Eastland Equity aborts rights issue as proposed development project faces hiccups

Eastland Equity aborts rights issue as proposed development project faces hiccups
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KUALA LUMPUR (Jan 18): Eastland Equity Bhd has aborted the rights issue with warrants it had proposed to raise funds to pay for part of its RM23.27 million land acquisition in Sabah. 

In a filing today, Eastland said it has aborted the cash call for two reasons — hiccups in the proposed development at the land it wanted to acquire, and that the amount raised may not be enough for company requirements. 

In November 2017, Eastland’s wholly-owned unit FBO Land (Setapak) Sdn Bhd (FBO) had entered into a sales and purchase agreement (SPA) with the landowner PCK Properties Sdn Bhd to acquire the 2,181 sq metre land.  

At the time, PCK held a planning approval to develop two blocks of 28-storey hotels, with a total gross development value of RM638.97 million.  

Eastland in turn proposed a six-for-five rights issue at 13.5 sen per share to raise between RM11.7 million and RM39.8 million primarily for the land purchase. It comes with one warrant for two rights shares subscribed. 

“The vendor had, on Jan 16, 2019, informed the board that it is not able to fulfil a representation and warranty in the SPA as the planning approval for the proposed development granted by Dewan Bandaraya Kota Kinabalu has lapsed on Jan 9, 2019,” said Eastland today. 

“As there is much uncertainty as to when the extension of the planning approval may be obtained, FBO and PCK had, Jan 18, 2019, entered into a deed of mutual termination to terminate the SPA in relation to the proposed acquisition,” the company added.

Meanwhile, Eastland also pointed out that based on current business condition, financial position and working capital requirements of the company, the amount it could raise from the rights issue with warrants “may not be sufficient to meet the company’s funding requirements”.

“Accordingly, the company has decided to abort the proposed rights issue with warrants,” it said.

“The management of the company is currently evaluating various proposals for a more holistic corporate exercise to be undertaken to meet the company’s funding requirements and to improve its financial performance,” it added. 

Shares of Eastland Equity closed unchanged at 11.5 sen, giving it a market capitalisation of RM28.25 million.