Friday, August 30, 2013

Tropicana Corp - reserve takeover

News that Tan Sri Danny Tan intends to inject his 762 acre track in Iskandar Malaysia into Singapore listed Albedo Ltd in a reverse takeover.

Investors would have expected Tan to have pumped most of his property assets into Tropicana Corp Bhd.

Such a move will enable Tan to gain control of a Singapore listed entity that will develop the track in Iskandar Malaysia. However, Albedo could potentially be a rival to Tropicana which is also developing project in the region.

Tan is expected to be the single largest shareholder of Albedo.

Some observers opine that the RTo is a smart move by Tan to sell properties to Singaporeans who would be more comfortable dealing with local companies. In addition Tan could park offshore the profit made from the developments in Iskandar.

However, the RTO could give rise to a a conflict of interest between Albedo and Tropicana Corp both of which are controlled by Tan and family unless the family decides to form a JV.

A JV between the two, if it happens, would enable Albedo to leverage Tropicana’s expertise in property development and in return help Tropicana draw Singaporeans buyers to its developments in Iskandar as they may have more confidence in a Singapore company.

While come quarters wonder why Tan did not inject the 762 acres into Tropicana, others say the company may not be able to stomach it after a massive asset injection in 2012. Tropicana is asset rich but its cash flow its tight. Hence the company has to dispose of some of its assets.

Its total assets stood at rm4.58 billion.

Meanwhile sources say CapitaMalls Malaysia is looking to acquire Tropicana City Mall and an office block from Tropicana Corp Bhd. The price is expected to be between rm550 million and rm650 million for both the mall and office block.

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