YTL Corp, the Juggernaut

In an interesting corporate development,YTL Corp has divested all its assets and property projects in Malaysia and Singapore to its its 60.72%-owned unit, YTL Land. The disposal will bring in a substantial RM476.05mil to YTL Corp.

The disposal consideration and settlement of the outstanding intercompany balances of RM476.05mil is to be satisfied by the issuance by YTL Land of RM253.03mil nominal value of 10-year 3% stepping up to 6% irredeemable convertible unsecured loan stocks (Iculs) at 100% of nominal value of RM0.50 per Iculs and the remaining RM223.02 in cash.

In tandem, YTL Land would also undertake a renounceable rights issue of Iculs to raise funds to partly satisfy the cash portion. YTL Corp would subscribe in full for its entitlement under the proposed rights issue of Iculs.

The conversion price of the Iculs has not been fixed. The Iculs and the new YTL Land shares to be issued arising from the conversion of the Iculs would be listed and quoted on the Main Market of Bursa Securities.

Under the share sale agreements, YTL Corp would dispose of its 100% stakes in Arah Asas Sdn Bhd, Satria Sewira Sdn Bhd, Pinnacle Trend Sdn Bhd, Trend Acres Sdn Bhd and its entire 70% stake in Emerald Hectares Sdn Bhd to YTL Land.

Meanwhile, YTL Corp's wholly-owned units YTL Singapore Pte Ltd, Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd also entered into share sale agreements with YTL Land.

YTL Land had also entered into a land deal with YTL Land Sdn Bhd.This is in line possibly with YTL Corp's ongoing strategy for its principal business arms to own and operate the relevant assets within their business spheres in order to leverage on operational and developmental efficiencies and synergies.

Accordingly, the disposals are aimed at unlocking the value of YTL Corp's investments in its property units and projects.

YTL Corp would continue to participate in and benefit from the development, potential earnings and capital appreciation of the land owned by the disposed firms through its existing shareholding in YTL Land and its interest in the Iculs and/or the YTL Land shares arising from the conversion of the Iculs.

YTL Corp said the net cash proceeds from the proposed disposal and the settlement of outstanding intercompany balance would be utilised for general working capital purposes.

Until such time as the net cash proceeds are utilised, they will be held in interest-bearing bank deposits, money market instruments, deposits and/or other realisable short-term investments pending further evaluation of the strategic options and opportunities of YTL Corp and its subsidiaries, it said.

So, it looks like the biggest non-GLC on Bursar just got bigger.......and this elephant may just fly soon.

MRCB's Anti-climax Merger

Just when you thought that MRCB has finally came out on its own to be a branded corporate entity,  a merger is now on the card  to create a mega property company by fusing it with IJMLand.

The market did not like it and shunned the so-called corporate development. Instead prices of both IJMLand and MRCB fell when they resume trading.

Investbank Bank OSK has reduced MRCB to a 'neutral' recommendation on the basis that the details of the proposed merger with IJM Land Bhd have yet to be finalised. If so, I think OSK is merely jumping the gun with this silly pre-judgment.

The new MRCB and IJM Land proposed merger will make it the second largest property player with revalued asset of  RM6.5 billion.

According to OSK, there has yet to be a decision on whether the proposed merger will be satisfied via a purely share swap for shares in the newly incorporated company (newco) or a combination of both shares in newco and cash,

According to the OSK report,"The RM2.30 offer price for MRCB offers only seven per cent and 12.2 per cent upside from the last closing price and our previous fair value respectively.As such, it is viewed that the  offer price as somewhat fair and yet not that attractive, owing to the rather limited premium or upside."

Nevertheless, it did not rule out the possibility of MRCB's share price overshooting the offer price over the short term, driven by the excitement over the proposed merger.

Both parties are expected to enter into a definitive merger agreement within three weeks from the date of the MoU.

On the longer perspective, I think the EPF strategists  are gunning for a large hoard of cash before they embark on the Sungai Buluh mixed development property land development scheme and this could be one of its proposed pipeline..