Saturday February 9, 2013
MRCB signs deal worth RM729mil with Gapurna’s Salim
By B.K. SIDHU
PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) got a shot in the arm via a much-needed injection of 33 acres of prime land in the Klang Valley into its landbank for future development after it sealed a deal worth RM729mil with Datuk Mohamad Salim Fateh Din's Gapurna Sdn Bhd.
Salim's Gapurna will end up with a 16.8% equity stake in MRCB under the cash and share swap deal, with Salim taking up the mantle of main driver of the property and construction company. He will be appointed MRCB's new managing director after a board meeting that is expected to be held after the Chinese New Year holidays. His son, Imran Salim, is likely to be appointed chief operating officer. MRCB has been without a chief executive officer since July last year.
The signing, held privately yesterday after several months of negotiations, also saw the Employees Provident Fund (EPF) consolidating its shareholding in Gapurna and MRCB.
MRCB is also issuing free warrants to its existing shareholders on the basis of one warrant for every three existing shares held in MRCB, with the exercise price of the warrant set at RM2.30.
Under the deal, MRCB has proposed to buy companies related to Gapurna for RM729mil, to be satisfied by RM110mil cash and the issuance of 398.7 million MRCB shares attached with 113.9 million free warrants on the basis of every two new MRCB warrants for every seven new shares held.
The new MRCB shares are priced at RM1.55 a share, representing a 25% premium over Wednesday's closing price of RM1.24.
MRCB shares have slumped RM1.01 over the past 12 months, from RM2.27 as at Feb 8 last year to RM1.26 yesterday prior to being suspended for the announcement. Analysts believe a re-rating of the stock is in the offing with the 33-acre land boost and open to getting more in the future.
A conditional share sale agreement was signed with Nusa Gapurna Development Sdn Bhd to buy several of its subsidiaries that own the 33 acres of land in the Klang Valley for RM459mil and Gapurna's related companies; Gelanggang Harapan Construction Sdn Bhd (GHC) for RM250mil and Gapurna Global Solution Sdn Bhd for RM20mil.
Salim, via Gapurna, holds a 60% equity stake in Nusa Gapurna, while the remaining 40% is held by the Employees Provident Fund (EPF), which, in turn, has a 42.2% stake in MRCB. EPF's stake in MRCB, however, will be diluted to 38.4% upon the completion of the exercise, expected in the second quarter of this year, and upon obtaining all the necessary approvals from the relevant authorities.
Since Gapurna, EPF and parties are acting in concert in this proposed exercise, they plan to seek a waiver from the Securities Commission to undertake a mandatory take-over offer for the remaining shares in MRCB that they do not own.
EPF deputy chief executive officer Datuk Shahril Ridza Ridzuan said the acquisition would boost MRCB's land bank by an additional 33 acres in strategic Klang valley, with the key development being the PJ Sentral Garden City Development.
“I wanted to invest in MRCB because I believe in its brand value and am confident that together with EPF in MRCB, we will develop prime property and infrastructure projects in the future and increase shareholder value,'' said Salim.
Apart from the 33 acres, MRCB has also entered into a first right of refusal/call option agreement with Nusa Gapurna to buy all the remaining land and any future development land secured by the latter over a period of three years and an RM50mil profit guarantee agreement with the latter for GHC.
The proposed acquisition of GHC was also expected to increase the existing construction order book of MRCB significantly and to keep the construction arm busy for many years, a statement issued by MRCB said.