KUALA LUMPUR (July 22): Berjaya Corp Bhd (BCorp) has proposed to subscribe to one new ordinary share representing 50% of Berjaya Kyoto Development (S) Pte Ltd’s (BKyoto) enlarged share capital, for S$34.66 million (RM97.28 million) cash, which will allow it to participate directly in the Four Seasons Hotel & Residences project in Kyoto, Japan.

BCorp said the proposed subscription will also increase its landbank and portfolio of properties owned, which include The Ritz-Carlton Residences in Malaysia. In a filing with Bursa Malaysia, BCorp said yesterday it signed a subscription agreement with  Berjaya Land Bhd (BLand) and BKyoto for the proposed subscription. Currently, BLand is the sole shareholder of BKyoto. Upon completion of the proposed subscription, BCorp and BLand will have 50% stake each in BKyoto. Tan Sri Vincent Tan Chee Yioun is a major shareholder of both BLand and BCorp.

In conjunction with the proposed dilution, BCorp will advance to BKyoto Group up to RM152.74 million to partly settle the inter-company debts between BKyoto Group and BLand, as well as to fund working capital for BKyoto Group in proportion to its shareholding in BKyoto.

“The proposed dilution will enable BLand to reposition its financial resources and commitments to other property developments within BLand Group, while retaining a 50% substantial stake in BKyoto,” BLand said in a separate filing.  It added that the proposed dilution will not have any material impact on the net assets and gearing of BLand Group for the current financial year ending April 30, 2016.

However, the proposed dilution will result in an estimated gain of about RM147.9 million in BLand, arising from the deemed disposal cum de-consolidation of BKyoto and the remeasurement of the fair value of the remaining stake of 50% in BKyoto. The proposed dilution is expected to be completed by the third quarter of 2015.

BKyoto Group is currently developing a five-acre (2.02ha) piece of land in Kyoto into a commercial development comprising a 123-room hotel and 57 units of residences known as the Four Seasons Hotel & Residences, with an estimated development cost, including land cost, of about 33.69 billion (RM1.05 billion). The Four Seasons project is expected to be completed by the third quarter of 2016.

Both BCorp and BLand said their audit committee is of the opinion that the proposed subscription by BCorp in BKyoto is fair, reasonable and on normal commercial terms, and is in the best interests of the group.

This article first appeared in The Edge Financial Daily, on July 22, 2015.

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