KUALA LUMPUR (Aug 2): Co-Prosperity Holdings Ltd, the Hong Kong-listed major shareholder of Yong Tai Bhd, is planning to pump RM54.18 million into Yong Tai by way of private placement that will raise its stake in the company to 31.34% from 24.56% now.

Yong Tai inked a conditional share sale agreement yesterday with Co-Prosperity's wholly-owned unit Full Winning Development Ltd (FWD) for the placement of 43 million new shares — equivalent to a 9.87% stake in Yong Tai — at an issue price of RM1.26 a share. The issue price was at a 10% discount to Yong Tai's five-day volume-weighted average share price up to Aug 1.

Proceeds to be raised from FWD's stake increase, said Yong Tai, will be used to partly fund its shareholder's advance to Iconic Paragon Sdn Bhd (IPSB) — which Yong Tai is in the midst of acquiring — in acquiring two pieces of land from Dewan Bandaraya Kuala Lumpur (DBKL) for RM86.39 million.

In announcing a 70% stake subscription in IPSB in April this year, Yong Tai had said it would advance RM130 million to IPSB for the acquisition, as well as to finance other costs related to the lands, such as conversion premium, development charge and incidental land and development costs.

In a separate media statement, Yong Tai's group chief executive officer Datuk Wira Boo Kuang Loon said FWD's decision to increase its stake in Yong Tai is a demonstration of Co-Prosperity's commitment and confidence in its business direction.

"The decision is also in line with Co-Prosperity's business plan to expedite its development and diversification into the media, cultural and entertainment business as Yong Tai Group is involved in tourism and cultural related developments," he added.

Yong Tai said its board of directors is of the view that the proposed placement is the most appropriate option to raise additional funds in the most expeditious manner.

"Upon completion of the proposed private placement, the enlarged capital base and shareholders' funds are also expected to further strengthen the financial position of the company," Yong Tai said.

Subject to relevant approvals being obtained, Yong Tai expects to complete the placement and IPSB stake subscription by the fourth quarter of this year.

In a separate announcement, Yong Tai also said it has terminated the memorandum of understanding (MoU) with Terrawest Resources Sdn Bhd for the proposed acquisition of a 1.5-acre land in Puchong, Selangor.

Yong Tai said the termination came after both parties were unable to agree and finalise certain terms.

Subsequent to the MoU termination, Yong Tai said it will set its focus back in developing the Impression City project, particularly the Impression Melaka theatre.

Shares in Yong Tai — a garment maker-turned-property developer — rose 1 sen or 0.72% to close at RM1.39 today, for a market capitalisation RM605.6 million.