PETALING JAYA: Loss-making bottled drinking water company Bio Osmo Bhd plans to buy Impiana Group’s hotel assets from its largest shareholder in a reverse takeover (RTO) deal valued at RM425.9mil.
This will be done via a series of transactions to be satisfied by new shares.
The move will see major shareholder, Datuk Seri Ismail @ Farouk Abdullah, increase his stake in Bio Osmo to over 33%, triggering a mandatory general offer for the remaining shares in the company.
Following the move, the group plans to change its name to Impiana Hotels (M) Bhd.
Bio Osmo, which was primarily involved in the bottled drinking water business, had first set foot in the hospitality sector in 2016.
The business quickly became the main contributor to the group’s revenue and profits, while the bottled drinking water business continued to incur losses due to stiff competition and rising production costs.
The hospitality business contributed 51.6% of the group’s revenue in FY17.
The group said the proposed acquisitions would allow it to further expand its existing hospitality business, improve its financial performance and enhance shareholder value.
“The group expects the expansion of its hospitality business after the proposed acquisitions will allow it to benefit further from the profitability of the Impiana Group,” it said in a filing with Bursa Malaysia.
Bio Osmo announced yesterday that it had entered into five conditional share sale agreements to acquire the hotel assets, while its 75%-owned subsidiary Intra Magnum had entered into a conditional sale and purchase agreement.
The assets the group is looking to acquire are Impiana Hotels & Resorts Management Sdn Bhd (Impiana Management), Impiana Pangkor Sdn Bhd, Astaka Mekar Sdn Bhd, Impiana Cherating Sdn Bhd, the assets and liabilities of Impiana Ipoh and the remaining 25% stake in Intra Magnum.
Vendors of the acquisitions are Farouk, Datuk Yahya Abdul Jalil, Datin Afrizah Abdul Bakar, Impiana Sdn Bhd and Impiana Ipoh.
The group said the purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the market value of the properties, historical performance and operating history and future earnings potential of the assets.
The issue price of 5 sen represents a premium of 10.13% from the five-day volume weighted average market price up to and including April 11, 2018, being the market day immediately preceding the date of the announcement.
The group said RM400mil of the purchase consideration would be satisfied via the allotment and issuance of 4.8 billion new Bio Osmo shares and 3.2 billion new irredeemable convertible preference shares (ICPS) at an issue price of 5 sen per share/ICPS.
The balance of RM25.9mil will be paid via cash, to be funded through bank borrowings.
The group also announced a proposed private placement of up to 2 billion new Bio Osmo shares to independent third-party investors.
It expects to raise RM100mil from the exercise, which will be used for the repayment of bank borrowings, repayment of advances from shareholders and the future expansion of its hospitality assets.
The proposals are subject to the approvals being obtained from Bursa Securities, shareholders of Bio Osmo at an EGM to be convened, and other relevant authories.
The group expects the proposed exercises to take place in the second half of 2018.
Farouk, 72, is the executive chairman of Impiana Sdn Bhd, which he set up in 1990.
Since 1979, he has been an independent non-executive director of Shangri-La Hotels (M) Bhd.