HK firm invests RM280 mil in Yong Tai, emerges as substantial shareholder

KUALA LUMPUR (Feb 5): Hong Kong-listed Sino Haijing Holdings Ltd is investing RM280 million in Yong Tai Bhd under a corporate exercise and emerged as its new substantial shareholder with more than 33% of the voting rights.

In a statement today, Yong Tai said the corporate exercise involves Sino Haijing's unit Impression Culture Asia Ltd's subscription of Yong Tai's proposed special issue of 150 million new shares amounting to RM120 million, representing 34.5% of its enlarged and paid-up share capital at an issue price of 80 sen per share.

It also involves the proposed subscription of 200 million new irredeemable convertible preference shares (ICPS) at an issue price of 80 sen each, being the par value of the ICPS, with subscription consideration amounting to RM160 million.

Following Sino Haijing's impending emergence as a new substantial shareholder, it will seek an exemption from the authorities from undertaking a mandatory takeover offer for the remaining Yong Tai shares that it does not already own after the corporate exercise.

Yong Tai, which entered into a subscription agreement with Impression Culture yesterday, said the corporate exercise would enable it to raise additional funds without incurring high borrowing cost.

Yong Tai expects the corporate exercise to be completed by September 2016.

Its executive director Boo Kuang Loon said Sino Haijing's capital participation in the proposed special issue and ICPS demonstrates the latter's commitment and confidence in Yong Tai's business direction.

"Based on Yong Tai's ongoing project as well as the scale of the projects to be undertaken in Impression City and Impression Melaka, the board envisages that the immediate funding requirements of the Group will be significant.

"Therefore, the proposed special issue and ICPS will strengthen the company's financial position with enhanced shareholders' funds. These factors are expected to facilitate the continuous business expansion plans of Yong Tai," he added. Under the corporate exercise, Yong Tai has also proposed to undertake a private placement of up to 70 million new shares to independent third party investor(s) yet to be identified.

The issue price, which will be determined at a later date, would not be more than 10% discount from the five-day weighted average market price of Yong Tai shares immediately preceding the price fixing date.

There could be several price fixing dates as the placement is expected to be implemented in tranches within six months after the receipt of all relevant approvals.

Based on an indicative issue price of 80 sen apiece, Yong Tai expects to raise gross proceeds of RM336 million from the proposed special issue, ICPS and private placement. Yong Tai pointed out that a total of RM150 million will be used to fund the balance purchase consideration for the acquisition of Impression Land and the construction and production cost for the Impression Melaka project.

It added that RM100 million would go to part-financing Yong Tai's existing project and/or future projects, RM60 million for future acquisitions of new land banks and/or property development related projects by the group, RM22 million for general working capital while the remaining RM4 million to fund the estimated expenses for the recent proposed acquisitions, proposed Melaka Joint Venture and other proposals contemplated.

"We are optimistic that this corporate exercise will further fuel the growth, and at the same time prepare us for our expansion plans in the near future," Boo said. The proposed corporate exercise is subject to the approval of relevant authorities and the shareholders of Yong Tai at an extraordinary general meeting.

Meanwhile, Yong Tai is also undertaking a proposed bonus issue of up to 20.05 million new ICPS on the basis of one new ICPS for every 10 Yong Tai shares held by the company's shareholders as at an entitlement date to be determined and announced later.

"The proposed bonus issue of ICPS is aimed to reward the existing shareholders of Yong Tai through further participation in the company.

"As the ICPS will be listed and quoted on Bursa Malaysia Securities Bhd, this will present an opportunity for the ICPS holders to trade and benefit from any potential capital appreciation of the ICPS," said Boo. -- theedgemarkets.com

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