KUALA LUMPUR: Berjaya Corporation Bhd (BCorp) is seeking shareholder ratification of the disposal of its trust beneficial interest in Four Seasons Hotel & Hotel Residences Kyoto in Japan to Godo Kaisha Tigre for Japanese yen 50.79 billion (about RM2.06 billion).
BCorp said the sale consideration of Japanese yen 49.00 billion (about RM1.99 billion) plus the building consumption tax of Japanese yen 1.79 billion (about RM2.52 million) due to the tax authority of japan and the subsequent leaseback of the hotel.
An extraordinary general meeting (EGM) will be conducted through live streaming on July 1, 2020 for the company’s shareholders to vote for the ratification.
On the rationale of the corporate exercise, BCorp said the disposal provided an opportunity for the group to monetise its investments in the hotel at an attractive price.
"Based on the sale consideration of Japanese yen 49.00 billion, the group expects to realise an estimated gain on disposal of Japanese yen 16.03 billion (about RM649.41 million),” it said in a filing with Bursa Malaysia today.
The company said part of the proceeds from the disposal would be used towards part repayment of the group’s bank borrowings, this would give rise to interest savings and in turn, will improve the group’s financial position.
"The disposal will also unlock capital resources that are tied up in long term assets, thus improving the cash position of the group and providing the group with financial flexibility for its operations and future investments as and when they arise,” it said.
BCorp, through its principal adviser for the transaction, Maybank Investment Bank Bhd (Maybank IB), announced the proposed disposal in February 2020.
On March 10 2020, Maybank IB announced that the disposal was completed and Berjaya Kyoto Development Kabushiki Kaisha (BKD), which is an indirect subsidiary of Berjaya Corp, had entered into a leaseback agreement of the hotel for about 17 years up to Dec 31, 2036.
Therefore, in the filing today, BCorp said the leaseback would ensure that there would be no interruption to the existing operations of the hotel which is managed by BKD.
Commenting on the risk on payment of lease rental, BCorp said the number of hotel guests in the hotel has been declining significantly since February 2020 impacted by COVID-19, with the reduction in the visitation of international visitors, as well as demand for accommodation and banquets among the locals.
"The significant reduction of the occupancy rate of the hotel has adversely impacted the performance and in turn, affected the profitability of the hotels and resorts business segment of the group.
"Hence, the business performance of the hotel is expected to be challenging in the subsequent quarters,” it said.
However, the BCorp said it would seek to mitigate the aforesaid risk by increasing its efforts to trim operational costs, seek subsidy from the Japanese government for employee wages and avoid unnecessary expenses.
It would also suspend any intended or budgeted capital expenditures to conserve the cash flow of the hotel, as well as reviewing and streamlining the operations for higher operational efficiency, which include but not limited to, optimisation of manpower needs, digitalisation and automation. - Bernama
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