Tien Wah seeks shareholders' nod to diversify into property development

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KUALA LUMPUR (Apr 3): Tien Wah Press Holdings Bhd is seeking shareholders' approval to provide financial assistance of up to RM250 million to a joint venture company (JVco), and to diversify its business into property development and investment.

The JVco is Lum Chang Tien Wah Property Sdn Bhd (LCTWP), which Tien Wah set up with Lum Chang Holdings Ltd (LCH) on a 50:50 ownership basis to undertake the proposed redevelopment of its factory site along Jalan Semangat in Petaling Jaya, Selangor, into a mixed-use commercial project. The JVco was formerly known as Sterling Model Sdn Bhd.

In a Bursa Malaysia filing today, Tien Wah proposed to provide the aid in two ways: in the form of cash advances to subscribe for up to RM100 million worth of the JVco's securities; and via the provision of guarantee, indemnities and/or collaterals for the JVco to obtain banking facilities of up to RM150 million — which is in proportion to Tien Wah's stake in the JVco held via its subsidiary, Tien Wah Properties Sdn Bhd (TWPSB).

However, if the JVco fails to get any financing facilities, Tien Wah will then contribute up to RM250 million in the form of cash contributions for TWPSB to subscribe for the JVco's securities to meet the latter's capital expenditure and working capital requirements to undertake the said redevelopment.

The site, measuring about 13,040 square metres, is a on a 99-year lease from the Selangor state government, with some 47 years remaining as on March 20 this year.

The proposed subscription and provision of financial assistance are integral terms to the JV agreement entered into between Tien Wah's unit and LCH's unit in May 2016 to work together on the proposed redevelopment, said Tien Wah. The two proposals will assist the JVco to raise adequate project financing and to facilitate the proposed redevelopment, said Tien Wah.

"The availability of expedient funding would help to avoid unnecessary delays throughout the development period of the land and to ensure the timely completion of the proposed development," Tien Wah said.

Meanwhile, the diversification is proposed in view of Tien Wah's proposed investment in the JVco via either the proposed provision of financial aid or the proposed securities subscription, "which may potentially result in the diversion of 25% or more of the Tien Wah's net assets or contribution from such an operation, of 25% or more to Tien Wah's net profits in the future.

Tien Wah shares were not traded today. It last settled at RM1.45 on Monday, which gave the group a market value of RM209.88 million.