DRB Hicom proposes 51% buy of unit developing Media City; taps into property project

DRB Hicom proposes 51% buy of unit developing Media City; taps into property project
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KUALA LUMPUR (Nov 27): DRB Hicom Bhd has proposed to acquire a 51% stake in Media City Ventures Sdn Bhd for RM85.68 million cash, which will allow the group to tap into a mixed development project here.

The acquisition will also allow the diversified group to jointly undertake the planning, design and completion of new facilities and infrastructures, including the broadcast equipment and system on the existing premises of Angkasapuri covering an area of approximately 63,613 square metres or 15.72 acres.

In a filing with Bursa Malaysia yesterday, DRB Hicom said it has entered into a conditional share sale and purchase agreement with Enigma Permata Sdn Bhd (EPSB) for a 51% stake in Media City Ventures for the above acquisition.

EPSB was incorporated on Nov 3, 2004 and its principal activity is investment holding. Its shareholders are Azman Hanafi Abdullah and Arsad Mat Jali who each own 50,000 ordinary shares of RM1 each representing 50% each in the company.

According to the filing, Media City Development Sdn Bhd, being the parent company of Media City Ventures, holds a 23-year concession from the Ministry of Communications and Multimedia and will undertake the installation of the broadcast equipment and system along with other services for Angkasapuri on March 20, 2012, among others.

The filing added that the Malaysian government and Media City Development had on March 20, 2012 executed two other agreements (concession agreement; CA) in relation to the supply, installation and leasing of broadcast equipment and systems to Pusat Berita Bersepadu, Pusat Penyiaran Antarabangsa, Wisma TV and Wisma Radio.

In return, Media City Development shall be entitled to receive availability charges, asset management services charges and broadcast maintenance charges by way of monthly payment in arrears pursuant to the CAs.

"The effective date of the CA is pending the fulfilment of certain conditions precedent in the CAs. Upon the CA being unconditional, the GOM (Government of Malaysia) will then confirm the effective date of the CA," the filing read.

Pursuant to the CA, the government will transfer parts of three pieces of land (exchange land) with 99 years of lease and measuring 45,648 square metres or approximately 11.28 acres to Media City Development.

"Under the CA, Media City Development is required to develop a portion of the exchange land (measuring approximately 4.14 acres) into a mixed development at its own risk, cost and expenses," the filing said, adding the project shall comprise a hotel and a commercial complex, with offices and food and beverage outlets within five years of the transfer.

"The total construction, supply and installation costs under the CA of RM860 million will be financed via a mixture of external borrowings and equity and/or shareholders' advances," DRB Hicom said.

DRB Hicom said the proposed acquisition will expand the stable of concession businesses currently in the group and can provide it with a new source of stable and recurring income.

"In addition, the group can enjoy the potential development profits from the development of the strategically located exchange land upon its fulfilment of certain conditions in the CA," it added.

DRB Hicom expects to complete the deal by the first quarter of 2016.

Shares in DRB fell one sen or 0.79% to close at RM1.26 yesterday, for a market capitalisation of RM2.44 billion.

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