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KUALA LUMPUR: Singapore-listed GSH Corp Ltd is venturing further into real estate development in Malaysia, with the acquisition of a major stake in Sutera Harbour Resort and two parcels of residential land in Sutera Harbour, Kota Kinabalu, Sabah.
In an announcement to the Singapore Exchange yesterday, GSH said its wholly-owned subsidiaries Borneo Ventures Pte Ltd and TYJ Group Pte Ltd — the investment vehicle of its executive chairman Sam Goi — have jointly invested approximately RM700 million for a 77.5% stake in The Sutera Harbour Group Sdn Bhd.
The acquisition will see Borneo Ventures injecting RM250 million in exchange for about 1.03 million new shares in The Sutera Harbour Group.
Borneo Ventures will also subscribe to 260,000 new cumulative redeemable preference shares (CRPS) and TYJ Group 190,000 CRPS issued by the Sutera Harbour Group at a subscription price of RM260 million and RM190 million, respectively. The CRPS bear a coupon of 10% per year.
Through its wholly-owned subsidiaries Ocean View Ventures Pte Ltd and Ocean ViewPoint Pte Ltd, GSH has also agreed to acquire stakes in two separate parcels of land measuring 12.1 acres (4.9ha) and 13.11 acres within the 384-acre Sutera Harbour property.
“Kota Kinabalu is a rising property hotspot in Malaysia and we see robust potential for prime real estate in the city, fuelled by strong tourism growth from Northeast Asian countries such as South Korea, Japan, Hong Kong and China,” said Gilbert Ee, chief executive officer of GSH, in a statement.
Ee notes that visitor numbers from these countries are growing exponentially and today account for more than half of total international arrivals to Sabah — and of these, more than a third come from Hong Kong and China.
“Apart from tourism, Sabah has experienced strong GDP (gross domestic product) growth in 2012, thanks to its key sectors of agriculture and oil and gas. With such strong fundamentals, we see great potential in Kota Kinabalu’s luxury hospitality sector as well as premier resort homes,” Ee said.
Datuk Edward Ong Han Nam is presently the sole legal and beneficial owner of The Sutera Harbour Group.
The resort group operates two five-star hotels — the 500-room Pacific Sutera Hotel and the 456-room Magellan Sutera Resort — and the 104-berth Sutera Harbour Marina and Country Club which has a 27-hole championship golf course.
GSH is in the business of distributing IT, photographic and timepiece products, which include brands such as Apple, Fujifilm and Nixon.
For its half year ended June 30, 2013, GSH reported a net loss of S$1.03 million (RM2.67 million) on the back of S$63.6 million in revenue. This compared to a net profit of S$5.16 million and revenue of S$68 million recorded in the same period in the previous year. It had a cash and bank balance of S$5.3 million as at June 30, 2013.
In its half yearly report, the group stated it had announced several memoranda of understanding (MoU) relating to prospective property projects.
“The company undertook several substantial fundraising exercises in the past year to enhance the group’s financial resources in pursuing the diversification into the property development and construction businesses,” said GSH in its report.
“In the longer term, the single largest impact to the group’s financials will be the group’s initiatives in real estate development,” it said.
On Nov 29 last year, GSH announced that its wholly-owned subsidiary City View Ventures Sdn Bhd had signed a sales and purchase agreement (SPA) with Tropicana Kia Peng Sdn Bhd to acquire a parcel of prime land in Kuala Lumpur for a purchase consideration of RM132.4 million.
In its press statement, GSH stated that it plans to develop the 5,800 sq m (0.58ha) leasehold tract located in Jalan Kia Peng into a residential and commercial project.
GSH shareholders approved the acquisition in an extraordinary general meeting on Oct 9 last year, as part of the group’s move to diversify into property development and related businesses in Asean countries.
On July 18 last year, GSH announced that it had entered into a MoU with Gabungan Granite (Terengganu) Sdn Bhd (GGT) to acquire its shares in the company. GSH was eyeing the development of a site of approximately 7.1 acres in Kuala Lumpur, which GGT has the rights to develop.
However, it was stated that at this preliminary stage, shareholders should be cautioned that there is no assurance that a SPA will be entered into.
GSH’s ventures into property in Malaysia follow a similar move by Singapore-listed Albedo Ltd. In September, Albedo agreed to a S$774 million takeover by a private company controlled by Tan Sri Danny Tan, the founder and group executive vice-chairman of Tropicana Corp Bhd. Tan injected seven parcels of land in Johor’s Iskandar Malaysia valued at RM2.7 billion.
GSH stock closed at 8.7 Singapore cents yesterday, a nine-month high, for a market capitalisation of S$860 million.
This article first appeared in The Edge Financial Daily, on January 3, 2014.
