Malaysia's Iskandar Waterfront to raise S$476m to shrink debt

A visitor looks at a model of the proposed Bandar Malaysia development which Iskandar Waterfront Holdings Sdn and China Railway Engineering Corp bought 60 per cent of in December last year.
A visitor looks at a model of the proposed Bandar Malaysia development which Iskandar Waterfront Holdings Sdn and China Railway Engineering Corp bought 60 per cent of in December last year. PHOTO: BLOOMBERG

KUALA LUMPUR (REUTERS) - Iskandar Waterfront Holdings (IWH), which recently offered to buy out its listed unit Iskandar Waterfront City Berhad (IWC), said the merged entity was looking to raise about RM1.5 billion (S$476.1 million) this year by issuing new shares.

IWH, controlled by Malaysian property tycoon Lim Kang Hoo, will issue around 600 million new shares to raise funds as part of the merger to cut debt, a senior official as well as the company's financial adviser told Reuters.

While the price for the shares has not been finalised, IWH's financial adviser Astramina Advisory estimates that at RM2.47 per share - a 10 per cent discount to IWC's closing price on Wednesday (March 15) - the merged entity would raise about RM1.5 billion.

"This would substantially pare down the RM2 billion debt consolidated under IWH after the merger. A lot of parties have expressed interest (for the placement), some of them are foreign corporates," said Ms Wong Muh Rong, managing director for Astramina Advisory.

The shares will be issued and privately placed to institutional investors, she said.

Last week, IWH announced plans to buy out the 61.7 per cent stake it does not already own in IWC. It will then assume IWC's listed status on Bursa Malaysia. Shares of IWC have jumped as much as 59 per cent since the announcement.

The merger deal is expected to be completed in six to nine months, after which IWH targets a secondary listing in Hong Kong, China or Singapore within 12 months.

Mr Lim, who is also IWH's executive vice-chairman, said secondary listing plans will materialise when the merged company's market capitalisation hits RM30 billion. The company has not decided how much it will raise.

IWC's market capitalisation is currently RM2.26 billion, Thomson Reuters data shows.

Mr Lim told Reuters he was considering a secondary listing in Hong Kong or China "because that is the market from which we brought in the investors (who) have deep pockets".

Separately, Mr Lim said development works for the city centre project Bandar Malaysia's Phase 1 was expected to begin by April. In December 2015, IWH and China Railway Engineering Corp bought a 60 per cent stake in Bandar Malaysia from troubled Malaysian state fund 1MDB for RM7.41 billion.