Landmarks proposes rights issue to fund hotel projects

KUALA LUMPUR: Landmarks Bhd, in which Genting Bhd is the single largest shareholder with a 30.3% stake, has proposed a rights issue of warrants to raise RM79.5 million to partially fund the development of hotels in Treasure Bay, Bintan, Indonesia and a resort at Datai Bay, Langkawi.

In a filing to Bursa Malaysia yesterday, Landmarks said the exercise entails the proposed rights issue of up to 240.85 million warrants on the basis of one warrant for every two shares held in the company.

The indicative issue price for the warrant is 33 sen per warrant while the indicative exercise price is RM1.00. Landmarks’ shares closed at RM1.16 apiece yesterday, giving it a market capitalisation of RM552.9 million. The final issue price and the exercise price of the warrants shall be determined at a later date.

“The company intends to procure written unconditional and irrevocable undertakings from its substantial shareholders to subscribe in full for their entitlements to the warrants. The company also intends to procure underwriting agreement(s) for the portion of the warrants not covered by the undertakings,” said Landmarks in the announcement to Bursa.

Apart from Genting’s 30.3% stake, Landmarks’ second largest shareholder is Zimulia Sdn Bhd with a 17.99% stake. Zimulia is the private vehicle of Datuk Zakaria bin Abdul Hamid, who is Landmarks’ chairman.

Out of the RM79.5 million gross proceeds, Landmarks said it intends to utilise RM60 million to partially fund the development of hotels in Treasure Bay, Pesona Lagoi Bintan, Indonesia, as well as a resort on the remaining portion of the land at Datai Bay, Langkawi.

The rest will be used as working capital and defray the expenses incurred by the rights issue exercise.

On tourism in Langkawi, Landmarks quoted The Langkawi Tourism Blueprint 2011 — 2015 as saying the increase in visitor arrivals, average spending per day and average length of stay will drive Langkawi’s tourism to grow at 14% per annum from RM1.9 billion in 2010 to RM3.8 billion in 2015.

“The Blueprint will be a growth catalyst for Langkawi’s tourism industry. More accommodation and commercial zones are expected to be developed, leading to generation of new jobs at hotels and retail outlets,” it added.

On Indonesia, the company said trade, hotels and restaurants sector is estimated to post a significant growth between 7.7% to 8.2% in 2013, in line with strong public consumption and import activity.

“Growing middle class has led to increase in demand for goods and services, including recreation (domestic tourists). In addition, the number of foreign tourists is also expected to increase. Thus, expenditures related to tourism is expected to rise, including, among others, food, beverages, and accommodation,” it said.


This article first appeared in The Edge Financial Daily, on September 20, 2013.