KUALA LUMPUR: IGB Corp Bhd has made a RM277.5 million cash offer to acquire the remaining 50% stake in Great Union Properties Sdn Bhd (GUP), which owns the Renaissance Kuala Lumpur Hotel, from Stapleton Developments Ltd (SDL) and Chong Kim Weng.
IGB, which currently owns 50% of GUP, will pay RM101.348 million and settle the shareholder’s advance of RM176.15 million in GUP.
Based on GUP’s audited financial statements for the financial year ended Dec 31, 2010 (FY10), GUP recorded earnings before interest, depreciation and tax (Ebitda) of RM24 million while its net assets were RM116.6 million.
IGB said SDL is a subsidiary of New World Development Co Ltd, which is listed on the Hong Kong Stock Exchange. Chong is a senior partner of Jeyaratnam & Chong, a legal firm in Malaysia from which IGB group procures legal advisory services from time to time.
“The total consideration is based on 8.5 times the hotel’s 2010 Ebitda which is equivalent to valuation of the hotel at RM710 million net of bank borrowings and shareholders’ loan.
“The total consideration will be satisfied wholly in cash from internally generated funds,” it said.
IGB had invested RM226 million in GUP, comprising subscription of 50 million RM1 shares between 1988 and 1992 and 100 million preference shares of 10 sen each (between 1993 and 1996) and shareholder’s advance of RM76 million.
“The total cost of investment in GUP post-proposed acquisition will be RM503 million,” it said. IGB said upon completion of the proposed acquisition, GUP would be a unit of IGB.
“As the controlling shareholder of GUP, IGB will have full management control and hence will be able to execute its business plans and strategies more effectively,” it said.
This article appeared in The Edge Financial Daily, December 20, 2011.
IGB, which currently owns 50% of GUP, will pay RM101.348 million and settle the shareholder’s advance of RM176.15 million in GUP.
Based on GUP’s audited financial statements for the financial year ended Dec 31, 2010 (FY10), GUP recorded earnings before interest, depreciation and tax (Ebitda) of RM24 million while its net assets were RM116.6 million.
IGB said SDL is a subsidiary of New World Development Co Ltd, which is listed on the Hong Kong Stock Exchange. Chong is a senior partner of Jeyaratnam & Chong, a legal firm in Malaysia from which IGB group procures legal advisory services from time to time.
“The total consideration is based on 8.5 times the hotel’s 2010 Ebitda which is equivalent to valuation of the hotel at RM710 million net of bank borrowings and shareholders’ loan.
“The total consideration will be satisfied wholly in cash from internally generated funds,” it said.
IGB had invested RM226 million in GUP, comprising subscription of 50 million RM1 shares between 1988 and 1992 and 100 million preference shares of 10 sen each (between 1993 and 1996) and shareholder’s advance of RM76 million.
“The total cost of investment in GUP post-proposed acquisition will be RM503 million,” it said. IGB said upon completion of the proposed acquisition, GUP would be a unit of IGB.
“As the controlling shareholder of GUP, IGB will have full management control and hence will be able to execute its business plans and strategies more effectively,” it said.
This article appeared in The Edge Financial Daily, December 20, 2011.
