LBS Bina to raise funds for property development projects in medium term

KUCHING: LBS Bina Group Bhd ( LBS Bina) is undertaking a fund raising exercise to fund property development projects over the medium term.

The research arm of Public Investment Bank Bhd ( PublicInvest Research) said the group is planning to undertake a project funding exercise whereby an estimated RM165.6 million will be raised.

The research firm noted the funds will be sourced via a renounceable redeemable cumulative preference share ( RCPS) rights issue on the basis of one RCPS for every five LBS Bina shares held.

To be listed on Bursa Malaysia in the near future, PublicInvest Research observed the issue price has been indicated at RM1.10 per RPCS with a conversion ratio of one new LBS Bina share for every two RCPS held.

As a result, the research firm estimated a maximum of 75.29 million new LBS Bina shares would be issued.

“The RCPS will be convertible for LBS Bina shares at any time commencing from the issue date while redemption, at the discretion of LBS Bina, might be undertaken at any time on or after the fifth anniversary of the issue date by giving notice in writing,” it added.

PublicInvest Research said the RCPS must be redeemed entirely.

In the meantime, the research firm gathered that 95 per cent of the total proceeds raised from the RCPS will be utilised for property development projects within 24 months from completion of the exercise, with the balance for general working capital purposes.

Meanwhile, PublicInvest Research was positive on the company’s move to raise funds through RCPS as it capitalises on LBS Bina’s strong growth trajectory and allows for further equity participation by entitled shareholders at relatively attractive levels

Additionally, the research firm noted the exercise was not immediately dilutive to its earnings base. With the group’s total future land bank of over 4,000 acres and is expected to last for the next 10 to 15 years, the research firm foresees a possible upward adjustments to the group’s gross development values (GDV), hence the potential enhancements to future revised net asset values ( RNAVs).

The research firm gathered that four of the company’s projects namely Bukit Jalil with an estimated gross development value ( GDV) of RM1.23 billion, Alam Perdana ( RM1.83 billion GDV); Kota Tinggi (RM2.25 billion GDV) and Cybersouth ( RM1.15 billion GDV) are expected to start in the second half of 2017.

It noted those projects is expected to witness allocations of 30 per cent, 20 per cent, 10 per cent, 10 per cent respective from the proceeds of the fund raising.

Moreover, PublicInvest Research said the company’s other projects Midhills with an estimated GDV of RM310 million and Bandar Putera Indah with an estimated GDV of RM284 million starting in 1H17 will see allocations of 10 per cent each.

Meanwhile, the research firm pointed out that certain substantial shareholders of the group, namely Gaterich Sdn Bhd, Tan Sri Lim Hock San and Datuk Wira Lim Hock Guan have provided their irrevocable undertakings to subscribe for their respective RCPS portions, with a minimum of RM67.5 million to be raised.