Lim Kang Hoo proposes Ekovest-IWCity merger; IWH-IWCity merger off

FIABCI Malaysia’s Property Man of the Year 2015. Tan Sri Lim Kang Hoo

KUALA LUMPUR: The proposed merger between Iskandar Waterfront Holdings Sdn Bhd (IWH) and Iskandar Waterfront City Bhd (IWCity) is officially off and is now expected to be replaced with a corporate exercise that involves Ekovest taking over the latter.

IWH executive vice-chairman Tan Sri Lim Kang Hoo, who is also executive chairman and major shareholder of Ekovest, has proposed that Ekovest undertake a voluntary takeover offer for all shares in IWCity, excluding shares held by controlling shareholder IWH.

In a filing with Bursa Malaysia, Ekovest, which is involved in construction, property development and toll operation, said it received Lim’s proposal letter last Friday in relation to a “reorganisation exercise.”

The proposal will involve the company undertaking a conditional voluntary takeover offer to acquire the remaining shares - 62.2% - of IWCity for RM1.50 each in cash or for new ordinary Ekovest shares to be issued on the basis of a new Ekovest share for every IWCity share.

Subject to the approval of IWH board and shareholders, Lim said he would propose to IWH not to accept Ekovest’s offer to acquire its shares in IWCity, which represent a 37.8% stake.

“All relevant parties will use their best endeavours and efforts to negotiate in good faith documentation and arrangements in relation to the proposed acquisition on or before Nov 30, 2017, or such other extended date as may be mutually agreed between the parties in writing,” Ekovest said.

The company said its board of directors would deliberate on the proposal and decide on the next course of action. Accordingly, it will make a further announcement in due course.

Ekovest said Astramina Advisory Sdn Bhd had been appointed to act as the financial advisor for the proposed acquisition.

No detail was given on what reorganisation measures would take place after the completion of the takeover exercise. 

Meanwhile, IWCity said in a statement to Bursa Malaysia that it and IWH had agreed to  mutually abort their proposed merger scheme that would have led to IWH assuming IWCity’s listing status. Under that exercise, the offer price for IWCity shares was also RM1.50 each.

In conjunction with the merger agreement, IWH had proposed to acquire identified properties from several vendors, including companies and/or real properties from Johor ruler Sultan Ibrahim Ibni Almarhum Sultan Iskandar and/or his connected parties/companies (SJ properties).

According to IWCity, IWH has relayed that the respective vendors of the joint properties and the SJ properties had informed IWH that they would not be participating in the earlier proposed restructuring exercise. No reason was cited in IWCity’s announcement.

The vendors’ move resulted in “an unexpected substantial variation and reduction to the scale and scope of the proposed exercise”, IWCity said.

Hence, it added, the implementation of the proposed merger scheme and proposed restructuring exercise “is no longer consistent with the anticipated benefits and intentions which were originally envisaged by IWH, and the parties are unlikely to be in a position to fulfil the conditions precedent contemplated in the merger agreement within the originally anticipated timeframe for fulfilment/obtainment.”

IWCity shares closed at RM1.40 on Friday last week. Trading in the shares was suspended on Monday and Tuesday this week.