LBS unit to sell stakes in firms to HK-listed company

PETALING JAYA: Intellplace Holdings Ltd, a wholly-owned unit of LBS Bina Group Bhd, yesterday signed a memorandum of understanding (MoU) for the sale of the group’s equity in two of its companies involved in golf club operations and property development projects in Zhuhai, China.

LBS managing director Datuk Lim Hock San said the MoU provided for the parties to negotiate exclusively with each other and finalise the scope and terms of a sale and purchase (S&P) agreement.

The MoU was signed with Jiuzhou Technology Co Ltd (JDX), a wholly-owned subsidiary of Jiuzhou Development Co Ltd (JDCL), which is listed on the Hong Kong Stock Exchange.

In a statement, LBS said the MoU would kick-start negotiations for JDX to acquire up to a 100% (but not less than 60%) stake in Dragon Hill Corp Ltd, a wholly-owned subsidiary of Intellplace. Dragon Hill, through its subsidiaries, owns and operates the 36-hole Lakewood Golf Club and its adjoining property development project in Zhuhai.

LBS said the proposed sale to JDX was worth up to HK$1.65bil and would be settled by payment in cash, equity shares in JDCL, convertible securities and/or other means to be mutually agreed by the parties.

In a note to Bursa Malaysia, LBS said that pursuant to the MoU, Intellplace had agreed to grant exclusive right of negotiation to JDX for a period of six months from the date of the MoU.

After the signing of the MoU, JDX will perform due diligence review on the legal, financial, accounting and business aspects of Dragon Hill, and the parties will discuss and negotiate on the terms of the proposed sale and purchase (S&P) with a view to signing a definitive agreement.

“The LBS board wishes to emphasise that the definitive agreement for the proposed disposal may or may not be entered into. Even if such agreement is entered into, whether or not the proposed disposal may proceed will be subject to all the relevant conditions precedent being fulfilled,” LBS added.

Responding to StarBiz queries on the potential uses of the proceeds, Lim said the company intended to “actively and aggressively increase its land bank”.

“We can expand our land bank not only through joint ventures, but also by purchasing land without affecting our borrowings. Our existing land bank of 2,300 acres can last us for about 10 years. Land is increasingly scarce and expensive, and with the extra cash, we can look for good land and have better bargaining power,” he added.

On the land being looked at, he said: “I see the Klang Valley, Johor and East Malaysia as having very good potential. The local property market still has big room for growth. Under the 10th Malaysia Plan, the population in the Klang Valley is expected to increase from six million now to 10 million in 2020.”

Lim said LBS might also invest in other project in China when good proposal cropped up.

He said part of the proceeds would be used to reduce the company’s borrowings which would strengthen its balance sheet.

“We will also consider declaring a special dividend to our shareholders. When we reap profit from the China project, whether via disposal or through profit distribution from the joint venture operations, we would like to share the fruits with our shareholders,” he added.

Lim said the proposed sale would be a win-win deal for the parties.

By The Star