Lee to buy out Chunghwa's stake in Country Heights

KUALA LUMPUR: Having just raised RM385.5 million in cash from selling its 88.5-acre (35.4ha) land in Subang to Dijaya Corp Bhd last month, Taiwanese-controlled Chunghwa Picture Tubes (M) Sdn Bhd is divesting another of its property investment here — a deal that will see the family of Tan Sri Lee Kim Yew consolidating their stake in Country Heights Holdings Bhd (CHHB).

The sale of the remaining 13.93% stake in CHHB to the Lee family has been sealed, a source said. "There will soon be an announcement to Bursa Malaysia on the change in shareholdings from both parties. The transaction will further strengthen Lee's family shareholdings in CHHB, which shall benefit from new development plans in the Mines Resort area," the source added.

The Lee family had on April 20 bought 9.6 million shares or a 3.48% stake in CHHB from Chunghwa, lifting their interest to 53.52%. Acquiring the rest of Chunghwa's stake would boost the family's holdings to 67.45%.

At its closing price of RM1.16 on Wednesday, July 13, CHHB's market capitalisation stood at RM319.8 million. At current levels, the stock is trading at less than half its net asset of RM2.58 per share, and at a greater discount to its revised net asset value which should be much higher given the low book cost of the group's properties, especially in the Mines Resort area.

Still, there's no urgency on Lee's part to take the company private, sources said. Among other reasons, the Lee family through their private vehicle own a sizeable tract of land in the Mines Resort area, larger than that held by the listed CHHB, which they already control. For instance, 40 acres of land which is presently the Mines Wonderland Theme Park and over 200 acres of developable area at the South Lake opposite the Serdang KTM commuter station are owned privately by the family.

It is learnt that the family's priority now is to get funding for the development of the land, which inevitably shall add more value and spur the redevelopment of the existing properties under listed vehicle CHHB such as the Mines Waterfront Business Park, the Palace of the Golden Horses, the Mines Exhibition and most importantly, the North Lake.

"The family acquiring more shares in CHHB at this stage, while retaining its listing status, would allow them to realise value when the valuation of the listed company improves, thus in turn raising more funds for the development of the family's South Lake properties. At the same time, minority shareholders of CHHB will also stand to benefit from the upside. It is a win-win situation," the source added.

The development and redevelopment of the larger area at the Mines, involving CHHB's North Lake properties and the Lee family's South Lake, fall under the banner of the Mines Wellness City, an Entry Point Project which has an estimated development value of RM5.5 billion by 2020, according to CHHB's website.

Given the choice location, easy access to major highways and public transport system as well as the massive lake frontage, CHHB's North Lake and the Lee family's South Lake are considered hidden jewels in the Klang Valley property sphere. While both the listed company and the family have been trailing other players in the local property scene for the past 10 years, since the Asian financial crisis, the planned new activities at the North and South Lake will catapult them back into the race.

"Having had the patience to sit on these properties for the past 10 years, waiting for their appreciation, Lee may be the one having the last laugh," an industry observer added.