PETALING JAYA: IOI Properties Group Bhd is buying 400 acres from chairman Tan Sri Lee Shin Cheng for RM1.58bil in cash and new shares.
The land had a combined gross development value of RM20bil, the company said in a filing with Bursa Malaysia.
IOI Properties said that the landbank of the target companies is located within IOI City Resort and is strategically fronting the entrance of Putrajaya and next to the South Klang Valley Expressway.
It is also adjacent to the current development of IOI Properties.
Shares in IOI Properties were suspended from trading yesterday. Trading will resume today. It was last traded at RM2.12 on Monday.
The deals, deemed related-party transactions, will see Lee’s indirect stake in the company increasing to 58.56% from 51.47% currently.
The acquisitions will also see the earnings per share of IOI Properties being diluted as a result of the issuance of the new consideration shares.
Net borrowings will increase from RM889.37mil as of June 30, 2015 to RM1.46bil after the acquisition. Hence, net gearing will increase from 0.07 times to 0.1 times.
In a filing with Bursa, IOI Properties said that the first acquisition is a conditional share sale agreement (SSA) with Lee and his wife Puan Sri Hoong May Kuan for the proposed acquisition of 250,000 shares of RM1 each in Mayang Development Sdn Bhd (MDSB) for RM1.26bil.
The second proposed acquisition is also a conditional SSA with Lee, Hoong and their son Datuk Lee Yeow Chor for the proposed acquisition of the entire six million shares of RM1 each in Nusa Properties Sdn Bhd for RM319.83mil.
The proposed MDSB acquisition entails an amount of RM126.35mil to be satisfied via cash, while the remainder RM1.14bil will be satisfied via the issuance of 514.53 million new shares of RM1 each in IOI Properties at an issue price of RM2.21.
The MDSB sale shares are sold free from all claims, liens, charges and encumbrances and with full legal and beneficial title with all rights attached.
The purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the market value of the landbank, investment properties and ongoing developments of MDSB as appraised by Jones Lang Wootton (JLW) vide its report and valuation on Oct 2 of RM2.06bil.
Meanwhile, the proposed Nusa acquisition entails RM31.98mil being satisfied via cash, and the remainder RM287.84mil to be satisfied via the issuance of 130.25 million new IOI Properties shares at an issue price of RM2.21.
The Nusa purchase consideration was arrived at after taking into consideration the market value of the landbank owned by Nusa as appraised by JLW via the JLW Valuation Report of RM440.10mil.
“The target companies have landbank totalling 399.7 acres in area and post-completion of the proposed acquisitions, the landbank of IOI Properties in IOI Resort City will be enlarged to 449.7 acres from its existing 50 acres.
“In view of the target companies’ landbank being adjacent to IOI Properties Group’s existing landbank in IOI Resort City, the proposed acquisitions are expected to provide synergistic benefits to IOI Properties Group and allow IOI Properties Group to further leverage on its investments to date in road and interchange infrastructure in IOI Resort City, which has enhanced accessibility to IOI Resort City,” said IOI Properties.
As of Sept 30, all of the target companies’ landbank had been converted for development purposes and development orders had also been obtained for approximately 24% of the landbank.
“It is therefore anticipated that the landbank of the target companies to be acquired under the proposed acquisitions will immediately complement and augment the existing development of IOI Properties Group,” said IOI Properties.
The proposed acquisitions are not expected to have an immediate material effect on the earnings of IOI Properties for the financial year ended June 30, 2015 as it is expected to be completed by the third quarter of its current financial year