Albedo land deal logical

by **Cals** Sun 22 Sep 2013, 19:23

Published: Saturday September 21, 2013 MYT 12:00:00 AM
Updated: Saturday September 21, 2013 MYT 7:01:00 AM
Albedo land deal logical
BY LIZ LEE

PETALING JAYA: Tan Sri Danny Tan’s reverse takeover move to inject his 762-acre tract of land into Albedo Ltd may be the only logical move for the tycoon, consideringTropicana Corp Bhd cannot stomach any more big asset injections.
The land situated in Iskandar Malaysia was cited to worth an aggregate value of RM2.71bil as at Aug 30, based on estimations by Knight Frank Malaysia Sdn Bhd.
Tropicana, which is asset-rich but tight on cashflow, underwent an amalgamation exercise a year ago injecting some 73 properties into its coffers for RM948.7mil. The asset injection included Tan’s private property assets.
The group was also in a de-gearing exercise through strategic disposals.
An analyst from a bank-backed brokerage said it made sense for Tan to plant his private assets in another company if Tropicana could not take the asset injection.
“It is important to note that this land deal (with Albedo) came much later than the amalgamation exercise in Tropicana. If (Tan) could not inject any more assets into Tropicana, it is logical for him to look for another vehicle to do so,” he said.
Earlier reports said that Singapore-listed Albedo could pose potential rivalry for Tropicana, the latter having its own Iskandar projects.
To the question of having a conflict of interest, a property analyst said there should not be any given the collaborative possibilities for both companies.
“I can’t say if there would be a joint venture between the two companies but collaborations are highly likely,” he said, citing an exchange of marketing, construction and other expertise.
“In my opinion, it is better for both companies to have the same shareholders overseeing the projects. This would create healther competition than if other companies came in.”
On whether there could be any cannibalising effect among Tan’s Iskandar Malaysiaprojects, he added: “Developers would tell you that they would rather neighbouring developments flourish so that the value appreciation can spillover to their projects. They are not interested to see any surrounding projects failing.”
Another analyst noted that Tan’s move could raise some questions on Tropicana’s direction.
“Some may be confused about where Tan Sri’s focus is now until there is more clarity on what this means for Tropicana,” he said, concuring that it was unlikely to raise a conflict of interest.
Tan’s move will enable him to gain controlling stake in Albedo, a steel and raw materials trader. Albedo has signed a memorandum of understanding with Tan’s private company, Temasya Cergas Sdn Bhd, to purhase the land in Iskandar, settled via the issue of Albedo shares.
Reuters reported that Albedo had agreed to a S$774mil (RM1.96bil) takeover deal. It planned to issue 34.55 million new shares at2.24 Singapore cents (5.7 sen) per share to Tan’s Infinite Rewards Inc, which equals 95% of the enlarged Albedo’s stock.
Albedo will then use the proceeds to buy Reflections Oasis Inc, a subsidiary of Infinite Rewards. Infinite Rewards is reported to be acquiring seven parcels of land in Malaysia for commercial, industrial and residential development.