KUALA LUMPUR: Malaysia Aica Bhd (Maica) has inked two agreements with Cangkat Nusantara Sdn Bhd (CNSB), a related company of privately owned property developer, Sunsuria Development Sdn Bhd, for land and asset acquisitions, for a total consideration of RM56 million, to be settled with RM42 million in cash and the issuance of 28 million new Maica shares.
This will lead to CNSB owning a 17.68% stake in Maica, a wood products manufacturer. The proposed acquisition will be completed by the first quarter of next year.
In an announcement to Bursa Malaysia yesterday, Maica said its RM56 million acquisition includes a commercial development project in Bukit Jelutong, Shah Alam — Trivo, Suria Jelutong — for RM25 million.
“The project comprises 30 units of double-storey shop-offices, which Sunsuria has sold 24 units,” Maica said in the announcement to the exchange yesterday.
The group said the development cost for the project stood at RM16 million and will be completed in June 2014. This would result in RM11.8 million profit before tax.
Suria Jelutong is an ongoing development by Sunsuria, consisting of serviced apartments, retail and shops. It is located in the immediate northeast of the land that Maica is acquiring.
The second agreement is for the acquisition of an adjacent piece of land, measuring 1.43ha for RM31 million. The group said it does not have plans for the land at present.
The funding for the adjacent land will be financed via internally generated funds.
The funding for the development cost of the land shall be financed through a combination of internally generated funds and/or bank borrowings.
“We are confident that Maica will be in safe hands venturing into the property business, leveraging on the knowhow and expertise of Sunsuria,” Maica’s executive director Thor Poh Seng said in a press statement.
Maica said that as the proposed acquisitions are expected to result in a diversion of more than 25% of its net assets, shareholders’ approval will be required.
The group will be diversifying from its existing core businesses to include property development and investment businesses.
Thor added that despite diversifying into property development, the group will continue with its core business in wood products manufacturing and hire-purchase grants.
“We value the opportunity in partnering Maica to venture into the property business and trust that this partnership will enable Sunsuria to form strategic alliance with Maica for its business expansion,” said Sunsuria executive chairman Datuk Ter Leong Yap.
Ter is also a major shareholder in CNSB.
Maica’s new shares are priced at 50 sen each, taking into consideration of its share price over net assets of 54 sen as at March 31, 2013, consolidated profits of RM0.98 million and the historical share prices and trading liquidity for the past 12 months.
The price represents a discount of 13.79% to the last closing price of Maica at 58 sen as at Oct 22 and a discount of 8% and 14.99% to the 12 months and three months weighted average price of 54.35 sen and 58.82 sen.
CNSB is a private limited company incorporated on Jan 21, 2009. The principal activities of CNSB are investment holding and property development.
Maica said the proposed acquisitions are in line with the group’s strategic plan to expand into other viable business sectors as part of a longer-term plan, instead of depending solely on its existing core business, which has seen limited revenue growth for the past five years.
Sunsuria was instrumental in bringing the first Chinese university, Xiamen University, from Fujian Province into Malaysia. The project is estimated to cost RM600 million.
The campus will be located on a 62.72ha land in Salak Tinggi, Sepang, comprising five faculties with about 700 teaching staff members.
Maica closed 10 sen higher yesterday at 68 sen with 312,000 shares done.
This article first appeared in The Edge Financial Daily, on October 24, 2013.
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