Proposal to merge Iskandar Waterfront companies into master property developer

PETALING JAYA: Iskandar Waterfront Holdings Sdn Bhd (IWH), the master developer of Bandar Malaysia, has proposed a one-for-one merger offer to take up the remaining 61.7% equity in Iskandar Waterfront City Bhd (IWC) to create a master property developer with over RM30 billion worth of land.

In a filing with Bursa Malaysia yesterday, IWC said it received the proposal letter from IWH yesterday, in relation to a proposed members’ scheme of arrangement to be undertaken by IWC in connection with a proposed merger scheme and a proposed restructuring exercise to be undertaken by IWH. IWC’s board has 30 days to deliberate on the offer.

Trading in IWC shares had been suspended for three days pending the announcement.

Upon completion of the proposed merger, IWH will assume the listing status of IWC on the Main Board of Bursa Malaysia.

“The offer price for the proposed merger is at RM1.50 per IWC share. This represents a premium of 14% over the 30-day volume weighted average price of IWC shares up to and including March 3, 2017,” IWH said in a statement yesterday.

IWC shares were trading between 80 sen and 90 sen in January before going on an uptrend in February, and eventually spiked up to RM1.64 a share on March 3, 2017.

In tandem with the proposed merger, IWH will embark on a proposed restructuring exercise with IWH director cum executive vice-chairman Tan Sri Lim Kang Hoo, via internal rationalisation of minority stakes within the IWH Group and various Johor state entities, including Kumpulan Prasarana Rakyat Johor Sdn Bhd, the investment arm of the state government to consolidate landbank under IWH.

About 3,593 acres of land with an open market value of RM4.1 billion will be injected into IWH, at a discount of 2% over the open market value, as assessed by independent valuers CBRE|WTW, Cheston International (Johor) Sdn Bhd and Raine & Horne International Zaki + Partners Sdn Bhd.

“All the asset injections will be satisfied via issuance of new IWH shares at an issue price of RM1.50 per share and IWH redeemable convertible preference shares (RCPS) which are convertible by surrendering two RCPS for one share, that is, at RM3 per conversion price upon IWH generating a cumulative net profit of more than RM1 billion post the proposed restructuring exercise,” said IWH.

After the exercise, IWH will have a total landbank of over 7,400 acres in Kuala Lumpur and Johor Baru, with an estimated open market value of RM30 billion. Upon conclusion of the merger and the proposed restructuring exercise, the expanded share capital of IWH is expected to be more than 4.3 billion.

IWH said the proposed listing will allow investors to participate in one of the largest property companies in Malaysia and the opportunity to invest in its strategic landbank. The proposals are subject to the approval of the Securities Commission, Bursa Securities and the shareholders of IWC.

Astramina Advisory Sdn Bhd is the appointed financial adviser for IWH and appointed transaction arranger for IWC. AmInvestment Bank, CIMB Investment Bank, Maybank Investment Bank and RHB Investment Bank are joint principal advisers for IWC.