ECM Libra enters hotel JV with Plato unit, lines up new management pacts

PETALING JAYA (July 7): ECM Libra Group Bhd (ECMLG) has entered into a joint venture (JV) with TP Real Estate Holdings Pte Ltd (TPRE) for Ormond Group Sdn Bhd (OGSB), while also executing hotel management agreements covering Ormond Hotel Sandakan and The RuMa Hotel and Residences.

In a Bursa Malaysia filing yesterday, ECMLG said TPRE, a wholly-owned subsidiary of Plato Capital Ltd, will subscribe for 12.5 million new ordinary shares in OGSB for a cash consideration of RM100,000. Upon completion, OGSB will cease to be a wholly-owned subsidiary of ECMLG and will be owned by ECMLG and TPRE on a 50:50 basis.

The agreement also provides for Plato's relevant subsidiary to grant OGSB sublicence rights to use the "Ormond" and "Momo's" brands for its hotel properties as long as TPRE remains involved in the JV. OGSB, which holds rights to the "Tune" trademark, will also grant a sublicence for use of the Tune brand in connection with the business.

Separately, OGSB entered into hotel management agreements with ICSD Ventures Sdn Bhd for Ormond Hotel Sandakan, and with The RuMa Hotel KL Sdn Bhd for The RuMa Hotel and Residences. The agreements carry an initial term of two years, with an option for renewal for a further two years.

ECMLG said the transactions are deemed related-party transactions under Bursa Malaysia's Main Market Listing Requirements due to the interests of certain directors and major shareholders. Executive chairman and major shareholder Datuk Lim Kian Onn and director and CEO Gareth Lim Tze Xiang abstained from deliberations and voting on matters relating to the transactions.

The group said the JV would allow OGSB to leverage the Ormond and Momo's brands alongside its existing management of the Tune brand, while the hotel property management agreements are expected to generate management fee income.

The estimated fees payable under the hotel property management agreements over the initial two-year term amount to RM7.85 million. When aggregated with the share subscription under Bursa requirements, the highest applicable percentage ratio is about 4.07%, requiring an announcement under Bursa Malaysia's Main Market Listing Requirements, but not shareholder approval.

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