Highlight Eco World announces major corporate exercise to immediately turn it into top property player

by **Cals** Sat 26 Apr 2014, 18:16

Highlight Eco World announces major corporate exercise to immediately turn it into top property player

Business & Markets 2014

Written by Ho Wah Foon and Jeffrey Tan of theedgemalaysia.com

Friday, 25 April 2014 13:29

KUALA LUMPUR (April 25): New property player Eco World Development Group Bhd today announced a major corporate exercise that will see explosive growth and transform it into an important property player.

It enables the company to embark on ambitious properties developments and setting huge sales targets for the next two years at RM5 billion (RM2 billion for FY2014 and RM3 billion for FY2015).

According to a press statement by Eco World, the corporate exercise involves buying development rights of eight projects from the subsidiaries of its major shareholder, Eco World Sdn Bhd, with gross development value of RM30 billion.

The corporate exercise also involves:
• Proposed subscription of shares in EcoWorld Development Group Bhd by shareholders of EcoWorld Sdn Bhd to partially fund the acquisitions and ensure continuity of ownership.

• Proposed rights issue with warrants and up to 20% proposed private placement to raise funds for the acquisitions and as working capital for EcoWorld Development Group Berhad’s development activities.

Eco World Development Group Bhd, controlled by the son of SP Setia’s president/CEO Tan Sri Liew Kee Sin, was formerly known as Focal Aims Holdings Berhad.

Eco World Development Group Bhd president and CEO, Datuk Chang Khim Wah, said in a press statement: “The corporate exercise sets the stage for EcoWorld Development Group Berhad to achieve explosive growth over the next few years.

“Now that all the development projects of the unlisted entity have been integrated into the listed entity (after the exercise), we can focus our full attention to make EcoWorld Berhad one of Malaysia’s top property developers.”

In the statement, EcoWorld Development Group Berhad said that the proposed acquisitions would enable the group to “immediately scale up its business operations” in a significant manner as follows:

• EcoWorld Berhad will gain an immediate enlarged and active presence in all three key development regions of Malaysia: Klang Valley, Iskandar Malaysia and Penang.

• The size of its landbank will increase from 1,326 to 4,433 acres with a resultant growth in GDV from RM13.49 billion to RM43.53 billion.

• Its development pipeline will expand from three to 11 projects, which are planned to be launched in quick succession within the next one to two years.

• The group’s product range will expand to include affordable, upgraded and luxury homes, integrated high-rise developments and green business parks

• It will acquire a development team with the expertise and proven capability to create and deliver highly sought after development projects.

Giving further details, Eco World Bhd said this exercise includes the acquisition of two of EcoWorld Sdn Bhd’s units, which have investment property asset in Penang.

EcoWorld Berhad presently has only one ongoing project in Iskandar Malaysia – the Kota Masai township with 991.6 acres of remaining landbank.

In the Klang Valley, EcoWorld Berhad recently acquired 308.72 acres of land located south of Kota Kemuning for the development of a luxurious eco-theme mixed project called EcoSanctuary

Eco World has to date launched two projects – EcoSky in the Klang Valley and EcoBotanic in Iskandar – achieving RM1.13 billion in sales as at 31 March 2014.

“We are planning to launch four new projects shortly – these are EcoMajestic in the Klang Valley, EcoSpring and Eco Business Park I in Iskandar Malaysia and EcoTerraces in Penang.

“With another five projects still to be unveiled, namely EcoSanctuary in the Klang Valley, the newly revamped EcoTropics, Eco Business Park II and Eco Business Park III in Iskandar, as well as EcoMeadows on mainland Penang, the group will be kept very busy over the next few years.” said Chang.

In a separate filing with Bursa Malaysia today, Eco World Development Group Bhd proposed a share subscription by its major shareholder to raise RM1.37 billion, a rights issue with free warrants to raise RM788 million, and a private placement of new shares equivalent to 20% of its enlarged share base.

But before the share subscription and acquisitions, the company wants to carry out a one-into-two share split of its existing shares, involving the subdivision of each of the existing ordinary shares of RM1.00 each in EW Berhad into two shares of RM0.50 each in EW Berhad.

Eco World Development Group Bhd (EW), in its filing with Bursa Malaysia, said the share subscription will be taken up by Eco World Development Holdings Sdn Bhd and Sinarmas Harta Sdn Bhd for an aggregate 806,846,852 new EW Berhad shares, for total cash of RM1,371.6 million.

The proposed renounceable rights issue of new EW Berhad shares together with new free detachable warrants are to raise gross proceeds of approximately RM788.0 million.

The proposed private placement of new EW Berhad shares, representing up to 20.00% of the then existing issued and paid-up share capital of EW Berhad after the completion of the proposed share subscription and rights issue, to investors to be identified at an issue price to be announced later.

In addition, Eco World Development Group Bhd also announced it had today entered into conditional agreements to buy property firms as in the following:

(i) acquisition of Eco Macalister Development Sdn Bhd, a wholly-owned subsidiary of Eco World Development Sdn Bhd;

(ii) acquisition of Eco World Project Management Sdn Bhd, a wholly-owned subsidiary of EW Sdn Bhd;

(iii) acquisition of development rights from certain subsidiaries of EW Sdn Bhd.