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LBS could reap RM650m from disposal of Dragon Hill

KUALA LUMPUR (April 19): LBS Bina Group Bhd is negotiating the sale of up to 100% of its subsidiary Dragon Hill Corp Ltd for an indicative price of about HK$1.65 billion (RM651.76 million).

In a filing with Bursa Malaysia on Wednesday, LBS said its wholly-owned unit Intellplace Holdings Ltd, which owns 100% of Dragon Hill, signed a memorandum of understanding (MoU) with Jiuzhou Technology Co Ltd, a wholly-owned subsidiary of Jiuzhou Development Company Ltd.

Dragon Hill, through its subsidiaries, is involved in golf club development and management and property development in China. Its subsidiaries own and operate the 36-hole Lakewood Golf Club in Zhuhai, China and an adjoining property development project.

"The MoU provides for the parties to negotiate exclusively with each other and finalise the scope and terms of a sale and purchase agreement," LBS managing director Datuk Lim Hock San said in a press release on Wednesday.

"The proposed sale is a win-win deal for the parties. Further updates will be provided when there are material developments," Lim said.

LBS said the MoU was an expression of Jiuzhou Technology's intention to acquire up to 100% but not less than 60% equity interest in Dragon Hill.

It added that the indicative price for the acquisition of the entire issued share capital (and the related shareholders' loans) in Dragon Hill is approximately HK$1.65 billion in cash, equity in Jiuzhou Development, convertible securities and/or such other means which shall be mutually agreed by the parties.

Jiuzhou Development, which is listed on the Hong Kong stock exchange, is engaged in various businesses including high-speed passenger ferry operations, running a marine passenger transport pier, hotel and theme park businesses, LBS stated.

Upon the finalisation of the negotiations and if the parties are agreeable to all the final terms of the transaction, they will enter into a definitive agreement on or before the expiry of six months from the date of the MoU.

In an email response, LBS told The Edge Financial Daily that the sale of Dragon Hill does not mean it will be exiting the China market completely. It still has an interest in the Zhuhai International Circuit, the first permanent motor racing circuit built in China which is under the management of LBS.

LBS said through the issuance of shares in Jiuzhou Development, it will continue to have an interest in JV projects in China.

It noted that Jiuzhou Tourism Group, the holding company of Jiuzhou Development, is a large conglomerate involved in a wide spectrum of businesses in various industries and is the investment arm of the government in Zhuhai.

"We see many business opportunities we can explore together in the near future to gain synergy benefits from our smart partnership," LBS said.

The company stated it plans to launch new projects in Cameron Highlands, Pahang, the Klang Valley, Selangor, and Batu Pahat in Johor and will continue to source strategic development lands to further enhance its performance.

LBS said it had 20 ongoing projects and unbilled sales of approximately RM649 million as at Dec 31, 2011.

For FY11, LBS posted a 122.4% increase in net profit to RM36.72 million from RM16.51 million a year ago on the back of increased revenue of 30.7% to RM445.47 million from RM340.91 million previously.

The company attributed the improvement to the progressive recognition of contributions from its ongoing projects and good take-up rates for its projects.

Shares of LBS closed at 89 sen on Wednesday, an increase of 15.6% from 77 sen in mid-March. Over the past 52 weeks, its shares have traded between a high of 95.5 sen in July 2011 and low of 58 sen in April 2011.

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