L&G gets shareholders’ nod to acquire four property firms

KUALA LUMPUR (March 16): Land & General Bhd’s (L&G) shareholders will soon have to fork out 21 sen per share based on an indicative issue price of its rights issue to acquire four property firms plus an option to buy from its major shareholders.

At the extraordinary general meeting (EGM) yesterday, L&G obtained the approval of about 70.8% on the proposed rights issue as compared with the 29.2% who voted against it.

The proposed acquisition of four companies and an option to acquire another firm from its major shareholder, Malaysia Land Properties Sdn Bhd (Mayland) has also been approved with 71.5% voted in favour.

The cash call is on the basis of eight rights shares for every five existing L&G shares held.

Mayland is giving the undertaking to subscribe for up to 820 million rights shares which will cost it RM172.2 million, if some were to minorities decline to participate in the cash call. After netting off the sum for rights issue subscription, Mayland is expected to pocket RM171.8 million cash from the asset sales.

Managing director Low Gay Teck (pictured) said the EGM went well. The shareholders approved the proposal.

“The results for [the] three ordinary resolutions are in favour with 71.5% versus 28.5% for all the three resolutions for acquisition, proposed rights issue and for the exemption,” he told the media after the EGM.

Low, previously,  shared that the indicative price of 21 sen represents a 22% discount from theoretical ex-rights price, which was deemed to be an attractive discount to entice minority shareholders to subscribe for the rights issue.

The day before the shareholder meeting, Minority Shareholder Watchdog Group (MSWG) raised its concern with regard to Primal Milestone Sdn Bhd and Quantum Bonus Sdn Bhd’s financial results as at Dec 31, 2015 — which indicated an amount due from an associate company, amounting to RM184.6 million and other receivables amounting to RM8.6 million.

The board responded to MSWG that these amounts were initially advanced to Country Garden Properties Malaysia Sdn Bhd (CGPM) for the acquisition and development of the relevant lands in Semenyih and Serendah and are expected to be recovered through CGPM’s future projected cash flow over the development period.

Speaking to the media, Low said that the proposed rights issue will see enlarged outstanding shares, which could potentially see an increase in the company’s market capitalisation.

“With a larger market cap, the company will attract institutional investors with a certain mandate — to buy companies like L&G,” he said.

“In the past, we had issues with the lack of existing projects but the acquisition will help to address this issue as it provides an immediate pipeline of projects,” he added.

Low said that all the parcels L&G had acquired were situated in prime areas with matured developments in Selangor. There is also the optional agreement for L&G to buy a development in Taman Sri Hartamas, Kuala Lumpur.

This article first appeared in The Edge Financial Daily, on March 16, 2017.

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