In a filing with Bursa Malaysia, the group said it had purchased the property on behalf of its subsidiary Ivory Utilities Sdn Bhd (IUSB), for the development of a hotel and serviced apartment with an estimated gross development value of about RM410mil.
"IUSB will be submitting the proposed development plans to the relevant authorities for approval.
"Therefore, it is too preliminary at this stage to ascertain the total development cost and expected profits to be derived from the proposed development," it said.
Subject to authorities' approval, the development is expected to commence in 2022 over a span of three to four years.
The proposed acquisition is not expected to have any material effect on the earnings of the company for the financial year ending March 31, 2020 but is expected to increase gearing by RM53mil, assuming 70% of the purchase consideration is financed by bank borrowings.
According to Ivory Properties, the Copthorne Orchid Hotel & Resort is located in a matured and prestige development area in Penang, with ready infrastructure, connectivity and easy access.
"The Board believes that the demand for serviced apartments is promising in view of the strategic location of the Property and anticipates the property market to improve gradually in the future," it said.
Earlier this year, news sites reported that the Copthorne Orchid Hotel & Resort had ceased operations amid the Covid-19 pandemic.