IJM to inject property business into RB Land
Posted on | July 25, 2007
By THE STAR PETALING JAYA: IJM Corp Bhd is expected to inject its property development business into 70%-held subsidiary, RB Land Holdings Bhd. The deal is likely to be done via the issuance of new shares in RB Land, whose share price soared to a nearly 10-year high of RM2.65 before its suspension from trading yesterday afternoon. “It is an asset injection, not privatisation. The details will be out tomorrow (today) after the board has endorsed it,” a source said. Both IJM and RB Land suspended trading in their shares in the afternoon so that the board could finalise the deal with “peace of mind”, given that RB Land’s share price had gone up substantially, the source told StarBiz. “The suspension is done in view (of the fact) that the board will be announcing a material transaction on the proposed rationalisation of IJM group of companies’ property division involving RB Land,” IJM told Bursa Malaysia yesterday. Such a move is part of IJM’s efforts to consolidate the group’s assets after its merger with Road Builder (M) Holdings Bhd last year. The asset injection will make RB Land the property development arm of IJM group. Analysts said if the group were to issue new shares, they expected the transaction price to be at around the price level before suspension. However, IJM’s shareholding in RB Land will exceed 75% after it receives the new shares. Consequently, the group would have to trim its shareholding to meet the 25% public spread requirement in order to maintain the latter’s listing status.
IJM chief executive officer Datuk Krishnan Tan once indicated that the group intends to keep RB Land’s listing on Bursa. If that were the case, the construction group has two options to reduce its shareholdings. IJM could either place out RB Land shares to third parties, likely to be institutional investors, or distribute the shares to its shareholders as a bonus. Property development contributed RM77.1mil, or 24%, of IJM’s pre-tax profit amounting to RM318.9mil and revenue of RM463.8mil for the financial year ended March 31, compared with IJM group’s total revenue of RM2.3bil for the full year. Analysts said the asset injection would give RB Land a new lease of life as it would have more projects.
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