BCorp to raise stake in BLand

BLand settled at 70 sen per share, unchanged, at the close of trading hours yesterday, valuing it at RM3.37 billion. Year to date, shares in BLand have slipped 12.5%.

In a filing with Bursa Malaysia, BCorp and its wholly-owned subsidiary Juara Sejati Sdn Bhd entered into separate conditional share sale agreements with Berjaya Group founder tycoon Tan Sri Vincent Tan Chee Yioun, as well asPenta Investment Advisers Ltd, to acquire 598.73 million shares in BLand, which represent a 12% equity interest.

The acquisition will be satisfied by the issuance of RM353.25 million 10-year, 2% irredeemable convertible unsecured loan stocks (ICULS) at 100% nominal value, which will come with 706.50 million free detachable warrants in BCorp, and RM65.86 million cash, which will be funded through borrowings.

BCorp said the proposed buy would enable it to raise its equity interest in BLand at a reasonable value as its board believes that there is potential capital appreciation in the properties held by the BLand group.

“In particular, [BLand’s] ongoing property development projects are expected to contribute positively to the future earnings of the BCorp group,” the filing read.

BCorp targets to complete the proposed acquisition in the second quarter of 2016.

On the completion date, Penta Investment and Tan shall each receive RM32.93 million cash, as well as 176.62 million new ICULS with 353.25 million new warrants.

Tan’s investment in the 299.36 million BLand shares was made since 1996 at RM169.69 million or an average of 57 sen per BLand share, while Penta Investment’s expenditure for 299.36 million BLand shares was made between 2007 and 2015 at a total cost of RM271.66 million or an average of 91 sen per BLand share.

BLand’s first quarter of financial year 2016 (1QFY16) net profit declined 73.68% to RM9.91 million or 0.2 sen per share from RM37.66 million or 0.76 sen per share, despite a 7.09% increase in revenue to RM1.51 billion in 1QFY16 compared with RM1.41 billion in 1QFY15.

The drop in profits was attributed to higher finance costs and lower contributions from its gaming arm, hotels and resort businesses.

BCorp shares closed half a sen or 1.32% lower at 37.5 sen yesterday, with a market capitalisation of RM4.47 billion.

This article first appeared in The Edge Financial Daily, on December 3, 2015. Tap here to subscribe for your personal copy.