Infinite Rewards, controlled by Malaysian tycoon Danny Tan, is "not losing sleep" over sharp price swings in reverse takeover target, Singapore-listed Albedo.
Infinite is proposing to inject large parcels of Iskandar land into Albedo in exchange for shares giving it control of the company.
"It doesn't change anything. We are not worried about the volatility and it doesn't change the terms of our deal," Infinite's executive director of corporate finance Leong Choon Meng told The Straits Times.
Catalist-listed Albedo has proposed a $774 million reverse takeover which will see Infinite, a private vehicle of Mr Tan, emerging as the controlling shareholder in the listed company.
The deal involves the acquisition of seven parcels of land totalling 268ha in Iskandar, Malaysia's booming southern growth corridor, by Albedo.
To pay for the assets, Albedo will issue 34.55 billion new shares or 95 per cent of its enlarged share capital at about 2.24 cents apiece.
"If the market chooses to outrun that price, that's not within our control," said Mr Leong.
Since the planned deal was disclosed in late August, Albedo's share price has soared from 2.3 cents prior to the announcement to a high of 7.6 cents on Sept 19.
It has since come off its high amid much volatility, not unlike many of its penny stock peers, and ended on Tuesday at 4.2 cents, after gaining 40 per cent. "We would rather focus on delivering on our promises as a property developer rather than be concerned over the market price," he said.
There may be some basis for the excitement. Once the deal is completed, Albedo could shape up to become a true-blue Iskandar property play listed on the Singapore Exchange.
"Albedo will become the real Iskandar play. Rowsley is just a fraction (of it)," said Mr Leong, at a media briefing here on Tuesday.
Rowsley, part-owned by billionaire Peter Lim, is also deemed an Iskandar play following a reverse takeover involving an architectural firm and a 9.23ha waterfront site in Iskandar.
Infinite expects to develop the freehold agricultural land in Gelang Patah earmarked for a mix of residential, commercial and industrial developments over 12 to 15 years. The market value stands at RM2.72 billion (S$1.1 billion) and net asset value is RM2.3 billion.
In order to leave "some value on the table" for Albedo shareholders, Mr Leong said, the assets will be injected at a 17 per cent discount, or RM1.94 billion, into the firm.
Infinite expects to win a development order from the Malaysian government for the first parcel - the largest land area of the seven plots measuring 120ha - by January next year and the rest by 2017.
The takeover is expected to be a done deal by March next year and will also involve an indicative placement worth $170 million involving new shares and partial sale of shares by Infinite to pare down its stake to 74.8 per cent. Infinite has appointed Morgan Stanley as the global coordinator, lead manager, bookrunner and joint placement agent for the proposed placement.
Albedo will then tie up with Malaysian-listed property firm Tropicana Corp for project management, marketing and sales.
"This is not a collaboration that will go on indefinitely. It will last five years till we build up a strong property team in Albedo," said Mr Leong.
Albedo will sell its existing operations of steel trading to the company's founder and chief executive, Mr Tai Kok Chuan.
"The steel business has become more challenging. This (reverse takeover) is an offer we can't reject. Shareholders deserve something better," said Mr Tai, who was also present at the briefing.
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