Tan sells 2.2% of Tropicana to EPF

KUALA LUMPUR: Tan Sri Danny Tan, the founder of Tropicana Corp Bhd (TCB), has sold 2.2% (18.98 million shares) in the property development firm to the Employees Provident Fund (EPF).

Filings with Bursa Malaysia yesterday indicated that Tan had disposed of the shares to a government-linked institutional investor at an undisclosed price.

The Edge Financial Daily subsequently learned that the block of shares had been sold to EPF via an off-market deal.

Bloomberg data indicated that two blocks of TCB, formerly known as Dijaya Corp Bhd, which totalled 18.98 million shares, were crossed off-market yesterday at RM1.78 per share.

The transaction price was at a discount of 33 sen, or 18.5%, over yesterday’s closing of RM2.11.

Prior to this, Tan had sold 2.25 million shares on May 17. He now holds a direct and indirect equity stake of 59.93% (569.9 million shares) in TCB, following the share sale. His stake is valued at RM1.2 billion based on yesterday’s closing price of RM2.11.

Tan is group executive vice-chairman of TCB. He relinquished the CEO post in January as part of a management reshuffle. EPF’s maiden foray into TCB came after the company announced the specifics of its private placement undertaking last Wednesday.

The exercise consists of 86.3 million shares, or 10% of the issued and paid-up share capital of TCB, at a price of RM1.78 per share. The fixed price represented a 9.88% discount to the five-day volume weighted average market price of RM1.9752 as at last Friday.

TCB said in its filing with Bursa that shares from the private placement were oversubscribed by 2.6 times during its book-building process, indicating excess demand from institutional investors. Gross proceeds for TCB amounted to RM153.6 million.

The EPF doesn’t seem to have subscribed to the share placement.

According to a note by RHB Research, TCB is undergoing a massive expansion and has a strategic presence in three key property hotspots, namely Johor, Penang and the Klang Valley. TCB recorded total sales of RM254 million in the first quarter of its 2013 financial year (1QFY13).

RHB believes the company is on track to achieve its RM2 billion sales target for the full financial year, highlighting that its anchor landbank would help sustain its growth over the next decade.

It noted that TCB’s landbank totalled 2,000 acres (808ha) with a collective GDV of RM60 billion. Additionally, its ongoing asset monetisation initiatives are set to net between RM400 million and RM500 million in gross proceeds.

TCB’s share price has shot up since the beginning of May in anticipation of new institutional stakeholders, gaining as much as 40% in value.
The counter dropped to an intraday low of RM2.06 yesterday before rebounding to close unchanged at RM2.11 with 2.46 million shares traded.

This article first appeared in The Edge Financial Daily, on June 4, 2013.