By Sharen Kaur
KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) may hive off some of its assets, including its stake in the Eastern Dispersal Link (EDL) Expressway in Johor, as it looks for another source of funding next year.
The concession is worth more than RM1.2 billion and selling its stake will help MRCB partially finance the new jobs that it secured recently in the Greater Kuala Lumpur/Klang Valley. These include a RM1.63 billion job to regenerate the Bukit Jalil National Sports Complex (to be called KL Sports City), a joint venture with Cyberview Sdn Bhd to develop the Cyberjaya City Centre (CCC), which is expected to generate RM11 billion in gross development value, and a RM3.1 billion contract to develop Kwasa Utama in Sungai Buloh.
MIDF equity research head Syed Muhammed Kifni said apart from equity placement or rights issue, another source of funding might come from the disposal of the EDL Expressway stake.
MRCB executive director Imran Salim told Business Times it was eyeing several funding options. “We are also looking at a development fund for some of the bigger projects, especially CCC. We don’t want to borrow from banks as we are seeking to lower our debt. We aim to be a stronger company, financially.” MRCB told Bursa Malaysia on Monday it planned to raise gross proceeds of up to RM612.1 million via a proposed private placement of up to 20 per cent of its issued and paid-up capital, at an indicative price of RM1.24.
The primary objective of the exercise is to increase its Bumiputera shareholding to a minimum of 35 per cent from 28 per cent currently. This is a key requirement for MRCB to be a Bumiputera-controlled public-listed company, for which it had already received approval in principle.
Gapurna Sdn Bhd, the developer of Petaling Jaya Sentral with assets worth more than RM8 billion, has indicated that it may subscribe up to 120 million placement shares. The company is controlled by MRCB group managing director Tan Sri Mohamad Salim Fateh Din and his wife, Puan Sri Yasmin Mohamed Ashraff. Gapurna is the second-largest shareholder of MRCB, with a 16.7 per cent stake. The other major shareholders of MRCB are the Employees Provident Fund (38.4 per cent) and Tabung Haji (10.1 per cent). From the proceeds, MRCB will allocate RM371.5 million for property development activities, RM142.77 million for general working capital and RM85 million to repay borrowings.
As of October 30, MRCB’s borrowings stood at RM3.69 billion with gearing at 1.83 times. The repayment of borrowings will reduce its debt to RM3.6 billion and gearing to 0.88 times.
The stock fell six sen to close at RM1.36 yesterday, with 8.51 million shares traded. Syed Muhammed said the debt/equity level of the company was relatively higher in comparison to its peers. “That arguably may be the reason why MRCB seems hesitant to incur more borrowings, which we reckon is the right and prudent course to follow. We, too, reckon there is going to be more fundraising exercises to finance the Bukit Jalil regeneration and CCC projects.”
MIDF is maintaining MRCB’s target price at RM1.70. It believes that the current share price has yet to fully reflect MRCB’s fundamentals.
AmResearch analyst Mak Hoy Ken said MRCB had a few options to strengthen its balance sheet, including recycling the capital locked up in its investment properties into its 31 per cent-owned MRCB Quill REIT.
“In addition to the earlier monetisation of its non-core assets, such as the disposal of Duta-Ulu Klang Expressway, it may explore the creation of private property funds with select institutional investors to co-finance its development projects.
“Recycling of capital in the context of monetising its prime investment properties in KL Sentral into its real-estate investment trust (REIT) will help deleverage its balance sheet. This includes the earlier injection of Platinum Sentral into MRCB Quill REIT,” he said.
Mak believes investor attention would now gravitate towards how MRCB monetises its assets, following the recent slew of net asset value (NAV) accretive deals that was announced.
“This will help narrow the discount the stock trades viz-a-viz its NAV,” he said.
KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) may hive off some of its assets, including its stake in the Eastern Dispersal Link (EDL) Expressway in Johor, as it looks for another source of funding next year.
The concession is worth more than RM1.2 billion and selling its stake will help MRCB partially finance the new jobs that it secured recently in the Greater Kuala Lumpur/Klang Valley. These include a RM1.63 billion job to regenerate the Bukit Jalil National Sports Complex (to be called KL Sports City), a joint venture with Cyberview Sdn Bhd to develop the Cyberjaya City Centre (CCC), which is expected to generate RM11 billion in gross development value, and a RM3.1 billion contract to develop Kwasa Utama in Sungai Buloh.
MIDF equity research head Syed Muhammed Kifni said apart from equity placement or rights issue, another source of funding might come from the disposal of the EDL Expressway stake.
MRCB executive director Imran Salim told Business Times it was eyeing several funding options. “We are also looking at a development fund for some of the bigger projects, especially CCC. We don’t want to borrow from banks as we are seeking to lower our debt. We aim to be a stronger company, financially.” MRCB told Bursa Malaysia on Monday it planned to raise gross proceeds of up to RM612.1 million via a proposed private placement of up to 20 per cent of its issued and paid-up capital, at an indicative price of RM1.24.
The primary objective of the exercise is to increase its Bumiputera shareholding to a minimum of 35 per cent from 28 per cent currently. This is a key requirement for MRCB to be a Bumiputera-controlled public-listed company, for which it had already received approval in principle.
Gapurna Sdn Bhd, the developer of Petaling Jaya Sentral with assets worth more than RM8 billion, has indicated that it may subscribe up to 120 million placement shares. The company is controlled by MRCB group managing director Tan Sri Mohamad Salim Fateh Din and his wife, Puan Sri Yasmin Mohamed Ashraff. Gapurna is the second-largest shareholder of MRCB, with a 16.7 per cent stake. The other major shareholders of MRCB are the Employees Provident Fund (38.4 per cent) and Tabung Haji (10.1 per cent). From the proceeds, MRCB will allocate RM371.5 million for property development activities, RM142.77 million for general working capital and RM85 million to repay borrowings.
As of October 30, MRCB’s borrowings stood at RM3.69 billion with gearing at 1.83 times. The repayment of borrowings will reduce its debt to RM3.6 billion and gearing to 0.88 times.
The stock fell six sen to close at RM1.36 yesterday, with 8.51 million shares traded. Syed Muhammed said the debt/equity level of the company was relatively higher in comparison to its peers. “That arguably may be the reason why MRCB seems hesitant to incur more borrowings, which we reckon is the right and prudent course to follow. We, too, reckon there is going to be more fundraising exercises to finance the Bukit Jalil regeneration and CCC projects.”
MIDF is maintaining MRCB’s target price at RM1.70. It believes that the current share price has yet to fully reflect MRCB’s fundamentals.
AmResearch analyst Mak Hoy Ken said MRCB had a few options to strengthen its balance sheet, including recycling the capital locked up in its investment properties into its 31 per cent-owned MRCB Quill REIT.
“In addition to the earlier monetisation of its non-core assets, such as the disposal of Duta-Ulu Klang Expressway, it may explore the creation of private property funds with select institutional investors to co-finance its development projects.
“Recycling of capital in the context of monetising its prime investment properties in KL Sentral into its real-estate investment trust (REIT) will help deleverage its balance sheet. This includes the earlier injection of Platinum Sentral into MRCB Quill REIT,” he said.
Mak believes investor attention would now gravitate towards how MRCB monetises its assets, following the recent slew of net asset value (NAV) accretive deals that was announced.
“This will help narrow the discount the stock trades viz-a-viz its NAV,” he said.
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