SINGAPORE - Singapore Myanmar Investco (SMI), through its indirect subsidiary TPR Myanmar, is selling all of TPR's telecommunications towers and tower leases in Myanmar for US$8 million. The buyer is Irrawaddy Green Towers and its parent company Irrawaddy Towers Asset Holding.
This comes as SMI looks to focus its efforts on "less capital intensive and potentially better performing business segments" to gain faster returns on investments such as its duty-free and retail businesses, the company said in a regulatory filing on Friday.
TPR Myanmar is currently 99.99 per cent owned by Myanmar Infrastructure Group (MIG), which is 97 per cent-held by SMI. Irrawaddy Green Towers is the largest independent tower company in Myanmar with over 3,000 telecommunications towers, said SMI.
The deal terminates an earlier agreement entered with Tiger Infrastructure on June 1, 2018, for the share sale of TPR Myanmar, after a joint venture partner of SMI filed a summons to block the sale of TPR.
The sale of the telco assets will take place in three phases. The first phase requires Irrawaddy Green Towers to pay 10 per cent of the purchase price to MIG within 15 days after it receives from SMI a copy of the notice sent to Tiger Infrastructure of the earlier deal termination. At the same time, SMI needs to have opened a data room, with copies of all documents on the assets related made accessible to the buyer.
The next 75 per cent of the purchase price will come within 15 days after consent is obtained from Ooredoo Myanmar, SMI's major customer for the assets. This is along with the transfer of lease agreements and the delivery of all necessary documents for the smooth and uninterrupted operations of the assets to Irrawaddy Green Towers.
The balance of 15 per cent will be paid when SMI receives the approval of shareholders for the deal in the general meeting convened on the deal, as well as approval from relevant third parties. This includes the Department of Post and Telegraph, the Myanmar Investment Commission, the Directorate of Investment and Company Administration, and customers other than Ooredoo Myanmar.
The purchase price was arrived on a willing-buyer-willing-seller basis and took in account the historical financial position and performance of TPR and its unaudited net assets value and EBITDA as at Dec 31, 2018.
SMI added that the business of construction, operation and leasing of telecommunications infrastructure is a capital intensive undertaking. Thus, disposing the towers would allow it to improve its performance and strengthen its balance sheet.
Net proceeds from the disposal tally to U$7.9 million after deducting transaction expenses will go towards funding SMI's working capital, servicing bank loans and other operating requirements.
SMI said that the net proceeds may also be deposited with banks, financial institutions, invested in short-term money markets and/or marketable securities, or other purposes on a short-term basis. This will be where company directors deem appropriate.
The sale of the towers is subject to regulatory approvals, and the long stop date for the conditions to be fulfilled is March 31, 2020, or a later date agreed by the parties involved.
Shares of SMI closed flat at $0.150 on Thursday.