Memories Group to issue $4.3m convertible bonds to buy stake in 3 Yangon hotels, boat cruise

SINGAPORE - Catalist-listed Memories Group plans to acquire a 15.28 per cent interest in Strand Hotel International, which owns stakes in three Yangon hotels and a boat cruise, by issuing US$3.19 million ($4.3 million) in convertible bonds, the Myanmar-based tourism company said on Monday (April 29) before the market opened.

Memories entered into a share purchase agreement with Oakframe Investment and its holding company, Sun Hung Kai & Co, for the proposed stake acquisition of Strand Hotel International

The consideration for the stake sale will be fully settled by the issuance of US$3.19 million three-year unlisted convertible bonds at a coupon rate of 5 per cent per annum, to Oakframe. Assuming conversion at the maturity date, the maximum amount of the consideration will be US$3.67 million, comprising US$3.19 million in principal amount and US$0.48 million in accrued interest.

The conversion price of US$0.185, which is equivalent to S$0.25, represents a 177.8 per cent premium over the weighted average price of Memories Group's shares of S$0.09 last traded on the Singapore Exchange on April 24.

Oakframe has the right to convert the principal amount including any accrued interest of the bonds at any time before the maturity date into Memories shares at the conversion price.

Strand Hotel International, a joint-venture partner of Myanmar's Directorate of Hotels and Tourism Development, holds a 50 per cent interest in Myanmar Hotel International Company, which has long-term leasehold rights and the rights to develop, operate and manage The Strand Hotel, Inya Lake Hotel and Hotel G Yangon.

Strand Hotel International is also in another joint venture with GCP Hospitality Management and holds an 80 per cent stake in Myanmar Cruise International, which owns a boat cruise in the South-east Asian country, The Strand Cruise.

The acquisition is in line with Memories' plans to own, develop and/or operate more hotels and lodges, so as to expand its hotel business segment, said Cyrus Pun, chief executive of Memories Group, on Monday.

"The assets held by Myanmar Hotel International Company have long-term value creation potential… I remain convinced of the enormous tourism potential of Myanmar," Mr Pun said.

Shares of Memories were trading flat at nine cents as at 10.16am on Monday.