Thakral signs MOU with Aussie developer
Posted by luxuryasiahome on December 4, 2008
Proposed A$117.5m investments part of move to become a property player
AS PART of its bid to reposition itself as a pan-Asian property player, consumer electronics distributor Thakral Corporation has signed a memorandum of understanding (MOU) with an Australian developer for investments totalling up to A$117.5 million (S$115 million).
The proposed transactions with Australian-listed Payce Consolidated came after Hong Leong Asia (HLA) failed in its bid against the MOU. Board representatives from HLA’s indirect subsidiaries had opposed the MOU resolution but were outvoted.
Of the proposed investments of up to A$117.5 million, some 13 per cent or A$15.73 million will be funded in cash; 63 per cent or A$73.55 million in debt; and 24 per cent or A$28.22 million through the issuance of new shares and share options to Payce, possibly making it a strategic shareholder.
Of three proposed transactions, the first involves Thakral acquiring a A$32.5 million warehouse from Payce. The Bay Park property, with a remaining tenure of seven years, is currently leased out on a net lease rental of A$2.12 million per year.
The purchase will be 60 per cent funded by borrowings but Thakral expects Bay Park to be yield-accretive after servicing the debt. There is also redevelopment potential when the lease expires.
Under the second proposed deal, Thakral will invest A$77 million in property-linked notes with a special purpose vehicle owned by Payce. The notes are structured upon 179 completed residential units in Sydney, which will be sold over the next four to five years.
From the notes, Thakral will receive a running yield and deferred interest calculated based on sales revenue received.
As for the third proposed transaction, Thakral will obtain from Payce an option and a last right of refusal to jointly develop a residential site in Sydney. Thakral will have the right to purchase up to 49.99 per cent of the underlying economic interest for a maximum price of A$8 million.
In all, Thakral could be issuing shares and options to Payce at an issue price of S$0.002 above its net tangible assets as of Oct 31, after allowing for all reasonable provisions. Assuming that new shares are issued at S$0.085 and no options are exercised, Payce could gain an 11.3 per cent stake in Thakral.
Thakral said that this would help it gain a ’strategic shareholder with property expertise’ to help it become ‘a pan-Asia property vehicle’.
The execution of the MOU is subject to several conditions. For instance, Thakral has to first obtain shareholder approval to move away from its core business of consumer electronics distribution. Until definitive agreements have been reached, ‘there is no assurance that any of the transactions contemplated in the MOU will be completed,’ said Thakral. Shareholders ‘are advised to exercise caution in their dealings in the shares of the company’.
Payce is a property investment and development firm that is 14.99 per cent owned by Babcock & Brown. Babcock has a stake of about 8.9 per cent in Thakral.
Source : Business Times – 4 Dec 2008
