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Major BRDB shareholder offers to buy assets

KUALA LUMPUR: Ambang Sehati Sdn Bhd, the major shareholder of Bandar Raya Developments Bhd (BRDB), has offered to buy some of the developer’s assets, including the famous Bangsar Shopping Centre (BSC) and Menara BRDB in Jalan Maarof.

The other assets to be acquired by Ambang Sehati are CapSquare Centre in the city and Permas Jusco Mall in Johor Bahru. The announcement, which comes as news of the property developer undertaking a major corporate exercise broke over the weekend, said the price will be determined later.

BRDB said Ambang Sehati believes  the proposed disposal will enable BRDB to monetise these assets and achieve a more efficient utilisation of its capital, according to an announcement to Bursa Malaysia yesterday. Ambang Sehati owns 18.8% equity interest in BRDB.

The Edge weekly reported in its latest issue that BRDB is looking to pay a bumper dividend to its shareholders under a complex corporate exercise that could see it dispose of its most prestigious property assets — BSC and Menara BRDB.

According to BRDB’s annual report, CapSquare had a carrying value of RM214.37 million, BSC and the 12-storey Menara BRDB RM660 million and Permas Jusco RM68 million. The entire assets, worth a total of RM942.37 million, were revalued last year.

“Based on BRDB’s new-look balance sheet after the disposal of CapSquare, which was completed last month, shareholders are expected to receive a bounty from the proceeds of the sale,” said a source.

The shareholders of Ambang Sehati are Datuk Seri Akbar Khan Mohamed Khan and his children Sascha Saleem Khan and Tania Aishah Khan. Other shareholders include BRDB chairman Datuk Mohamed Moiz J M Ali Moiz and Abdul Sathar MSM Abdul Kadir.

As at June 30, BRDB had long-term debt of RM461.2 million while its short-term borrowings amounted to RM307.56 million. It is worth noting that the bulk of BRDB’s debts were tied to CapSquare, a project that had been on its books since the late 1990s.

The bulk of the debts are expected to be cleared because on Aug 5 BRDB announcd the completion of the disposal of two towers in CapSquare to a German fund for RM440 million. This should leave the company with a fairly clean balance sheet. If the debts are reduced after the disposal of the assets it will leave the company, which has a share base of 487.6 million 50 sen shares, a handsome cash pile.

Although BRDB does not have large parcels of land in prime areas, a few months ago entered into a joint venture with Multi-Purpose Holdings Bhd (MPHB) to develop the latter’s landbank in the Klang Valley and Penang island. Among the parcels of land is Mimaland in Gombak, Selangor. Apart from its property assets, BRDB also has a 56.76% stake in Mieco Chipboard Bhd, which is slated for disposal. This block of shares has a market value of RM48.8 million based on its closing price of 41 sen yesterday.

Despite its strong asset base, BRDB’s shares have been trading at a discount to its net asset value of RM3.57 (as at June 30). The counter closed one sen or 0.43% lower at RM2.32 or 0.65 times price to book value yesterday, with a total of 654,800 shares changing hands.

The proposed corporate exercise could realise hidden value in BRDB’s assets, but it remains to be seen how much above their current carrying value Ambang Sehati has to offer for the assets and how BRDB will reward its shareholders.

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