Sunsuria defers buying assets from major shareholder

KUALA LUMPUR: Sunsuria Bhd has allowed to lapse the heads of agreement (HOA) in relation to the acquisition of property development assets in Selangor and Johor from its executive chairman and major shareholder Datuk Ter Leong Yap.

In an announcement to Bursa Malaysia yesterday, the group said it reached the decision after taking into consideration its intention to deliver on current property projects and also the scale of the potential acquisitions.

“The decision will enable the company to have more time and flexibility to assess the various options available in respect to the proposed acquisitions and/or other potential landbank acquisitions,” it said.

According to a source, the acquisition of assets from Ter, which is essentially an asset injection by him as a major shareholder, has not been scrapped but has been pushed to some time next year.

Nevertheless, in response to the news, Sunsuria’s share price fell 11 sen or 7.69% to close at RM1.32 yesterday, reducing its market capitalisation to RM209 million.

The knee-jerk reaction came as investors had largely anticipated the asset acquisition exercise to boost the group’s landbank. The said property development assets were carrying a potential total gross development value (GDV) of RM10 billion.

However, despite shelving the plan to acquire assets from Ter, Sunsuria said it would continue with the proposed three-for-one rights issue to raise fresh proceeds for the group. “It is the intention of the company to implement the rights issue exercise to avail the company with funding as and when such opportunities arise,” it said.

In its filing, the group also said that it would continue to seek potential landbank, property investment and property development projects for acquisition, in line with its plan to grow its business and enhance its prospects.

Meanwhile, Ter said in a statement that he was committed to growing Sunsuria into a premier property development company. “[I] will continue to assess and evaluate the consolidation of my private assets into Sunsuria as and when Sunsuria is ready for such acquisition,” he said.

Ter currently controls 50.12% of Sunsuria, having built up his stake following the acquisition of a substantial interest from previous major shareholder Tan Sri Robert Tan, and launching a takeover offer for the group.

To reiterate, the development projects that are to be injected are a 50% interest in the Xiamen University Township development in Salak Tinggi, Selangor (estimated GDV of RM4.5 billion), a 75% stake in a proposed mixed development in Medini Iskandar, Johor (estimated GDV of RM4.5 billion), an 81% stake in 7th Avenue 2 Development in Setia Alam, Selangor (estimated GDV of RM1.1 billion), and an ongoing residential development with 49 bungalow lots together with infrastructure in Bukit Raja, Selangor (estimated GDV of RM81 million).

The proposed acquisitions are to be funded via a renounceable rights issue — of which Ter would take up a bulk of the amounts, a private placement, borrowings and/or internal funds.

This article first appeared in The Edge Financial Daily, on June 19, 2014.

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