GSB buying four companies for RM714m to expand landbank, tap into projects with GDV of RM1.74b

KUALA LUMPUR: GSB Group Bhd is undertaking a corporate exercise to buy several companies via cash and new shares to expand its landbank and scale up its property development business via related party transactions.

The property company said on Friday it was buying Aeon Frontier Sdn Bhd, Kerjaya Prospek Property Sdn Bhd and Kerjaya Hotel Sdn Bhd for a total purchase consideration of RM672mil.

GSB also inked a conditional share subscription agreement with Desanda Property Sdn. Bhd and several others to acquire a 99.4% of the enlarged issued share capital in exchange for 251.36 million new GSB shares.

“The total consideration for the acquisitions amount to RM714mil, ” it said in a press statement.

It said the four companies' core activities are property development.

Aeon Frontier, Kerjaya Prospek Property and Desanda Property are owned by Datuk Tee Eng Ho and GSB executive director Tee Eng Seng while Kerjaya Hotel is owned by GSB’s executive chairman, Datin Toh Siew Chuon, Eng Ho and Eng Seng.

Eng Ho is the executive chairman of Kerjaya and he privately owns a group of companies involved in property development while Toh is the spouse. Eng Seng is an executive director of Kerjaya and he is the brother of Eng Ho.

The vendors are major shareholders of GSB, holding a 40.8% indirect equity interest via Javawana Sdn Bhd.

As part of the corporate exercise, GSB proposed a fund-raising exercise of up to 125 million consolidated shares at an issue price to be determined later.

GSB also proposed to consolidate every five existing GSB shares into one GSB share.

On the funding for the proposed acquisition of Aeon Frontier Sdn Bhd, Kerjaya Prospek Property Sdn Bhd and Kerjaya Hotel for total consideration of RM672mil, GSB said it would be satisfied via RM100mil in cash, RM33.47mil via issuance of 196.9 million new GSB shares at 17 sen each while RM538.57mil would be satisfied via the issuance of 3.168 billion redeemable convertible preference shares (RCPS) at 17 sen per RCPS.

As for the subscription of Desanda Property, it said that it would be settled via a settlement arrangement which include the reinvestment of 251 million new GSB shares by Eng Hoe and Eng Seng at an issue price of 17 sen per share.

GSB said currently, it has an on-going mixed development known as “G-Residence” in Johor Bahru as well as an upcoming project in Shah Alam.

“In order to sustain as well as to enhance the group’s property development operations and its financial performance, the group continuously endeavors to identify viable landbanks and/or projects to expand and strengthen its landbank size and projects portfolio, ” it said.

It said proposed acquisitions and corporate exercise with Desanda Property would enable the group to significantly scale up its property development business.

“For instance, the proposed acquisitions will increase the group’s vacant landbank size as well as extending the group’s geographical reach to Malacca as well as other parts of Selangor such as Gombak.

The acquisitions and transaction with Desana Property would enable GSB to have access to on-going property development projects with total remaining GDV of RM1.74bil in strategic locations in Kuala Lumpur and Penang.