Crest Builder in talks to secure financing

PETALING JAYA: Crest Builder Holdings Bhd, which aborted its proposed private placement of shares in November last year, is talking to several parties to help raise funds to develop its two property projects in Kuala Lumpur.
Its managing director Eric Yong Shang Ming told SunBiz he hopes to firm up the deal in the next two to three months that will see the party either inject funds or become an equity partner in the developments.
“We are looking for active as well passive partners. There are several parties that we are in the midst of discussion now,” he said in a recent interview.
In 2012, Crest Builder’s property development division received a boost after securing the Dang Wangi light rail transit (LRT) mixed development project and the Malaysian Rubber Board (MRB) mixed development job with a total gross development value (GDV) of RM2.43 billion.
The company hopes to launch the Dang Wangi project by the end of this year, while the MRB project, a mixed property development in Ampang, is expected to receive the development order by the middle of this year and targeted for completion in 2019.
Yong said the group is hoping that the new financier would be able to cover between 40% and 50% of the two developments construction costs.
He said the financing sought for the Dang Wangi project called Latitud8 and the MRB job, the Galleria, could reach up to RM200 million and RM300-400 million, respectively.
However, Yong stressed that the property and construction group has no issues in financing its ongoing projects.
“We have the funding requirements for 2016. In fact, we are good for the next 18 months,” he said.
Back in November 2014, the group proposed a private placement of up to 10% of the issued and paid-up share capital of the company, amounting to about RM29.8 million based on indicative price of RM1.42 per placement share. The proceeds from the raised capital were to be used for preliminary expenses in the Dangi Wangi project.
However, a year later, Crest Builder announced that it would not go ahead with the placement plan in view of the market conditions.
On Nov 17 2015, Crest Builder’s shares were trading at RM1.01 each, some 71% below the RM1.42 offered by its share sale plan.
An analysts said that with depressed share prices, Crest Builder may want to hold off its issuance until there are clear signals of a pickup in the stock market.
To recap, Crest Builder was the first to bag a transit-orientated project from Syarikat Prasarana Negara Bhd (Prasarana) back in April 2012 for the Dang Wangi LRT station. It was reported that Prasarana would be entitled about 21.2% of the total GDV, including land cost.
Yong explained that since Crest Builder does not need to fork out any cash upfront for the land acquisition given that Prasarana is the landowner of the project, payment to Prasarana would be settled progressively and in kind.
Physical works for the RM1.1 billion GDV Latitude8 started in September 2014 and are expected to be completed by the end of 2019. The Dang Wangi project will be targeted at foreign buyers, Yong said.
The Galleria, sited opposite Great Eastern Mall and next to Gleneagles Hospital, will consist a 28-storey corporate tower and 33-story SOHO and retail mall, etc.
MRB, as the joint venture partner, will receive a total payout of 22.5% of the total GDV by way of a combination of cash payment and in kind.