PETALING JAYA: Hap Seng Consolidated Bhd (HSCB) has proposed a corporate exercise that entails the disposal of its credit division in Singapore and the acquisition of a building under construction in Kota Kinabalu.
In its filing with Bursa Malaysia yesterday, HSCB has proposed the sale of Hap Seng Capital Pte Ltd (HSC) to Lei Shing Hong Ltd (LSH) for cash of S$240mil (RM640.8mil).
It also proposed the acquisition of a 14-storey retail and office tower block from Akal Megah Sdn Bhd that is being constructed in Kota Kinabalu for RM395mil through its unit Hap Seng Realty (KK I) Sdn Bhd (HSRSB).
LSH is company incorporated in Hong Kong with issued and paid-up share capital of HK$1.19bil. Tan Sri Lau Cho Kun @ Lau Yu Chak, who is a major shareholder of HSCB, has a 37.68% stake in LSH.
Lau holds a 57.18% in HSCB through Gek Poh (Holdings) Sdn Bhd while Lei Shing Hong Investment Ltd (LSHI), a unit of LSH, is a 17% shareholder of HSCB.
Akal Megah is an indirect wholly-owned subsidiary of LSH, primarily involved in investment holding and property investment.
The directors of Akal Megah are Datuk Yong Foo San, Datuk Simon Shim Kong Yip and Datuk Gan Khian Seng.
LSH has common directors with HSCB, namely Shim and Ch’ng Kok Phan.
“The proposed disposal represents an opportunity for the HSCB group to divest its credit finance business in Singapore at an attractive gain,” it said in its filing with Bursa Malaysia.
Proceeds from the disposal will be used to finance the proposed acquisition of the purpose-built tower, which will be known as Menara Hap Seng KK.
Menara Hap Seng KK is being constructed on 2.16 acres of leasehold land.
The remainder will be used for the group’s general working capital requirements.
Once the proposals are complete, the group expects to realise a gain on disposal of RM513.19mil.
The proposed acquisition will provide HSCB the opportunity to earn rental income and benefit from potential capital appreciation of the acquired property.
In its filing, the company said the sale consideration of HSC will be fully satisfied in cash simultaneously with the transfer of the sale shares on completion date after netting-off the purchase consideration of the property.
The RM245.8mil balance of the sale consideration will be paid via telegraphic transfer.
The proposed acquisition of the property gives HSCB the opportunity to strengthen its position in the Sabah property market and also to grow its brand in Kota Kinabalu.
“The property is expected to fulfil the demand for modern and quality office space as it is strategically located within Kota Kinabalu city centre. The property will be the first green building in Kota Kinabalu and will be one of the few prominent signature office developments in the city upon completion,” it said.
In contrast, it said most existing office space in Kota Kinabalu are conventional shop-office developments or purpose-built office that are more than 10 years old.
The proposed acquisition is also in line with the group’s strategy to increase its investment property portfolio and is expected to provide a steady income stream as well as potential capital appreciation in the future.
“It also represents an opportunity for the HSCB group to expand and diversify the geographical coverage of its property investments portfolio to Kota Kinabalu, which HSCB group believes is primed to grow in economic importance and size contributed by the agribusiness and oil and gas sectors, and supported by retail and tourism demand,” it said.
HSCB said it will submit the application for the proposals to the relevant authorities within two months’ time.
It expects the proposals to be completed in mid-2015.
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