KUALA LUMPUR (April 6): Ekovest Bhd is purchasing a total of 38.96ha (96.27 acres) of freehold land in Pulai, Johor from Iskandar Waterfront Holdings Sdn Bhd (IWH) for RM944.62 million.
The related-party transaction comes after last month's aborted RM1.11 billion deal between the two groups. Both Ekovest and IWH are controlled by tycoon Tan Sri Lim Kang Hoo, who has stakes of 32.4% and 63% respectively.
In a bourse filing yesterday, Ekovest said its wholly-owned unit Timur Terang Sdn Bhd will acquire 17 parcels of land, measuring 32.49ha, for RM785.21 million. This purchase will be satisfied through the issuance of 911.32 million irredeemable convertible preference shares (ICPS) at 85 sen apiece and RM10.59 million in cash.
Timur Terang will buy another three parcels of land, measuring 6.47ha, for RM159.41 million, which will be fully satisfied in cash.
As such, the ICPS portion of the purchase price is RM774.62 million, while the cash portion is RM170 million. This cash portion will be funded through a mixture of internal funds and/or bank borrowings, said Ekovest.
Each ICPS can be converted into one new Ekovest share. The ICPS price represents a 71.89% premium over Ekovest's five-day volume-weighted average market price until April 2 of 49.45 sen.
"The board also believes that the proposed acquisitions will augur well for the group and the future development of the lands is expected to contribute positively to the group's future earnings in the medium to long term and deliver sustainable growth to the group if the development components on the lands are planned properly," said Ekovest.
Ekovest said it is resorting to using ICPS to satisfy 82% of the total purchase consideration to minimise cash flow. Additionally, the staggered conversion of the ICPS would allow it to spread out the dilutive effects on the group's earnings per share and net asset per share over a decade to commensurate with the long gestation and/or development period for the lands.
"In this regard, the board is hopeful the future development profits arising from the development of the lands would help cushion the dilutive effects arising from the conversion of the ICPS," the group said.
Assuming all 911.32 million ICPS are exercised, Ekovest's share capital would increase to 3.61 billion shares, from 2.7 billion shares currently.
In November 2019, Ekovest signed an agreement to acquire 17 parcels of freehold land, measuring a total of 30.49ha, for RM869.69 million, to be satisfied through the issuance of ICPS worth RM849.89 million, and a cash payment of RM19.8 million. Ekovest also agreed to buy another three parcels of land, measuring 6.32ha, for RM180.2 million, to be fully satisfied in cash.
However, on March 22, the deal fell through.
As a consequence of the deal falling through, plans to float IWH on the local bourse have been delayed. The Edge reported that this has been delayed to the second half of 2021, from the first half as initially planned.
Shares in Ekovest closed 1.5 sen or 3.06% higher at 50.5 sen yesterday, valuing the group at RM1.36 billion. The counter saw 15.03 million shares done.
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