KUALA LUMPUR (May 16): Ewein Bhd is increasing its stake in Ewein Zenith Sdn Bhd to 89% from 73%, as part of its plan to gain control in the Penang-based property developer, which is currently developing a luxury sea-front residential project worth RM800 million in gross development value.
The group said it is buying the 16% stake for RM160,000 through its wholly-owned unit Ewein Land Sdn Bhd.
The seller is Consortium Zenith Construction Sdn Bhd, a private vehicle controlled by Datuk Zarul Ahmad Mohd Zulkifli. It is also the contractor for the Penang Undersea Tunnel project.
Consortium Zenith will continue to have an 11% interest in Ewein Zenith after the deal.
"With the increased ownership of Ewein Zenith, Ewein will have even more control of Ewein Zenith, which forms the development arm of Ewein.
"This will maximise the profits of the development division, attributable to Ewein and shall benefit its shareholders," Ewein said in a press release that accompanied its filing with Bursa Malaysia yesterday.
As a result of the stake increase, Ewein said it will be able to capture 89% of the profit to be generated by Ewein Zenith for the financial year ending Dec 31, 2018 (FY18), compared to 60% in FY17, which will mark a significant increase in profit generation for Ewein.
"The board of directors is of the view that the prospects of the proposed acquisition is positive and will be in the best interests of the group," Ewein added.
Ewein said it expects to complete the stake acquisition deal within three business days after it has received confirmation from its financier, Public Bank Bhd.
Ewein said Ewein Land will also advance RM21.28 million to Ewein Zenith, in which the latter will use to settle the balance sum owed to Consortium Zenith for the purchase of 3.67 acres of land in Bandar Tanjung Pinang, Penang.
"For clarification purpose, the advancement is not part of the terms and conditions of the share sale agreement," Ewein added.
In 2013, Ewein signed a joint venture agreement and acquired the 3.67 acres of land from Consortium Zenith for RM133 million.
On the land, Ewein Zenith is developing a maiden luxury sea-front property project, known as "City of Dreams", which will comprise a 40-storey freehold residential area and feature 572 units ranging from 1,100 sq ft to 1,350 sq ft in size.
Ewein's share price dropped 8.5 sen or 12.98% to close at 57 sen yesterday, for a market capitalisation of RM171.9 million. — theedgemarkets.com