RAM: No immediate rating impact on Sunway, SunCity in RM4.5b merger

KUALA LUMPUR: The recent RM4.5 billion offer by Sunway Sdn Bhd for the assets and liabilities of Sunway City Bhd (SunCity) and Sunway Holdings Bhd has no immediate rating impact on the ratings and outlook of the two entities' debt issues, RAM Ratings says.

"Should the proposed offer be accepted and the exercise successfully completed, RAM Ratings expects synergistic benefits to arise from the merger," it said in a statement on Thursday, Dec 2.

SunCity is an established property developer within the upper-middle and high-end segments of the property market. Its business profile is supported by stable rental income from its pool of investment properties as well as dividend income and management fees from the Sunway Real-Estate Investment Trust.

Sunway Holdings' forte is in the construction business. It is also involved in quarry operations, trading and manufacturing, and property development.

The merger will create a larger and vertically integrated entity (Newco) with an entire value chain, encompassing both upstream to downstream activities, primarily in the property and construction businesses.,

"We believe that Newco will be better poised to undertake bigger property projects and bid for larger construction contracts, both local and global," RAM said.

"At this juncture, this corporate exercise is not expected to have any immediate rating impact on the two entities’ debt issues, pending further details such as more clarity on the management’s plans vis-à-vis the debt facilities, which could entail their restructuring," it added. — Bernama
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