MPHB

Sources say it is in talks to sell a hotel in KL for about rm50 million. This is part of the parcel of the company’s asset rationalization programe. It owns hotels in Penang , Pudu and Ampang.

The sale of the hotel will not be the first for MPHB. In Dec 2011, it completed for disposal of Menara MPHB to MCA for rm375 million cash.

Following the divestment, estimated that the net gearing of MPHB to be reduce to 51% by the end of FY2011.

Apart from the building, the other assets up for sale within the group are its insurance business – Multi Purpose Insurans Bhd – as well as its stockbroking business.

MPHB has embarked on an asset disposal progrwame to reduce the debt taken to acquire the remaining 49% equity interest in numbers for NFO magnum Corp Bhd in an exercise that was announced in Feb 2011. The debt incurred to purchase the 49% block is said to be approximately rm750 million.

The bulk of the 49% block was held by CVC Capital Partners. Apart from cash, CVC Capital also ended up with a 23% stake in enlarged MPHB, which was issued at rm2.30 a share.

Magnum’s steady cash flow is expected to ultimately help MPHB to repay the borrowings it took on to make Magnum its wholly owned subsidiary again. The NFO has a steady annual cash flow of about rm300 million, which is growing.

The group also has attractive landbank, from which it can unlock value via its JV with Bdr Raya Development Bhd.

Its objective is to keep MPHB as a pure gaming play.

Apart from the land that is tied with BRDB, MPHB has 4600 acres in Johor, which fronts the sea. It has been earmarked to be developed into a deepwater petroleum terminal in a project undertaken by Dialog Bhd.

MPHB also has land in Setepak, Rawang, KL and Penang with a total net book value of rm416 million.

The group is clearly sitting on valuable landbank but its next sales could come from its stockbroking and insurance net assets. These are estimated to be worth rm360 million and rm250 million respectively.