BAssets clears the air on cheap sale

KUALA LUMPUR: Berjaya Assets Bhd (BAssets) yesterday disclosed that it had sold a 20% stake in Berjaya Times Square Sdn Bhd (BTSSB) to the Sultan of Johor at a discount of 37% to the net asset value (NAV) of the building as at June 30, 2013.

In response to clarification on the transaction that was first announced last week, BAssets said the board gave the discount after taking into account that the 20% interest was a minority stake in an unlisted subsidiary of the company.

“The board also took into account the business acumen and stature of the Sultan of Johor, Sultan Ibrahim Sultan Iskandar,” BAssets said in a filing with Bursa Malaysia.

BAssets announced last Tuesday that it was selling the stake in BTSSB to the Sultan of Johor for RM250 million, incurring an exceptional loss of RM149.15 million at the group level of the listed company.

The company stated that the disposal would allow the group to raise cash without the need to resort to borrowings.

“The company’s shares have been trading below its RM1.00 par value for more than a year. As such, any proposal to place out new BAssets shares to investors to raise cash will not be attractive,” it said.

The entry of the Sultan of Johor into BTSSB has attracted attention to the company that owns and manages the Berjaya Times Square Mall which has a gross built-up area of 7.5 million sq ft on a 10-acre piece of land in Jalan Imbi, Kuala Lumpur.

BAssets also owns and manages Berjaya Waterfront in Johor Baru — formerly known as The Zon, Johor — with properties spreading over 18 acres of prime land in Johor.

The Edge Weekly reported that BAssets has plans for a large entertainment centre containing restaurants and clubs, with possibly slot machines, to be built at Berjaya Waterfront. The idea was to attract a slice of the crowd from the resort casinos in Singapore.

The RM250 million cash consideration was arrived at a willing buyer willing seller basis after accounting for the discount attached to both BAssets shares and BTSSB’s NAV.

The sales price of RM1.67 per BTSSB share represents a discount of 99 sen to the company’s NAV of RM2.66 per share or RM1.995 billion.

The market price to BAssets’ NAV was also discounted as the board took into consideration of the five-day weighted average market price of BAsset shares up to Dec 5 of 87 sen apiece.

This implies a 56% or RM1.12 discount to BAssets’ NAV of RM1.99 per share.

Shares in BAssets have not been able to break the RM1 level this year. It rose close to 12% from its 52-week low of 84 sen in February, to the year’s high of 94 sen on May 21. It then slid back to 84 sen on Oct 1.

Since BAssets announced the 20%-stake sale in BTSSB, its share price had climbed 4.57% from 87.5 sen to close at 91.5 sen yesterday.

Although the disposal will see BAssets incur an exceptional loss at the group level, it will realise an exceptional gain of about RM7.02 million at the company level.

The exceptional loss comes about because the price transacted is less than the value of the building booked in at group level.

Upon the disposal, BAsset’s stake in BTSSB will be reduced to 80%.

The Berjaya group is no stranger when it comes to building resorts. It has a hill resort in Bukit Tinggi, Pahang which is positioned as an alternative to Genting Highlands where a casino and a theme park attract thousands of visitors.

This article first appeared in The Edge Financial Daily, on December 17, 2013.


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