LBS Bina Group Bhd intends to form a joint venture with NWP Holdings Bhd, timber manufacturer to work on a development project on its 264-acre land in Zhuhai, China.
The Star reported that as part of the deal, LBS Bina has also proposed to subscribe to 1.1 billion NWP shares which is equals to 73.7 per cent of the enlarged number of issued shares of NWP.
The total cash consideration for the project is RM93.5 million, or 8.5 sen per share in order to part-finance the proposed development project.
In their separate filings with Bursa Malaysia, LBS Bina and NWP on March 5, the group said they had entered into a heads of agreement (HoA) for the proposed joint-development project and share subscription exercise.
LBS Bina said the deal would see its wholly-owned subsidiary Lamdeal Investments Ltd undertake jointly with NWP a development project on the 264 acres involving the transformation of Zhuhai International Circuit (ZIC).
The ZIC is located in the Gaoxin District of Zhuhai in Guangdong, China, which turn the projext into a mixed commercial development.
Lamdeal holds a 60 per cent of interest in Zhuhai International Circuit Ltd (ZICL), which is the registered and beneficial owner of the development land.
“As at the date of the HoA, ZICL had obtained a development approval from the relevant local authorities, namely the Development and Reform Bureau of Gaoxin District, China, for the development land.
The development approval is for transforming ZIC into a mixed commercial development,” LBS Bina said in the filing.
“The development project requires substantial funding and hence NWP has been identified to jointly undertake the project,” it added.
For the purpose of funding the proposed development, LBS Bina said that it would subscribe to 1.1 billion NWP shares, representing approximately 73.7 per cent of the enlarged number of issued shares of NWP, at 8.5 sen per share.
“The proposed subscription will enable LBS Bina to part-fund the ZIC project via NWP and retain control of the ZIC project via NWP,” the company said, adding that the proposed subscription would be satisfied entirely by cash.
Upon completion of the proposed subscription, LBS Bina and the parties acting in concert (PACs) would trigger a mandatory general offer obligation to acquire all the remaining NWP shares not already held by LBS Bina and its PACs.
The trading in the shares of LBS Bina and NWP will resume today after being suspended yesterday, pending the release of this announcement.
LBS Bina’s shares were last traded at RM1.03, while that of NWP at 13 sen.
Furthermore, LBS Bina saw its net profit increase 21 per cent year-on-year (y-o-y) to RM103.4 million for the financial year ended Dec 31 in 2017, from RM85.3 million in the preceding year, as the group’s revenue grew 37 per cent y-o-y to RM1.36 billion from RM993.62 million previously.
On the other hand, NWP saw its loss widen in its first financial quarter ended Nov 30 in 2017, to RM1.01 million from RM809,000 in the previous corresponding quarter, as the group’s revenue almost halved to RM2.72 million from RM4.63 million previously on lower demand from China for timber-related products.