Ekovest to table IWCity proposal to shareholders, KPRJ agrees to sell

PETALING JAYA: Ekovest Bhd, which has decided to put forward the proposed takeover of Iskandar Waterfront City Bhd (IWCity) to minority shareholders, has entered into a conditional share sale agreement with Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) to acquire its 6.40% interest in IWCity for RM80.39 million cash or RM1.50 per share.
"It is the intention of Ekovest to acquire as many IWCity shares as possible via acquisitions from the open market and/or direct business transactions during the offer period at a consideration of not more than the offer price of RM1.50," Ekovest said in a stock exchange filing.
A proposed offer to acquire the 62% stake it does not own in IWCity is to be tabled to non-interested shareholders at an EGM, targeted to be held in mid February 2018 or earlier. The proposed offer is for either RM1.50 cash for an IWCity share, or one Ekovest share for one IWCity share.
Tycoon Tan Sri Lim Kang Hoo, who controls both Ekovest and IWC, made a proposal to merge the two companies after a proposed deal between IWC and parent company Iskandar Waterfront Holdings Sdn Bhd fell through.
The proposed offer is conditional upon, in the event of a voluntary general offer, Ekovest individually holding more than 50% of the voting shares of IWCity; and should it become a mandatory general offer, Ekovest and the persons acting in concert collectively holding more than 50% of the voting shares of IWCity.
The cash consideration for the exercise will be funded using a combination of bank borrowings and internally generated funds of Ekovest, which is yet to be finalised.
IWCity has interest in properties in Plentong Land, Danga Land and Sutera Land, which collectively have a market value of RM3.68 billion.
The total audited net book value of land held for property development and property development costs of the IWCity as at Dec 31, 2016 was RM1.01 billion.
Based on the offer price of RM1.50 per offer share, the implied total purchase consideration for Ekovest to acquire a 100% equity interest in IWCity is RM1.26 billion.
"From Ekovest management’s perspective, this means that Ekovest will only need to pay RM28.81 per square foot to have full access or control over the IWCity group’s 1,000-acre land bank, which is currently valued at RM84.49 per square foot."
In an outright land purchase, Ekovest may only be able to acquire 41 acres and 257 acres of the same land bank.
The offer price of RM1.50 represents a discount of more than 50% to the estimated revised net asset value of IWCity of RM3.03 per IWCity share.
The group said the enlarged land bank of more than 1,000 acres will strengthen its property development business. Ekovest can also expand its concept of river beautification and rehabilitation along the Gombak River to Johor Baru, considering the land bank of the IWCity group along the Tebrau River.
IWCity is expected to contribute positively to future earnings of the Ekovest group, backed by the land disposal to Greenland Tebrau and launch of new property development projects.
Ekovest's share price fell half a sen or 0.54% to close at 91.5 sen with 744,400 shares changing hands. IWCity's share price closed unchanged at RM1.32 with 1.5 million shares changing hands.