Tanco gets nod for plans to revive operations

by **Cals** Mon 11 Nov 2013, 00:02

Published: Saturday November 9, 2013 MYT 12:00:00 AM
Updated: Saturday November 9, 2013 MYT 2:03:41 PM
Tanco gets nod for plans to revive operations
BY CHERYL POO

KUALA LUMPUR: Tanco Holdings Bhd, which has gained shareholder approval to proceed with a capital reduction and fund-raising exercise, said the painful-but-necessary exercise would revive the company as it proceeds with plans to develop its 162ha land in Port Dickson, Negri Sembilan.
"Our big challenge now is to develop our land bank," executive director Chan Chee Meng said after the group’s EGM.
Tanco intends to develop the sea-fronting land in Port Dickson into an RM5bil integrated resort known as Palm Springs Resort City (PSRC). The self-contained resort will encompass a water theme park as well as an adjoining service suite called Splash Park, a spa retreat, a retirement village, international hotels and a golf course.
The company also has a beach resort in Kuantan, Pahang, and 69ha of development land in Tasik Kenyir, Terengganu.
But despite its assets, the company had been unable to proceed with its plans after it fell into financial difficulties following two years of straight losses.
The capital reduction exercise will put the company on a cleaner slate, with assets valued at RM191.4mil and borrowings at a manageable RM33.8mil.
Chan said the focus would be on the Splash Park component of the PSRC project.
"We are now working on the first billion. Construction would be carried out over the next three to four years and we hope the project would generate a strong cashflow in the next year or two," said Chan.
"Our current landbank would keep us busy for the next 15 to 20 years," he added.
At the EGM yesterday, shareholders voted in favour of a plan to cut the par value of Tanco’s shares by 80% to 20 sen each that would wipe out the group’s accumulated losses. It will also offer shareholders to take up an irredeemable convertible unsecured loan stock (ICULS) issue of up to RM33.49mil at a yield of 3% per annum at 10 sen each.
"Shareholders have three years to convert the ICULS into ordinary stocks," Chan said.
The money from the capital-raising exercise will mainly go towards funding the group’s development plans.
"We are not looking to buy new land until we complete developing ours," he said.