E&O to raise up to RM1.5b via sukuk programme

KUALA LUMPUR (Dec 20): Eastern & Oriental Bhd (E&O) plans to set up a sukuk programme to raise up to RM1.5 billion to finance the costs of land reclamation, infrastructure and development for its Seri Tanjung Pinang 2 (STP2A) development in Penang.

The property developer said the proceeds from the issuance will also be used to repay borrowings, for working capital and to defray expenses incurred in relation to the sukuk issuance.

In a bourse filing, E&O said its subsidiary, Tanjung Pinang Development Sdn Bhd, has yesterday lodged with the Securities Commission Malaysia all the required information and relevant documents relating to the Sukuk Murabahah programme.

The programme is unrated and will have a tenure of 25 years commencing from the date of the first issuance.
 
“After careful consideration of our current financial commitments, the group believes that the sukuk programme will provide the financing to further advance the development works at STP2A. With the completion of STP2A reclamation works, resources are now focused towards creating a new prime seafront address, building further on the success achieved in our flagship development of Seri Tanjung Pinang Phase One," E&O managing director Kok Tuck Cheong said in a separate statement.

He added that a detailed masterplan is currently being finalised for STP2A, while various infrastructure works have started to take shape with the building of the first bridge marking the first gateway onto the island. "STP2A is expected to have a gross development value of over RM17 billion and will be developed over a period of 15 years.”

Maybank Investment Bank Bhd and RHB Investment Bank Bhd have been appointed as the joint principal advisers and joint lead arrangers for the sukuk programme.

On Dec 11, E&O had deferred the implementation of a rights issue with warrants after taking into consideration the recent unfavourable market sentiments observed in the equity market and the recent share price performance of the company. It has until Aug 7, 2020 to complete the corporate exercise.

E&O shares closed unchanged at 60.5 sen yesterday, with a market capitalisation of RM866.69 million. The counter saw 730,200 shares traded. Year-to-date, the counter has retreated 46% from RM1.12.

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