LBS deal with Zhuhai Holdings Investment

It had signed the HK$1.65bil (RM680mil) deal with Zhuhai Holdings Investment

Group Ltd to dispose of the entire equity interest in two of its subsidiaries in a cash and share deal, management has to decide what to do with the incoming funds.

The first part of the payment of HK$500mil (RM206.24mil), which LBS expected to receive next month from July 2013, has to either satisfy loyal shareholders by way of a dividend payout or be streamed back into the business for long-term growth.

This sum was to be followed with a proposed settlement of 225.56 million new shares in Hong Kong-listed Zhuhai Holdings at HK$1.33 per share worth HK$300mil (RM123.74mil) and promissory notes for the sum of HK$850mil (RM350.61mil).

LBS would emerge as a substantial shareholder in Zhuhai Holdings and be entitled to appoint a non-executive director for Zhuhai Holdings and reap a proforma gain on disposal of RM309mil at the end of financial year 2013.

There would be indirect benefits from the Zhuhai development project and via the potential appreciation of the holding company’s share value as well as any future dividend payments.

At present, LBS, which has a total landbank of 831.63ha, has hit RM326mil in sales from its 16 ongoing projects – both fully sold and under construction – in light of its 2013 revenue target of RM1bil and unbilled sales of RM702mil as at May 31.

Four more projects will be launched in the coming months, which hopefully will add to the momentum.

There were no plans to privatize the company and that speculation of incapability on LBS part to complete the China-based project was not an issue.