Landmarks Bhd has attracted a considerable amount of interest on the back of being a possible takeover target.
While the names of several potential buyers have been bandied about, sources say the group's current independent non-executive director Datuk Mohd Annuar Mohd Senawi is really the party keen to purchase the block of shares currently pledged to Pengurusan Danaharta Nasional Bhd.
However, questions abound on just what it is about Landmarks that has attracted such interest?
Although the property investment holding company has sizeable assets, several analysts point out that a lot of them are low-yielding.
“Take its luxury resorts in Langkawi ... those have been registering very low occupancy rates over the past few years because of one crisis or another,” a property analyst says.
Landmarks also has a 27 per cent stake in Shangri-La Hotels (M) Bhd but because of renovation works at the hotel and the general downturn in the tourism sector, the associate company has done little to shore up group earnings.
“His (Annuar) interest in purchasing the shares is more sentimental than anything else. He is vying Landmarks on a private capacity, not via his listed vehicle Idaman Unggul Bhd. He believes that he can add value to the company,” a source says.
(Annuar's private vehicle Idaman Unggul took over the listing status of Idris Hydraulic (M) Bhd last November upon completion of the latter's debt restructuring scheme. Annuar, who is chairman of Idaman Unggul, directly holds a 14.9 per cent stake in the company.)
No doubt, there is urgency for the blocks of Landmarks shares to find a new owner.
The national debt recovery agency has held two large blocks of the shares owned by Eastnusa Holdings Sdn Bhd and Peremba Holdings Sdn Bhd for several years now. Peremba (M) Sdn Bhd holds an indirect 19.3 per cent stake in Landmarks via Eastnusa and Peremba Holdings.
It is well known among Danaharta borrowers that the agency has to redeem its bonds by end June next year in order to wind up its operations by the end of next year.
“It will need as much recovery as it can get in order to redeem those bonds. At present, Landmarks has not been included in the list of shares put up by Danaharta for tender. But it will have to tender out those shares soon especially since quite a large block is involved ... the larger the block of shares, the longer the tender process,” one market observer points out.
Landmarks managed to return to the black in 2001, putting an end to a four-year losing streak. In addition, it rescheduled its debts of RM660 million into long term loans and debt papers.
However, for the financial year ended December 2003, it reported a net loss of RM5.3 million compared with a loss of RM38.61 million in the previous year as it continues to be weighed down by interest costs.
The fact that it has started equity accounting contributions from Teknologi Tenaga Perlis has helped somewhat. (The plant was commissioned on March 31, 2003).
About two years ago, the group had just come out of its debt restructuring exercise and had no grand plans in the pipeline apart from growing the social infrastructure part of its business, bringing out the best in its property division and improving the profitability of its hotel operations, specifically its luxury resorts, The Datai and The Andaman.
In 2000, Landmarks found a third core business – social infrastructure – comprising investments in the power generation and healthcare businesses.
In 1989, Peremba had acquired a 43 per cent stake in Landmarks, then controlled by prominent Chinese property developer Chong Kok Lim and his family. Peremba had stepped in as a white knight by injecting some of its better assets namely Saujana Resorts, Golf Associates Sdn Bhd and UBN Holdings into the ailing company to save it from liquidation.
Later in October 1993, Peremba sold its stake in Landmarks to once corporate high flyer but now relatively little heard of Datuk Samsudin Abu Hassan who relinquished the company’s ownership and three years later, Landmarks returned to Peremba’s control. Landmarks' move into other businesses is best described as bold given its long-standing involvement in property development since the 1980s.
Still, it makes good sense that the group was keen to diversify its earnings base given the fact that the prospects were not all that bright for the hospitality and tourism sectors, not to mention the property industry, at the time. To this end, the group acquired a 20 per cent stake in the 650mw Teknologi Tenaga Perlis Consortium Sdn Bhd.
On the healthcare side, it acquired a 34.6 per cent stake in Qualitas Healthcare Corp Sdn Bhd for RM8.53 million. In addition, it purchased a 50 per cent plus one share stake each in Mont Kiara Specialist Centre Sdn Bhd and in pharmaceutical distributor Mayflax Sdn Bhd.
There is of course the group's money-spinner Sungei Wang Plaza Sdn Bhd, which Landmarks wholly owns.
According to Rating Agency Malaysia Bhd, which rated the RM213 million structured bonds issued by Sungei Wang last year, the shopping centre has achieved a fairly resilient operating income of between RM43 million and RM52 million in the past six years, despite increasing competition in the area.
In addition, it has managed low tenant turnover rates that have averaged 10 per cent per annum over the last five years and can lay claim to one of the highest average occupancy and rental rates in the Klang Valley. However, industry observers point out that new shopping malls in the Klang Valley have begun to pose a threat to Sungei Wang.
On the property development side, Landmarks has some attractive land bank in Wangsa Maju, Kuala Lumpur. At last count, it had 60 acres and 135 acres of commercial and residential land, respectively, in the area.
“Because it lacks the financial muscle to go it alone, it has gone into partnerships in a big way recently to develop that area,” a property analyst comments.
Indeed, Landmarks has entered into joint venture projects with Sunrise Bhd, Tan & Tan Developments Sdn Bhd, Singapore-based MCL Land Ltd and Hedgeford Sdn Bhd. Combined, these projects have a gross development value of more than RM1 billion.
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