 1.33.

An exchanging ratio of more than one indicated that the holders are effectively receiving Ekovest shares which are higher in terms of a fair value than IWC shares to be surrendered, BDO said.

“The IWC shares have not traded above the offer price for the past three years prior to the March 15, 2018 (LPD), except during the Iskandar Waterfront Holdings Sdn Bhd’s (IWH) proposed merger scheme period.

“Additionally, the offer price represents a premium of about seven sen, or 4.9% over the closing price of IWC shares as at LPD,” BDO said.

It noted that the average daily volume traded of Ekovest shares as a percentage over free float of about 43.72% for the past 12 months is higher than the average daily volume traded of IWC shares for the same period of about

13.79%.

By accepting the offer, BDO also said the existing shareholders of IWC would be able to participate in the Ekovest group’s businesses.

This, said the independent adviser, would provide the shareholders with an opportunity to diversify the risk profile of their investment in IWC to include exposures to Ekovest’s businesses, such as the toll operations segment.

“For reference, about 11.6% of Ekovest’s revenue for the financial year ended June 30, 2017 was contributed by the toll operations segment. In addition, the existing shareholders of IWC will be able to continue participating in the future growth of IWC via Ekovest’s equity interest in IWC.

“Therefore, shareholders will continue to have substantial exposure to IWC while having exposure to Ekovest and other Ekovest businesses in properties, construction and toll.”

Last December, Ekovest said it had 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.

IWC’s biggest appeal is 1,052 acres of waterfront land in Johor Baru. The company is a master developer and makes its money from selling land that it reclaims from the sea.

The business model involves capital upfront, which the company recoups over time through the sale of land for development.