Friday, September 20, 2013

Salcon latest movement

Focal Aims Holdings Bhd has emerged as the most likely candidate for a reverse takeover of Eco World Development Sdn Bhd, disproving earlier theories that Salcon Bhd would be used as the vehicle for Tan Sri Liew Kee Sin’s comeback post-SP Setia Bhd.

Focal Aims’ major shareholders had inked a conditional share sale pact with Eco World Development Holdings Sdn Bhd (EWDH) and Liew Tian Xiong for 164.78 million shares at RM1.40 apiece, valuing the exercise at RM230.69mil.

EWDH, previously known as Maple Quay Sdn Bhd, controls 50% of Eco World and is owned by Tan Sri Abdul Rashid Abdul Manaf and Datuk Eddie Leong Kok Wah – former directors of SP Setia and close associates of Liew. Tian Xiong is Liew’s eldest son.

The takeover by EWDH would make it Focal Aims’ largest shareholder with a 65.05% stake and is expected to trigger a MGO for the company. However, an MGO had yet to be extended, pending the completion of a one-month due diligence.

EWDH plans to first acquire shares in Focal Aims and follow that with an injection of Eco World’s assets into Focal Aims. This is a faster way to grow for Eco World than the traditional listing route, which requires a proven track record of three to four years.

Sources say despite the MGO, Focal Aims’ listing status would remain, the source added.

Focal Aims’ key asset is its 1,011ha Kota Masai township in Iskandar Malaysia.

The company, which had been loss-making for three years until it turned in a profit for the financial year ended Sept 30, 2012, also owns vacant freehold land in Plentong, Johor Baru, measuring 426ha. The land, mostly acquired in 1994 for what must be a bargain at today’s prices (Sept 2013), was valued at RM302.64mil as of September 2012.

It is understood that Focal Aims was chosen as the vehicle because water treatment specialist Salcon, in which Leong has a 13.18% interest, did not have a track record in property development.

Salcon, which has joint-venture agreements with Eco World to develop property in Johor, last week sold its water assets in China for RM518mil.

Eco World came into sharp focus earlier 2013 after the company purchased a staggering 1,214ha for some RM600mil, a feat even listed developers would find hard to stomach. The gross development value of this land-bank is estimated to be worth RM30bil.

An amalgamation of Focal Aims and Eco World, if it pans out, could make the combined entity an attractive stock, given its quality land-bank and close ties to SP Setia, where a number of executives have left to join Eco World. Liew himself is expected to leave before his contract expires in 2015.

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