Albedo to buy more Iskandar land in $1.89b reverse takeover

6 additional land parcels up for purchase.

Singapore listed Albedo Limited announced that it has agreed to buy an additional six parcels of land from a company majority owned by Malaysian tycoon, Tan Sri Dato’ Danny Tan in a move that will increase the size of the reverse takeover (RTO) deal by more than twofold from S$774 million to S$1.86 billion.

The latest total purchase consideration, which is at a discount of 16.6% to the aggregate market valuation of all the land parcels, includes a prime waterfront commercial site called Lido Waterfront, within a 10-minute drive from the Johor Causeway and walking distance to the popular and upcoming Country Garden @ Danga Bay residential project.

Albedo, which will be transformed into a major property developer in Malaysia on completion of the RTO, first agreed to buy seven parcels of land from Tan Sri Dato’ Tan’s Infinite Rewards Inc in September 2013.

The additional six land parcels currently belong to Tan Sri Dato’ Tan and his family and will bring Albedo’s Iskandar landbank to 13 parcels of about 1,182.58 acres.

Explaining on the rationale for the RTO, Albedo has earlier said that intense competition and the softening of customers’ demand for the Group’s trading and distribution businesses of steel related raw materials and consumables have eroded profit margins. The Company’s board of directors expects the Group’s existing core trading businesses to remain challenging.

The proposed acquisition, which is subject to the approval by Albedo’s shareholders, will provide an opportunity for the Company to venture into new business areas which have the potential for growth and will likely to enhance the long-term interests of shareholders.

Tan Sri Dato’ Tan is a Malaysian entrepreneur with more than 30 years of experience in property development, resort management, restaurants, leisure and entertainment operations. He is the controlling shareholder and the Group Executive Vice Chairman of Tropicana Corporation Berhad (formerly known as Dijaya Corporation Berhad), an established property developer and manager listed on the Main Board of Bursa Malaysia. He is also the Executive Vice Chairman of TT Resources Berhad, Chairman of Sports Toto Malaysia Sdn Bhd and a Director of U Mobile Sdn Bhd.

Albedo will pay for all the land parcels to be acquired by issuing new shares representing 95% of the enlarged issued capital of the Company.

The completion of the RTO is conditional upon, an independent valuation report on all the properties, with the valuation amount not less than RM6.5 billion including the value of the properties of Lido Waterfront. Prior to the completion, Albedo will also effect a consolidation of its shares on the basis of every seven existing shares into one share.

Separately, Albedo is also negotiating with Kawasan Mestika Sdn Bhd to acquire Kawasan’s entire issued capital which holds or will hold a 228-acre property in Pulai, north of Iskandar’s Nusajaya Development.

As agreed earlier, planning permission for the development of the first parcel of land of about 295.87 acres, for commercial and industrial use, will be obtained prior to completion of the RTO. The planning permits of the remaining 12 parcels of land are envisaged to be obtained post-RTO completion.