Friday 29 Mar 2024
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KUALA LUMPUR: Sunsuria Bhd executive chairman and largest shareholder Datuk Ter Leong Yap will inject over 440 acres (178.06ha) into the property development company, raising its total project gross development value (GDV) from RM300 million to RM11 billion.

In a statement yesterday, Sunsuria (fundamental: 2.5; valuation: 1.2) said it had entered into several agreements with Ter for stakes in three property companies for a combined RM349.9 million. The companies have ongoing and upcoming developments in Salak Tinggi and Setia Alam in Selangor, and Medini in Johor.

“The collective proposals, which are expected to be completed by the second quarter of 2015, will expand Sunsuria’s existing land bank from 4.71 acres to 445 acres,” it said.

“Taking into account the effective interest of Sunsuria in the projects arising from the proposals, this will translate into an effective GDV of RM4.5 billion for its future income stream,” said Sunsuria.

Under the agreements signed between Sunsuria and Ter yesterday, Sunsuria will acquire a 99.99% stake in Sunsuria Gateway Sdn Bhd (SGSB) for RM1 million cash together with a cash subscription of RM237 million of new redeemable preference shares (RPS); a 21% stake in Sunsuria Medini Sdn Bhd (SMSB) for RM54.97 million; and a 99% stake in Rentak Nusantara Sdn Bhd (RNSB) for RM25 million as well as cash subscription of RM32 million new RPS.

Sunsuria said all the three acquisitions will be funded internally, including via a corporate exercise involving a rights issue with warrants approved by Sunsuria shareholders on May 12 last year.

An amount of RM100 million from the proposed SGSB subscription will be used to redeem 10 million existing RPS in SGSB.

Ter will then reinvest the RM100 million in Sunsuria through the subscription of 102.04 million shares at an issue price of 98 sen each.

All these corporate exercises are expected to be completed by the second quarter of this year.

The acquisition of SGSB will see Sunsuria owning a 50% stake in Sime Darby Sunsuria Development Sdn Bhd, a joint venture (JV) with Sime Darby Property (Sungai Kapar) Sdn Bhd. 

The JV is undertaking a mixed property development with a GDV of about RM6.4 billion on a piece of 346.58-acre freehold land in Salak Tinggi. 

Although Sunsuria will merely acquire a 21% stake in SMSB, the property developer said the investment will enable the group to explore international markets together with new partner from Japan, Creed Investments Pte Ltd (Creed).

Under the proposed acquisition, Sunsuria will have an option to require Creed to purchase all the 21% stake it acquired for a price of at least RM39.9 million. This gives Sunsuria the flexibility to exit the investment between April 1, 2016 and Oct 31, 2016.

As for RNSB, Sunsuria is undertaking an ongoing bungalow land development in Setia Alam, Selangor, and said it believes demand for these properties is expected to remain positive.

This injection was originally mulled in May last year, but it was deferred, to allow Sunsuria to build a track record as a public-listed company for “at least another few quarters,” Ter said in an interview with The Edge. 

This raised questions about Sunsuria’s rights issue ahead of the proposed injection.

Nevertheless, Sunsuria requested a six-month extension to undertake the fundraising exercise from Bursa Malaysia.

According to Sunsuria’s filing with Bursa on Oct 3 last year, the group had received approval for an extension of six months until April 10 to complete the rights issue with warrants.

Sunsuria plans to raise between RM184.5 million and RM356.31 million from the rights issue and share placement. The indicative issue prices of the rights and placement shares were 65 sen and 75 sen, respectively.

Back in May, the group proposed a renounceable rights issue of up to 475.08 million new shares on a three-for-one basis with 158.36 million free detachable warrants on a one-for-three basis. The bulk of the proceeds will go towards property development and land acquisition.

The proposed acquisition that Sunsuria announced yesterday will be subject to shareholders’ approval at an extraordinary general meeting.

Sunsuria Development Sdn Bhd launched a reverse takeover exercise on Malaysia Aica Bhd last January. 

The exercise was completed last May and Malaysia Aica was renamed Sunsuria Bhd.

As at Jan 23, Ter had direct and indirect interests of 21.41% and 29.71%, respectively, in Sunsuria.

Trading in Sunsuria shares, which was suspended for two market days, will resume today.

It closed at RM1.57 a share last Friday, giving it a market capitalisation of RM248.63 million. 

 

This article first appeared in The Edge Financial Daily, on March 11, 2015.

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