Damansara Realty to raise RM150mil via convertible notes

KUALA LUMPUR: Damansara Realty Bhd (DBhd) plans to raise up to RM150mil by issuing redeemable convertible notes, most of which will be used to develop projects in Putrajaya, Kuantan and Johor Baru.

The construction, property development and facilities management company told Bursa Malaysia that it would issue the unsecured and non-guaranteed notes in four main tranches to Advance Opportunities Fund I (AOF), an open-ended fund established in the Cayman Islands.

Advance Capital Partners Asset Management Private Ltd will be AOF’s discretionary investment manager. 

The notes are due in 2019 and will pay an annual interest of 0.1%. DBhd will raise RM20mil in the first tranche, RM30mil in the second and RM50mil each in the third and fourth tranches.

The first tranche is expected to be issued by the second half of 2016.

The notes can be converted into ordinary DBhd shares. It said based on the minimum conversion price of 50 sen, which is the par value of DBhd’s shares, the maximum number of conversion shares to be issued will be 300 million.

DBhd intends to use RM87.1mil of the proceeds to develop projects in Putrajaya, Kuantan and Johor Baru.

In Putrajaya, DBhd will develop 1,350 residential units and 45 commercial units at a gross development cost (GDC) of about RM467.3mil. The project in Kuantan involves 49 linked and semi-detached units with a GDC of about RM42.6mil. In Johor Baru, DBhd intends to develop 50 shop lots in Damansara Aliff.

The group expects to use RM50.9mil of the proceeds for working capital.

DBhd noted that it recently secured contract to provide cleaning services for the KL International Airport and is actively tendering for new projects in areas such as parking operations, hospital planning and facility management. 

In 2014 DBhd underwent a corporate restructuring which saw the entry of Seaview Holdings Sdn Bhd as controlling shareholder following its purchase of a 51%-stake from Johor Corp, the state investment agency. Johor Corp continues to hold a 14.2% stake in DBhd.

“Apart from strengthening our balance sheet, the notes confer the group the flexibility to drawdown funds when we need it. The funding comes at a critical juncture which will accelerate the growth of our property arm even as we expand our project management division,” said DBhd group chief executive officer Mohd Fazlin Shah Mohd Salleh.