Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 31): In a surprise move, Iskandar Waterfront Holdings Sdn Bhd (IWH) has axed plans to merge with its 38.35%-owned associate Iskandar Waterfront City Bhd (IWCity) and assume the latter's listing status.

Tycoon Tan Sri Lim Kang Hoo, who is the major shareholder and executive chairman of Ekovest Bhd, is instead proposing for Ekovest to buy the rest of the 62% shares it does not own in IWCity through either a cash consideration of RM1.50 per share, valuing the company at RM1.25 billion, or a one-for-one share swap deal.

It is understood that Lim intends to take IWCity private. Lim, through IWH, now owns 38.35% in IWCity.

Lim is the common major shareholder of all three companies — Ekovest, IWCity and IWH.

This follows a decision by the owners of the lands that were supposed to be injected into the merged IWH — Sultan of Johor Sultan Ibrahim Sultan Iskandar and Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) — to pull out of their participation in the restructuring exercise between IWCity and IWH.

"(Their pullout) will result in an unexpected substantial variation and reduction to the scale and scope of the proposed restructuring exercise," IWCity said in a filing with Bursa Malaysia today.

As such, IWCity said the implementation of the proposed merger scheme and the proposed restructuring exercise is no longer consistent with the anticipated benefits and intentions which were originally envisaged by IWH.

"The parties are (also) unlikely to be in a position to fulfil the conditions precedent contemplated in the merger agreement within the originally anticipated timeframe for fulfilment/obtainment," it added.

Hence, IWCity and IWH have mutually agreed to terminate the proposed merger.

In May, IWH had entered into a merger agreement with IWCity for a proposed 1-for-1 merger offer to take up the remaining 62% equity in the latter. The board of IWCity had until today to deliberate on the proposed merger offer by IWH, after two extensions.

In tandem with the proposed merger, IWH will embark on a proposed restructuring exercise with Lim — who is director-cum-executive vice-chairman of IWH — via internal rationalisation of minority stakes within the IWH Group and various Johor state entities including KPRJ to consolidate the land bank under IWH. This will see an injection of 3,593 acres of land with an open market value of RM4.1 billion into IWH.

In a separate filing today, Ekovest said it had on Friday received a proposal letter from Lim, who owns a 32.38% stake in the company, to acquire the 62% shareholding in IWCity, which currently has 1,052 acres of land bank mainly in Johor.

Lim is also proposing to the board of directors of IWH, which owns a 38% stake in IWCity, not to accept the offer from Ekovest.

All parties have until Nov 30 to deliberate on Lim’s proposals.

Lim and parties acting in concert currently own a 63% stake in IWH, while KPRJ owns the remaining 37% stake.

Astramina Advisory Sdn Bhd has been appointed as the financial advisor for the proposed acquisition.

Trading in both Ekovest and IWCity’s shares were halted since yesterday and will resume trading at 9am tomorrow. Ekovest’s share price last closed at RM1.16 on Friday, valuing the group at RM2.48 billion, while IWCity's stock settled at RM1.40, bringing a market capitalisation of RM1.17 billion.

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